More than 60% of Asia and the Pacific’s population—about 2.7 billion people—has been lifted from extreme water insecurity over the past 12 years, but these hard-won gains are threatened by accelerating environmental decline and a major financing gap, according to a new Asian Development Bank (ADB) report.

The Asian Water Development Outlook (AWDO) 2025, publishedyesterday, finds that renewed political commitment, targeted investments, and governance reforms since 2013 have driven this progress.

But ecosystem decline, climate risks, and funding shortfalls for water investments threaten to plunge billions back into water insecurity. Wetlands, rivers, aquifers, and forests that sustain long-term water security are deteriorating fast. Extreme weather events such as storm surges, rising sea levels, and saltwater intrusion threaten a region which already accounts for 41% of the world’s floods. In recent weeks, parts of Southeast and South Asia have been hit by devastating floods.

The AWDO estimates that $4 trillion through 2040—or $250 billion a year—is needed to meet the region’s water, sanitation, and hygiene (WASH) needs alone.

“Asia’s water story is a tale of two realities, with monumental achievements on water security coupled with rising risks that could undermine this progress,” said ADB Senior Director for Water and Urban Development Norio Saito. “Without water security, there is no development. This report shows we need to act urgently to restore ecosystem health, strengthen resilience, improve water governance, and deploy innovative finance to deliver long-term water security—especially for the neediest communities.”

The AWDO assesses water security through five dimensions: access to clean water and sanitation for people living in villages and cities; the availability of water for key economic sectors such as agriculture; the state of rivers and other natural ecosystems; and protection measures against droughts, floods, and other water-related disasters.

The region’s steady improvement over the past 12 years is starkly demonstrated in rural India, where 840 million people now have better WASH services, due chiefly to government programs. In the People’s Republic of China, government investments in flood control, rainfall radar systems, and emergency response have significantly enhanced resilience to water-related disasters.

Notable advances have also been made in Cambodia and the Lao People’s Democratic Republic, which have significantly reduced exposure to unsafe drinking water. In Tajikistan, projects supported by initiatives like the United Nations’ Early Warnings for All have reduced drought exposure and strengthened national flood and storm management systems.

The AWDO notes that progress can be sustained if nature is protected and integrated into water systems through national river health monitoring, stronger pollution controls, and better watershed protection. Stronger governance systems that prioritize prevention will improve climate resilience, and water systems will be more effective if subnational bodies are given the resources and authority to manage them. Efforts must be inclusive—engaging women and young people—if investments are to succeed.

The report finds that current spending on WASH infrastructure covers less than 40% of the estimated $250 billion needed every year, leaving an annual shortfall of more than $150 billion.

Closing the gap requires deploying finances in smarter ways, including through blended finance that pools public and private resources to reduce project risk and mobilize private capital.

Improving the efficiency and financial sustainability of the water sector can also attract private investment.

This year’s AWDO was produced in partnership with the University of Oxford, the International Water Management Institute, the University of Queensland, the International Center for Water Hazards and Risk Management, the Global Water Partnership, the International WaterCentre, Griffith University, and the IHE Delft Institute for Water Education.

AWDO is a comprehensive assessment of water security in Asia and the Pacific issued every three to six years. ADB has published five editions of the report since 2007. This year’s edition was supported by the Japan Fund for Prosperous and Resilient Asia and the Pacific financed by the Government of Japan, the Water Resilient Trust Fund financed by the Government of Netherlands, and the Urban Resilience Trust Fund financed by the Government of the United Kingdom.

ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.