The Indus Illusion: How Pakistan Mistook Guaranteed Water for Water Security

The Indus Waters Treaty has been placed in abeyance by India, bringing about fresh worries over Pakistan's water security. However, the failing nation's fragility goes beyond the upstream geopolitics; it is also the result of decades of institutional sluggishness, under-investment and the failure to transform assured access to water into lasting economic resilience.

Illustration by The Geostrata

2022 should have been a memorable summer for Pakistan, as it had excess water. Rather, it revealed the extent of the country's lack of control over it. The monsoon rains and the accelerated melting of glaciers led to one of the worst floods in the country's history, with almost one-third of the country flooded, more than 33 million people displaced, and more than two million homes destroyed, with economic losses estimated at more than US$30 billion.

Entire districts disappeared beneath floodwaters, crops were washed away, and critical infrastructure was left in ruins. However, slowly the water receded, and Pakistan was faced with the same situation that it had seen in the past: reservoirs were still not sufficient, ground water was still shrinking, and water scarcity was back on the media agenda. It wasn't too much or too little; it was mismanaged.

This paradox is the crux of Pakistan's water economy.

The  Indus Basin Irrigation System (IBIS) provides Pakistan with the major portion of its agricultural output, rural livelihoods and a considerable amount of hydropower generation. But the river is more than a geographical entity; it is an economic asset that has provided the livelihoods of the farming community, supported the growth of the country's textile industry, helped ensure food security and assisted in macro-economic stability.

Few nations are as deeply dependent on a single river system as Pakistan is on the Indus. This is not surprising, as Islamabad immediately condemned India's decision to keep the Indus Waters Treaty (IWT) in abeyance after the Islamabad-backed terrorist attack in Pahalgam in April 2025, threatening the country with serious repercussions on the economy and water security. Those worries are understandable.

However, they also raise a more elemental query: having one of the world's most favourable water-sharing treaties for more than 60 years, how is Pakistan so vulnerable today? The answer lies not in India's recent policy shift, but in decades of neglected reforms, institutional problems and a faulty assumption that guaranteed access to water equated water security. India’s move has certainly shaken up the strategic landscape, but it has also revealed structural problems that have been piling up for decades.

AN ECONOMY BUILT ON THE INDUS 

The level of dependency is hard to overstate. Almost four-fifths of the cultivated area in Pakistan is irrigated by the Indus Basin Irrigation System (IBIS), and it is considered the biggest continuous irrigation system in the world. The agriculture sector uses about 95 per cent of the nation's freshwater withdrawals, generates almost one-fifth of national GDP, and is the nation’s primary employer.

This water supports the cultivation of wheat, rice, cotton and sugarcane and supports the country's largest export industry, which is the textile industry, a significant source of foreign exchange for Islamabad. The Indus is not just a river system; it is the economic backbone around which the growth model of Pakistan has been designed. But even with plenty of water, there has never been an efficient use.

Despite possessing one of the biggest irrigation systems in the world, Pakistan is one of the least water-productive agricultural economies.

The four major crops of the country, rice, wheat, sugarcane and cotton, use almost 80 per cent of the irrigation water and account for less than 5 per cent of GDP, the World Bank said. The negative impacts of poor water management are estimated to cost the economy about 4 per cent of GDP each year (excluding agriculture), covering flood damage, droughts, lack of water resources, and loss of productivity. The numbers reflect a deeper structural issue: Water is not the problem, but the economic returns on every cubic metre that is used by Pakistan.

THE TREATY BOUGHT CERTAINTY, NOT SECURITY

The Indus Waters Treaty (IWT) was signed in 1960 with the help of the World Bank and is considered one of the most successful transboundary water-sharing treaties in the world. The treaty gave Pakistan the rights to use the western rivers of the Indus, Jhelum and Chenab (which make up almost 80 per cent of the average flows of the Indus basin), and the eastern rivers (Ravi, Beas and Sutlej) to India.

Incredibly, this agreement has endured several wars, military stand-offs, and longstanding diplomatic deadlocks to offer Pakistan a degree of hydrological certainty that few lower riparian nations can claim. That was a diplomatic success, but more than that, it was an economic opportunity. Assured river flows gave Pakistan decades to build storage, modernise the irrigation system, develop water use efficiency and adjust to the growing population of the country.

Rather, the treaty increasingly came to be interpreted as a ‘forever’ agreement, as opposed to a ‘reform’ period. The agreement guaranteed water but it never provided for a satisfactory management of water. This is an important distinction. Treaties alone do not create water security, but the institutions, infrastructure and policies that transform a natural resource into long-term economic resilience.

THE COST OF DEFERRED REFORM

The impact of that complacency can be seen in the water economy in Pakistan today. However, with one of the world's most extensive irrigation schemes, the nation only stores a small portion of the annual river flows and is therefore susceptible to flooding and drought. Loss of water from ageing canals has been significant from seepage and evaporation, and traditional flood irrigation is the most common farming method, causing low water-use efficiency.

However, surface water is becoming scarce, and groundwater is being used more and more across the country, particularly by farmers, as a source of water, thus increasing the pressure on already stressed groundwater resources in Pakistan, one of the biggest groundwater-using countries in the world. Policy decisions have made matters worse due to these structural weaknesses.

Water-intensive crops such as rice and sugarcane continue to occupy significant areas despite growing scarcity, and any improvements in irrigation efficiency, crop diversification, and groundwater control have been limited. World Bank data show that Pakistan's four major crops use almost 80 per cent of irrigation water but generate only five per cent of GDP, illustrating the country’s low water productivity.

Inefficient use of water has been estimated to cost the economy about 4% of GDP each year, while the Bank identifies the biggest water issues in Pakistan as primarily on the domestic side of the governance challenge, rather than at the transboundary level. Thus, the water crisis in the country is now an institutional issue rather than a hydrological problem.

The Indus was a resource, and successive governments were not able to maximise its value.

WHEN CERTAINTY ENDS

Pakistan has decried India's decision to place the Indus Waters Treaty in abeyance as a threat to its water security and economic stability. Those are valid concerns for a country with an economy deeply intertwined with the Indus River system. Yet India's decision has altered the strategic environment, not created Pakistan's structural vulnerability. That is a vulnerability that has taken decades to form because of under-investment, water use inefficiency and a lack of building resilience when there was certainty.

The Indus Waters Treaty was an agreement that ensured water for Pakistan. It could never offer assurances of institutions to manage that water effectively. A treaty will not create reservoirs, modernise irrigation systems, limit groundwater use, or change agricultural policy. The state has always had those duties. As Pakistan confronts an increasingly uncertain water future, the real lesson of the Indus is not about how much water a nation receives, but how wisely it prepares to use it.

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BY KAPISH

TEAM GEOSTRATA

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