Thailand’s High-Tech Expansion Raises Water Security Concerns

Thailand’s push to establish itself as a major Southeast Asian hub for data centres, electronics and advanced manufacturing is creating a parallel challenge: ensuring that enough reliable water is available to support industrial growth without increasing pressure on agriculture and local communities.

The issue was highlighted at the Unlocking Capital for Sustainability Thailand conference in Bangkok on September 23, where representatives from UOB Thailand and the United Nations Environment Programme (UNEP) warned that water security could increasingly affect investment decisions and economic resilience.

Chow Wong Yuen, Chief Sustainability Officer at UOB Thailand, said the country’s industrial development has changed the demands placed on its water system. Thailand has moved from an economy heavily dependent on agriculture toward automotive manufacturing and, more recently, data centres, printed circuit boards and electronics production.

Much of this investment is concentrated in the Eastern Economic Corridor (EEC), which covers the provinces of Chachoengsao, Chonburi and Rayong. These industries can require dependable water supplies for manufacturing processes and cooling, creating additional demand alongside agriculture, municipal consumption and other industries.

Technology Investment Accelerates

The pressure comes as Thailand is attracting substantial capital into digital infrastructure.

According to the Thailand Board of Investment (BOI), foreign and domestic investment applications reached approximately US$43.6 billion, or 1.47 trillion baht, during the first half of 2026, up 37% year on year. Digital-sector applications accounted for around US$33 billion, driven largely by data centres, data hosting, cloud services and artificial intelligence infrastructure.

The trend builds on rapid growth already recorded in 2025. In the first half of that year alone, the data centre sector attracted 521.2 billion baht across 28 investment applications, according to BOI data.

This investment is central to Thailand’s strategy of moving toward higher-value industries, but it also increases the importance of resource availability when companies assess potential locations.

Data centres can require significant amounts of water, particularly where evaporative cooling systems are used. Electronics and semiconductor-related manufacturing may also depend on highly reliable supplies of treated or purified water. Interruptions can therefore become an operational and financial risk rather than simply an environmental issue.

EEC Faces Widening Water Gap

Existing assessments suggest that water availability could become a significant constraint on the EEC’s development.

The World Bank has estimated that, assuming future water availability resembles average hydrological conditions during the decade to 2023, the region could face a water supply shortfall of almost 40% by 2037. During dry years, the deficit could reach 72%. Those projections already take into account 32 planned infrastructure investments intended to improve supply.

The World Bank has consequently identified wastewater treatment, additional storage capacity and greater water-use efficiency as priorities for supporting continued economic development in the region.

Climate change adds another layer of uncertainty. More variable rainfall, drought risk and extreme weather can affect the volume and reliability of available water, while floods can damage industrial assets and water infrastructure.

For businesses considering long-term investments, these conditions mean water security is increasingly relevant to site selection, operational continuity and physical climate risk assessments.

Financing Water Resilience Remains Difficult

Building infrastructure is only part of the challenge. Financing it can also be difficult.

Chow said water resilience projects often create substantial economic benefits but lack the predictable revenue streams that commercial lenders typically require.

Flood protection provides one example. A seawall or drainage project may protect industrial facilities, communities and public infrastructure simultaneously, but it may be unclear which beneficiaries should pay and how lenders could structure repayment.

Water security projects face similar challenges if revenue depends on consumption that varies significantly between normal and drought conditions.

Chow contrasted this with renewable energy financing, where power purchase agreements can provide lenders with long-term contractual revenues that allow repayment risks to be modelled more easily.

Potential approaches for water projects include minimum purchase commitments from industrial users, government guarantees, public-private partnerships and blended finance structures. These mechanisms could help convert some of the wider economic value provided by resilient water infrastructure into more predictable financial returns.

Efficiency and Alternative Cooling Technologies

Reducing demand could be as important as expanding supply.

Greater irrigation efficiency could limit competition between agriculture and industry, while wastewater recycling and circular water systems could reduce industrial dependence on freshwater sources.

Data centre operators may also increasingly consider cooling technologies that use less water. The choice of cooling system involves trade-offs between water use, electricity consumption, climate conditions, operating costs and facility design.

For companies, this means water-use efficiency may become an increasingly important element of sustainability strategies alongside energy efficiency and renewable power procurement.

It could also influence environmental disclosures. Companies operating in water-stressed locations are facing growing expectations from investors and other stakeholders to identify water dependencies, assess physical risks and explain how those risks are being managed.

Ecosystem Protection Enters the Equation

Sudhir Sharma, Regional Coordinator for Finance and Economic Transformation at UNEP, argued that infrastructure planning should also consider the ecosystems that ultimately provide water.

Water systems are often evaluated in terms of reservoirs, pipelines, treatment plants and distribution networks. However, degradation of watersheds, pollution and climate impacts can reduce both the amount of water available and the proportion that is suitable for use.

Sharma said water pricing therefore needs to reflect not only the infrastructure required to distribute water, but also spending on ecosystem protection, climate adaptation and pollution management.

Better disclosure and coordination could also become important as water risks cross administrative and national borders. Shared standards, compatible data and connected early-warning systems could help governments and businesses prepare for floods, pollution incidents and supply disruptions.

Water Becomes an Industrial Competitiveness Issue

Thailand’s high-tech expansion illustrates how water security is becoming closely connected with industrial policy.

The country continues to attract significant investment in digital infrastructure and advanced manufacturing, but supporting those industries requires reliable electricity, land, transport networks and increasingly secure water supplies.

Addressing the challenge will therefore require more than expanding reservoirs or pipelines. Water efficiency, wastewater reuse, ecosystem protection, resilient infrastructure and financing structures capable of supporting long-term adaptation will all play a role.

For investors and companies entering Thailand’s growing technology sector, water availability is likely to become an increasingly important part of project planning and risk management. For policymakers, the challenge is ensuring that industrial growth does not create unsustainable competition for a resource that remains essential to agriculture, communities and ecosystems.

Source: www.eco-business.com