Climate Change Strains Asia’s Water and Power Systems — Reports Warn Of $4T Need And Rising Utility Losses

Climate change is already degrading water supplies and disrupting electricity systems across Asia, putting millions at risk and pushing governments to consider multibillion-dollar investments to protect basic services, according to two recent reports.

Rising Water Risks And A Massive Financing Gap

The Asian Development Bank (ADB) warns that water-related disasters are becoming more frequent while investment to protect communities lags far behind. The ADB estimates Asian countries will need roughly $4 trillion for water and sanitation between 2025 and 2040 — about $250 billion per year — yet governments currently provide only about 40% of that sum, leaving an annual shortfall of more than $150 billion.

The report finds that roughly 2.7 billion people (around 60% of the Asia-Pacific population) have access to water for most basic needs, but more than 4 billion people remain exposed to unsafe water, degraded ecosystems and mounting climate hazards. From 2013 to 2023 the region experienced 244 major floods, 104 droughts and 101 severe storms, events that have eroded development gains and caused widespread damage.

'It's a tale of two realities,' said Vivek Raman, principal urban development specialist at the ADB and a lead author of the report, noting a 'triple threat' of environmental pressures, insufficient investment and accelerating climate impacts.

Power Systems Facing Growing Climate Costs

Separate research by the Asia Investor Group on Climate Change (AIGCC) and the MSCI Institute finds Asia's power utilities are already losing about $6.3 billion a year because of extreme heat, floods and water shortages — a figure that could rise to roughly $8.4 billion annually by 2050 if adaptation measures are not scaled up. The study analyzed 2,422 power plants across China, Hong Kong, India, Indonesia, Japan, Malaysia and South Korea and identified extreme heat as the costliest hazard, responsible for more than half of projected losses by 2050.

Asia produces roughly 60% of the world's power generation capacity and remains heavily reliant on coal, making both energy security and economic growth vulnerable as climate impacts intensify. Declining river flows threaten thermoelectric plants and hydropower dams that depend on steady water supplies, while coastal and riverine flooding endangers low-lying plants and transmission infrastructure.

On-the-Ground Impacts And Preparedness Gaps

These risks played out this year as late-season storms and prolonged rains battered the region. In central Vietnam's Quy Nhon, Typhoon Kalmaegi snapped transmission lines and left chest-high floodwaters that isolated neighborhoods. Residents sought powered public spaces to charge phones and check on relatives in the aftermath.

Despite mounting hazards, many utilities lack detailed, funded climate adaptation plans. Of 11 firms studied in depth by AIGCC/MSCI, nine assessed how climate change could affect them, seven evaluated risks at individual plants, but only five had quantified and disclosed how future climate impacts might raise costs or harm earnings.

'Most companies are at very early stages' in preparing for climate impacts, said Anjali Viswamohanan, director of policy at AIGCC.

Finance, Opportunity And Risks

Asia's rapid infrastructure expansion is both a challenge and an opportunity. Amit Prothi of the Coalition for Disaster Resilient Infrastructure notes that the region will build as much infrastructure in the next three decades as was built in the last two centuries, creating a major chance to embed resilience from the outset. Still, experts warn that closing financing gaps could attract investors with weaker environmental safeguards in some cases.

Researchers and policymakers urge faster, better-targeted investments in climate-proof water systems and energy infrastructure, clearer company-level disclosures, and stronger adaptation planning to protect billions of people and the region's economic growth.

Reporting note: Reporting for the original stories came from multiple locations, including Hanoi, Vietnam. The Associated Press' climate and environmental coverage receives support from private foundations; AP retains full editorial control.