Global Futures Initiative

The standard wisdom is that, if developing countries invest in environmentally-friendly infrastructure and engineering, then many of these problems will be mitigated. However, globalization factors and how they contribute to environmental challenges such as the stock of potable water are often overlooked. In fact, one of the greatest factors affecting water access is internationally-induced: free trade and foreign direct investment. As developing countries struggle to attract capital and compete in international export markets, they develop production practices that lead to rapid wastewater creation and, at the same time, increase water usage.

Simply put, as barriers to trade are lifted, countries specialize according to their comparative advantage. Most developing nations enjoy a comparative advantage in  goods that either require high water inputs, and/or create large amounts of wastewater (e.g., textiles, garment manufacturing). The problem is that poor nations tend to have poorly enforced environmental regulations and lack the necessary infrastructure to (1) effectively treat the large amounts of wastewater being produced; and/or (2) develop more efficient methods of water consumption and/or recycling. As a result, as developing countries specialize and trade in goods that are water-intensive and water polluting, the supply of potable water will be adversely affected..

Policymakers are slowly taking notice. For example, the deputy secretary-general for the Federation of Thai Industries recently lamented the negative externalities of trade. "Thailand has so far focused on boosting trade and investment [..], but we have overlooked the impact caused by the waste and growing production that means we have to consume more energy and natural resources."[1] The challenge moving forward is twofold. How can developing countries balance international market expansion with sustainable environmental practices, particularly in resources (e.g., water) so vital for survival? Do governments have enough political incentives to prioritize environmental regulations when business interests are likely to favor the status quo? 

Nita Rudra is a professor in the Department of Government specializing in international political economy, international development, and redistribution in developing economies.