THE nation has long treated water shortages as short-lived disruptions, with systems typically recovering after seasonal droughts, pollution incidents or temporary plant shutdowns.

However, a growing body of evidence suggests that such disruptions may no longer remain episodic but instead evolve into persistent structural challenges.

In January 2026, the United Nations University Institute for Water, Environment and Health warned that the world is entering an era described as “global water bankruptcy”, where droughts, supply constraints and pollution events become chronic rather than temporary crises.

While Malaysia has not reached this stage, the warning underscores how repeated shocks, rising demand and long-term overuse are steadily eroding the resilience of water systems.

Bernama reported today that the concept of water bankruptcy, as explained by UNU-INWEH, goes beyond conventional notions of water stress or crisis. It reflects a condition in which both surface and groundwater resources are overdrawn, leaving little capacity for recovery.

UNU-INWEH director Kaveh Madani described the system using a financial analogy, comparing surface water to a current account replenished annually by nature, and groundwater to savings.

“Water bankruptcy occurs when we not only spend the money in the current account, but also empty the savings account due to continuous consumption exceeding what is available,” he said.

Madani emphasised that the issue is not simply about the abundance of rainfall, but about how resources are managed.

“Bankruptcy is not about whether you are rich or poor, but about how you manage assets,” he said, noting that environmental balance is often overlooked.

“Not all water in a region is for human use. Nature also requires its share.”

He added that water bankruptcy involves both insolvency, where demand exceeds sustainable supply, and irreversibility, where environmental damage can no longer be restored.

Malaysia’s water security is increasingly shaped not only by supply, but also by demand, system reliability, water quality and distribution losses.

Data from the Suruhanjaya Perkhidmatan Air Negara shows that raw water abstraction in Peninsular Malaysia and Labuan rose from 14,560 million litres per day in 2015 to 17,299 million litres per day in 2024. Domestic and non-domestic consumption have also increased over the same period.

At the same time, reserve margins are tightening. SPAN recommends a minimum reserve margin of 15 per cent to ensure operational stability.

However, the margin declined from 15.4 per cent in 2023 to 14.9 per cent in 2024, with several states already falling below the threshold.

States such as Selangor, which supplies water to Kuala Lumpur and Putrajaya, recorded 12.1 per cent, while Melaka, Perlis, Kelantan and Kedah reported even lower levels, with Kedah recording zero per cent for five consecutive years from 2020 to 2024.

Lower reserves reduce the system’s ability to absorb demand surges or supply disruptions.

Pollution remains a major operational risk, as contaminated raw water can force treatment plants to shut down. In January 2026, the Ministry of Natural Resources and Environmental Sustainability informed Parliament that 33 of 672 monitored rivers were classified as polluted in 2025 based on Department of Environment data.

Incidents of contamination have previously caused widespread disruption. For example, in July 2024, four treatment plants in Selangor were halted following chemical leakage in Rawang that affected Sungai Selangor.

In October 2025, a major pollution event in Sungai Johor disrupted supply across several districts, affecting an estimated 1.17 million residents.

Air Selangor, the state water operator, has noted that plants may need to shut down when raw water quality exceeds safe thresholds.

Elevated pollutant concentrations, particularly during dry periods with reduced river flow, can significantly increase contamination levels even if the volume of pollutants remains unchanged.

Non-revenue water (NRW), referring to treated water lost before reaching consumers, further compounds supply constraints.

Data from SPAN shows NRW losses in Peninsular Malaysia and Labuan rising from 4,721 million litres per day in 2017 to 5,541 million litres per day in 2024.

The Air Selangor has highlighted that such losses represent not only lost water but also wasted infrastructure, energy and treatment costs.

Estimates by BIMB Securities in 2025 suggest that operators collectively lose around RM2 billion annually due to NRW, funds that could otherwise be used for infrastructure upgrades.

Climate variability is expected to intensify these pressures. Studies by Malaysia’s National Water Research Institute indicate that regions such as the Klang Valley face high to very high-water stress under climate change scenarios.

Periodic El Niño events, including the severe 1997–1998 episode linked to the 1997–1998 El Niño, have previously contributed to prolonged drought and rationing affecting millions of people.

Projections under the National Climate Change Policy 2.0 suggest that Malaysia’s average temperatures could rise by between 1.1°C and 1.5°C by 2050, and up to 2.1°C by 2100, potentially increasing evaporation rates and water demand.

Experts argue that addressing long-term water risk requires more than expanding supply through new dams or deeper wells.

UNU-INWEH’s Madani cautioned that increasing supply alone may ultimately drive higher demand, perpetuating the cycle of strain. Instead, emphasis must be placed on demand management, efficiency, pollution control and improved transparency in water resource governance.

Malaysia’s experience illustrates how multiple pressures—rising consumption, shrinking reserves, pollution incidents, infrastructure losses and climate impacts—are converging.

While not yet in a state of water bankruptcy, the cumulative effect of these trends suggests that without structural reform, temporary disruptions may increasingly give way to persistent and systemic challenges. – March 22, 2026