How Artificial Intelligence Can Help Solve India’s Water Utility Problems

Commentary by Bhawna Prakash

Published October 23, 2024

Senior government and industry leaders will gather in Washington in late October for annual meetings between the World Bank and the International Monetary Fund (IMF). Water and digital solutions rank among the World Bank's top priorities under its Global Challenge Programs and are expected to be highlighted during the meetings.

India has a unique opportunity to further build on global momentum and use artificial intelligence (AI) to transform its water and sanitation sectors. National policies so far have been ineffective in technology integration with utilities at scale. However, AI can assist the government in overcoming challenges within the water, sanitation, and hygiene (WASH) value chain for utilities.

India should take three steps to modernize the WASH ecosystem: leverage and scale up AI to address nonrevenue water (NRW), augment private sector participation, and improve corporate reporting.

Setting the Context

NRW is water that is produced but cannot be billed because it is lost before it reaches customers or there is no mechanism to bill it. As of 2019, NRW costs the world $39 billion and India $5 billion annually. This issue arises from insufficient planning, faulty systems, inefficient utility operations-including theft, underbilling, and user nonpayment-and a lack of funding for infrastructure modernization. Indian utilities can leverage AI to identity redundancies and minimize NRW.

India's NRW hovers between 31 and 38 percent, exceeding the global average of 30 percent. The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0, covering 60 percent of the urban population, which is 22 percent of Indians, targets reducing NRW for cities to below 20 percent. However, this target is not mandatory but an incentive.

The Jal Jeevan Mission, launched by the Modi government in 2019 for rural areas, prioritized technology adoption to deliver tap water connection to every household and improve governance. NITI Aayog, the central policy commission, and various ministries and departments have developed India's national AI strategy, rules, and use cases. Simultaneously, states and cities are tackling their own water issues. For instance, Karnataka established an AI task force to monitor groundwater levels in Bengaluru. AI implementation for WASH, specifically for NRW, must be streamlined for efficiency.

Leveraging AI to Address NRW

There are existing use cases for reducing NRW using digital technologies. For instance, Japan was able to reduce its NRW from 22.0 percent in the 1970s to 7.3 percent in the early 2000s. To achieve this, Japan developed a national policy and guidelines for leakage control and prevention, as well as a robust enforcement mechanism. Advanced technological interventions, including acoustic methods, automatic leak detectors, data-triangulation detectors, Internet of Things sensors, and AI, were deployed to control water distribution systems.

Implementing a similar system in India will enable the government to identify leakages, enhance planning, reduce NRW, and earn lost revenue. This revenue could then be reinvested into India's underfunded water infrastructure, allowing for the expansion of services to communities currently lacking access to water and wastewater networks.

Reimaging Private Sector Participation

Increasing private sector participation in the sector is critical. A recent World Bank report highlights that the global water and sanitation sector faces an annual funding gap of $131.4 to $140.8 billion, with only 2 percent of investments coming from private players. To attract new investments, government policies, and programs must provide de-risking opportunities and implement innovative engagement models.

There are numerous global examples of effective public-private partnerships. Ofwat, the United Kingdom's water regulator, established a $522 million innovation fund to support AI-powered systems to improve the operational resilience of water systems with climate change.

The New York City Department of Environmental Protection and the Partnership Fund for NYC launched the Environment Tech Lab (ETL) in 2023 to leverage the global tech sector to solve challenges in its water and wastewater network. ETL is currently working with startup ecosystems to rapidly test, support, and incubate new technologies, including AI-focused solutions.

A national fund to encourage and de-risk private sector participation in WASH in India will go a long way. There are numerous private players equipped to implement solutions. The government, however, must also be mindful of supporting community engagement for successful implementation.

Improving Corporate Reporting on Water Resources

Data on water use is limited in India due to voluntary corporate environmental reporting mandates. The Securities and Exchange Board of India's Business Responsibility and Sustainability Report (BRSR) Core requires sustainability disclosures for the top 1,000 companies by market capitalization beginning in March 2024, including information on water and energy usage, waste, greenhouse gas emissions, and others. While a positive step, this approach excludes several companies and does not offer a solution for streamlining reporting.

Expanded and enforceable reporting could improve transparency. Advanced generative AI platforms could benefit both companies and regulators by improving sustainability reporting. Several technology providers are active in the space. For instance, NASDAQ's Environmental, Social, and Governance (ESG) AI solution builds on regulatory and voluntary reporting on ESG and is already being widely adopted in the United States. India can use a similar approach to modernize reporting, thereby making it easier for corporates to report and the government to assess.

AI can revolutionize the water sector, reduce costs, and increase access. To implement scalable solutions, policymakers should focus on unified legislation, NRW reduction using AI, private sector investments, and data reporting.

Bhawna Prakash is a senior fellow for water and sanitation with the Chair on India and Emerging Asia Economics at the Center for Strategic and International Studies in Washington, D.C.

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