Thailand’s reliance on tourism as an economic driver is colliding with an underdeveloped water infrastructure, leaving popular destinations like Krabi and Samui vulnerable to droughts and supply shortages. Without decisive investment, the very foundation of the country’s tourism-led growth strategy is at risk.
A National Water Infrastructure Gap
Thailand’s water supply is split between Bangkok’s Metropolitan Waterworks Authority (MWA) and the Provincial Waterworks Authority (PWA). In 2018, the government launched a 20-year master plan to strengthen water resource management, but progress has been uneven. Bangkok operates four major treatment plants, including the Bang Khen facility (3.6 million m³/day), which draw from the Chao Phraya River. Rising sea levels have begun causing saltwater intrusion, threatening supply security.
In the provinces, limited budgets have left infrastructure vulnerable to seasonal flooding and poor distribution capacity. The gap is particularly stark in tourist-dependent islands, where booming demand clashes with outdated systems.
Krabi and Samui: A Case Study in Water Stress
Krabi and Samui are home to more than 20,000 hotel rooms each, with development accelerating to capture rising tourist flows. During the dry season, however, surging demand and insufficient rainfall have left local reservoirs nearly depleted. Residents now purchase water directly from private vendors, while hotels struggle to reassure guests.
The rainy season may provide temporary relief, but climate change is lengthening dry spells and intensifying the risks. Abundant monsoon rainfall is also poorly captured, with little storage or reuse capacity. Left unchecked, these shortages could undermine both tourism revenues and community well-being.
Four Priorities for Water Management
To address this crisis, policymakers and investors must adopt a comprehensive approach:
Demand Forecasting: Independent studies should project seasonal demand scenarios, quantify gaps against current capacity, and provide data for investment planning.
Investment Costs: Treatment and distribution requirements vary depending on technology choices—whether seawater desalination (reverse osmosis), rainwater harvesting, reuse, or conservation campaigns. Tariff structures will also shape feasibility.
Financing Models: For large-scale plants, the decision is whether to rely entirely on public funds or mobilize private capital under models such as Design-Build-Operate-Transfer (DBOT). Smaller facilities could be financed by hotel consortia through project finance structures, possibly bundled with renewable energy or recycling initiatives.
Long-Term Operations: Water projects must not end at construction. Continuous monitoring, leakage control, tariff collection, and reinvestment are critical to sustainability.
The Maldives offers a precedent, where eco-tourism resorts integrate desalination, renewable energy, and recycling. Thailand could replicate such models, aligning with its Bio-Circular-Green Economy (BCG) strategy.
Making Projects Bankable
If government budgets are insufficient, tariffs must be realistically set and enforced to attract investors. Project bonds could be issued in baht or hard currencies, with terms tailored to investor needs: fixed vs floating coupons, take-or-pay provisions, and clear allocation of risk among parties. Infrastructure funds could also pool multiple water projects, creating cashflow stability attractive to capital markets.
The Tourism Tax Debate
Foreign tourist arrivals reached 35–40 million in 2024, generating nearly 2 trillion baht in revenue.
The government is counting on tourism to lift GDP growth while broader productivity reforms tackle the “middle-income trap.” Yet unchecked growth strains limited resources, making sustainability urgent.
Calls are mounting for a tourism tax to offset the social and environmental costs of overtourism. A 300-baht levy approved under the previous government has yet to be implemented, with revenues earmarked for insurance rather than infrastructure. Future debate should revisit whether a dedicated “resort tourism tax” could fund water systems and eco-projects. Collection could occur at airports or via hotel bills, ensuring revenues flow directly into infrastructure for communities and visitors alike.
Toward Sustainable Growth
The water shortages in Krabi and Samui illustrate the broader tension between economic expansion and environmental limits. Tourism thrives on natural beauty, yet risks eroding it if infrastructure lags. By mobilizing investment, aligning financing models, and considering targeted taxation, Thailand can turn a looming crisis into an opportunity for green transformation.
If the country succeeds, it will not only safeguard its tourism industry but also set a precedent for sustainable infrastructure in Southeast Asia.
Note: This article was originally written in May 2024, based on data available at that time. While some figures may have since evolved, the structural issues and investment perspectives remain highly relevant today.
Dai Kadomae, CFA, CPA
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