The Great Water Grab: Commodifying scarcity while Sri Lanka thirsts

By Riza Yehiya

On August 23, The Sunday Times published a searing report titled A Price Tag on Lanka’s Water, revealing a concerted effort by the Asian Development Bank (ADB), international experts and private interests to transform Sri Lanka’s upper watersheds into a tradable natural capital asset. The timing of this revelation could not be more grotesque.

On the same day the report appeared, the Irrigation Department confirmed that the country’s 74 major reservoirs held only 35.8% of their effective storage capacity. In the agricultural heartlands, reservoirs such as Manankattiya in Anuradhapura stood at just 1.5% effective storage and Muruthawela in Hambantota at 1.6%. Farmers watched helplessly as critical water sources dwindled, threatening entire harvests.

This is the context in which the ADB, the International Water Management Institute (IWMI) and their private-sector partners are advancing a program to put a price on water, to treat it not as a human right or a public good but as a financial asset to be bought, sold and profited from. The audacity of this project is compounded by a stark fact: according to national water demand assessments, Sri Lanka’s water supply currently falls short of national demand by approximately 25%. In plain terms, the country does not have enough water to meet the needs of its own people. Yet, rather than focusing on closing this gap through sound governance and infrastructure investment, the government and its international partners are preoccupied with a far more lucrative question: “How can private hands make money from Sri Lanka’s water?”

The serendipity knowledge program

The ADB’s Serendipity Knowledge Program (SKOP) presents itself as a platform dedicated to identifying knowledge solutions for Sri Lanka’s development challenges. On August 13, under this banner, ADB Country Director Shannon Cowlin hosted a session in Colombo titled Investing in Sri Lanka’s Upper Watersheds: Unlocking Natural Capital for a Resilient Future.

The language is carefully chosen: natural capital, ecosystem services, climate resilience, sustainable financing. These are the buzzwords of international development finance designed to lend an air of ecological virtue to what is, at its core, a programme of asset extraction. The ADB has commissioned two complementary studies to strengthen the evidence base for this initiative. The first, a hydrological assessment by IWMI, examines the contribution of upper watersheds to water security. The second, an economic valuation study, explores how natural capital can be incorporated into investment decisions. Together, these studies aim to move the discussion from understanding the importance of upper watersheds to identifying practical pathways for investing in them.

This is the intellectual architecture of commodification: first demonstrate that something has value; then create mechanisms to capture that value; and then invite private investors to participate in that capture. The ADB has already agreed to provide $100 million in initial funding for the Canopi Fund and the establishment of the Upper Watershed Management Authority (UWMA). The cabinet has granted its approval. The machinery of commodification is already in motion.

The Global Commission on the Economics of Water: ideological cover

The intellectual scaffolding for this project is provided by the Global Commission on the Economics of Water, whose secretariat is conveniently housed at IWMI’s global headquarters in Colombo. Launched in 2022 by the Netherlands, the Commission produced a 2024 report titled The Economics of Water: Valuing the Hydrological Cycle as a Global Common Good.

The operative phrase is global common good. As The Sunday Times report astutely observes, this simply means nature’s gifts are not within the sovereignty of any state. Others, the world citizens, cannot be prevented from enjoying them, and there is a shared interest. This is a breathtaking assertion of extraterritoriality. It means that Sri Lanka’s water – the water that sustains its farmers, its ecosystems and its very existence – is not really Sri Lanka’s. It belongs to the world. And if it belongs to the world, then the world’s institutions and investors have a legitimate claim to manage it, to value it and to profit from it.

The commission’s report warns that by 2050, failure to act on water could put at risk more than half of the world’s food production. This is the stick. The carrot is the promise that natural capital investment can deliver economic, social, and environmental returns. Translated from development-speak, it means private capital will be brought in to manage Sri Lanka’s watersheds, and private capital will expect a return on its investment. That return will have to come from somewhere, and that somewhere is the pockets of Sri Lankans.

Why commodification is the wrong answer

Sri Lanka’s water crisis is real and deepening. The country is now classified as highly water-stressed, using approximately 90.8% of its available renewable freshwater resources. Total renewable water resources are estimated at roughly 52.8 billion cubic meters per year, but there is very little buffer left to absorb growing demand and climate shocks.

The crisis is not one of absolute scarcity but of uneven distribution, weak governance, and institutional fragmentation. Management of the island’s water network is currently split across multiple state institutions, including the Irrigation Department, the Mahaweli Authority and the Department of Agrarian Development, creating acute operational friction and leaving vulnerable communities exposed to predictable shortages. UN-linked assessments suggest that around 35.6% of the population is vulnerable and deprived in relation to water, with the poorest households being 6.8 times more likely to experience extreme water insecurity than the richest.

