Institutional innovation for energy, food and water security in South Asia: the Sustainable Development Investment Portfolio (SDIP) Programme

Rising populations, rapid urbanisation, industrial expansion and economic growth are projected to significantly increase the demand for water, energy and food in South Asia over the next two decades. Energy demand alone is projected to more than double by 2040. Water availability per capita is expected to continue its long-term decline, particularly in Pakistan and parts of India where, within 20 years, it could reach crisis levels in some subregions. Arable land per capita will also continue to shrink and increases in food supply will need to come from intensified agricultural production systems and/or increased food imports. Climate change is expected to exacerbate these emerging issues of resource scarcity. Rising temperatures, changes to water resource availability – resulting from melting glaciers and changed precipitation regimes – and increases in the intensity and frequency of extreme weather events (droughts, floods and heat waves) are all projected to adversely impact on economic activity, especially in the agriculture and energy sectors. Maintaining water, energy and food security will be a significant challenge for South Asian countries. Competition for land and water resources is set to intensify, driven by increased demand from agriculture, the energy sector and industry. Emerging resource constraints may involve difficult resource allocation trade-off decisions across sectors. Balancing the competing demands will be essential to sustaining future economic growth, poverty alleviation (especially achieving Sustainable Development Goals) and in maintaining national and regional political security. The extent to which South Asian countries can effectively manage these emerging issues will largely determine the region’s future economic development trajectory. Adopting a more integrated ‘nexus’-based approach to natural resource management and development planning offers much potential for improved water, energy and food (WEF) security and enhanced climate change resilience. Australia, through the Sustainable Development Investment Portfolio (SDIP), is supporting countries to better manage these emerging WEF security constraints, through targeted aid program investments and public/economic diplomacy. This paper highlights some of the innovative approaches that have been supported through SDIP and how they are contributing to improved development outcomes in the agriculture and energy sectors in South Asia.