The economic impact of water supply disruption from the Selangor River, Malaysia

Abstract

The insidious economic impact of water disruption has received less attention compared to palpable climate disasters, but climate change and water security concerns call for investigation on cost consequences of property values and business losses in an already fragile water supply-demand balance in many developing countries. The economic impact of frequent water supply disruptions from the Selangor River in Malaysia due to technical issues, water pollution, and climate-related problems was estimated using the stock flow measure to assess property at risk, and survey to estimate business loss. The findings revealed that commercial, residential, and industrial property valued at RM459,041 million in 2020 in the State of Selangor and parts of Kuala Lumpur, were at risk due to frequent water supply disruptions. A survey of small and medium enterprises from the manufacturing, construction, and services sectors revealed that 46% of the respondents were affected with losses amounting to RM2,053 million. The total economic impact of water supply disruption in 2020, combining both property value at risk and business loss, is amounted to RM461,094 million, which accounted for 34% of Malaysia's GDP. A number of recommendations are made to prevent the widespread occurrence of water disruptions.