The 25% gap between supply and demand is not a technical problem that can be solved by pricing mechanisms. It is a governance problem that requires institutional unification, infrastructure investment and equitable allocation. Instead, the government is creating yet another authority – the Upper Watershed Management Authority – to manage a single aspect of the water cycle while leaving the underlying fragmentation intact. This is not reform; it is proliferation, serving the interests of international financiers who prefer fragmented governance because it is easier to penetrate and control.

The human cost of commodification

The commodification of water is not an abstract economic exercise. It has concrete, predictable consequences for the most vulnerable Sri Lankans.

For farmers who currently receive irrigation water largely free of charge, the introduction of pricing mechanisms would represent a fundamental assault on their livelihoods. Agriculture accounts for 85-95% of all water withdrawals, supporting the rice production that underpins the country’s food security. If farmers are forced to pay for water, or worse, if water is allocated to higher-value uses like tourism or industry, the consequences for food production would be catastrophic. The Sunday Times report notes that even in official quarters, there are questions asked about why farmers, for instance, are allowed to be freeloaders of irrigation water. This framing is pernicious; farmers are not freeloaders but the backbone of the nation’s food system.

For the urban poor who already face profound inequalities in access to safe water, commodification would be devastating. Only about 60% of Sri Lankans receive pipe-borne water; the rest rely on wells or rainwater highly exposed to drought. In Colombo, daily water demand is already estimated at 600,000 to 800,000 cubic meters, with the Labugama Reservoir estimated to sustain supply for only about 50 days. Commodification would entrench inequality – those who can pay will have water, and those who cannot will go without.

For the nation as a whole represents a surrender of sovereignty. The Sunday Times warns of the weaponization of freshwater resources in the not-too-distant future. Water is already a source of geopolitical tension in South Asia, and to cede control over its watersheds to international investors is to invite foreign powers to hold the nation’s most vital resource hostage.

The ideology of natural capital

The concept of natural capital is seductive because it appears to take nature seriously. By assigning economic value to ecosystems, it seems to elevate them from the taken-for-granted to the valued and protected. But this is an illusion. Natural capital is not a neutral accounting framework; it is an ideology that subordinates nature to the logic of the market, assuming that the only way to protect something is to give it a price and that the only legitimate form of value is exchange value.

These assumptions are profoundly at odds with the reality of water. Water is not a commodity like any other; it is the basis of all life with cultural and ecological significance that cannot be captured by any pricing mechanism. The Global Commission’s report is inspired by, and builds on, the Stern Review on the Economics of Climate Change and the Dasgupta Review on the Economics of Biodiversity. Both are products of a particular intellectual tradition, one that seeks to address environmental problems through market mechanisms rather than through collective action and democratic governance. The common good in this framework is not the good of the Sri Lankan people but the good of a global economic system that requires water to be managed as a global common precisely so that it can be exploited by global capital.

A different path

Sri Lanka does not need to commodify its water to manage it sustainably. There is another path, one that prioritizes public ownership, democratic governance and equitable access.

First, institutional unification. The fragmented system of water governance is a recipe for failure. The government should establish a unified National Water Resources Authority accountable to Parliament and the people, not to international financiers.

Second, investment in infrastructure. The dry zone’s ancient cascade tank systems naturally capture rainfall and recharge aquifers. Decades of neglect have allowed these tanks to become silted. Infrastructure spending must prioritize systematic de-silting, bund stabilization and catchment reforestation. This creates water security, not complex financial instruments that extract value without restoring the watersheds.

Third, demand management and conservation. The National Water Supply and Drainage Board loses nearly 50% of water before it reaches consumers. Fixing this leakage would dramatically reduce the demand-supply gap. Similarly, shifting to efficient irrigation methods would reduce agricultural water use without reducing crop yields.

Fourth, equitable allocation. Water allocation should be guided by equity and sustainability, not by the ability to pay. Drinking water for all, water for food production, and water for ecosystem health must be prioritized over water for tourism or export.

Fifth, resistance to commodification. Sri Lanka must reject any framework that treats water as a global common good subject to international governance and private investment. Water is a national asset and a human right. It belongs to the people of Sri Lanka, not to the ADB, IWMI or private investors.

A defining moment

The Sunday Times report reveals a defining moment for Sri Lanka. On one side are the forces of commodification: the ADB with its $100 million, IWMI with its intellectual authority and the private sector with its appetite for profit. On the other side are the people of Sri Lanka – the farmers, the urban poor and the dry-zone communities – who depend on water for their very survival.

The government faces a choice: continue down the path of fragmentation, privatization and external control or chart a course prioritizing public ownership, democratic governance and equitable access. The article concludes with a warning, “The government cannot be unaware of these wider repercussions as water becomes part of an accelerating global conversation and an action plan that goes with it for its exploitation.”

The 25% gap between water supply and demand is a crisis, but it is also an opportunity, an opportunity to build a water governance system that is unified, equitable and sustainable. Commodification is not the solution to this crisis; it is a diversion from it. The real solution lies not in putting a price on water but in putting water in the hands of the people.

-This article was originally featured on groundviews.org