Why the next decade will define Bangladesh’s industrial water security

Bangladesh's industrial rise – central to its ambition of becoming a middle-income country – is confronting a hard ecological truth. As the world's second-largest apparel exporter, the country's growth has been powered by textiles and garments, but at a mounting environmental cost. Groundwater tables are plunging, rivers are choking with pollution, and water – once treated as a free input – is rapidly becoming a strategic risk to industrial competitiveness.

At the heart of this reckoning is water.

More than 98% of industrial water in Bangladesh is extracted from groundwater. In major manufacturing hubs such as Gazipur and Savar, the water table is falling by two to three metres every year. Shallow tube wells have already run dry, forcing factories and nearby communities to drill deeper, driving up costs and accelerating depletion. Meanwhile, surface water bodies such as the Buriganga, Turag and Shitalakhya rivers remain heavily polluted by untreated industrial effluents. Studies suggest that over 90% of water bodies near industrial clusters are highly contaminated, making surface water unusable for production without expensive treatment.

For years, this crisis was largely ignored. Water was cheap, regulations weak, and enforcement inconsistent. But that era is ending fast.

From advocacy to action

In this high-stakes environment, the World Bank-hosted 2030 Water Resources Group (WRG) has shifted from traditional advocacy toward a mission-critical focus on circularity and industrial water reuse. The premise is simple but transformative: industrial wastewater is not a burden to be discarded, but a misplaced resource.

WRG operates as a neutral, multi-stakeholder platform, bridging public policy and private-sector execution. In Bangladesh's textile and apparel sector – where sustainability is now a prerequisite for market access rather than a voluntary corporate gesture – WRG has become a key convener.

Photo: Courtesy

Through the Bangladesh Water Multi-Stakeholder Partnership (BWMSP), WRG aligns global brands, local manufacturers, industry associations and government agencies around shared water goals. It also provides technical tools such as hydro-economic mapping, translating complex global Environmental, Social and Governance (ESG) requirements into practical, local roadmaps. This is particularly important for small and medium enterprises (SMEs), many of which lack the technical capacity to interpret international sustainability standards on their own.

One of the most significant recent developments is the formalisation of the Bangladesh Alliance for Water Reuse and Recycle (A4R) in 2024-25. Supported by WRG and more than 34 partners—including government bodies, brands, manufacturers, business associations, technology providers and civil society – A4R has emerged as a key engine for scaling a circular water economy in industry.

A "perfect storm" for industry

Bangladesh's industrial sectors are now facing a convergence of pressures that make water management an existential issue.

First, groundwater scarcity is no longer a distant threat – it is already disrupting production. Second, pollution has made surface water increasingly inaccessible. Third, water pricing reforms are on the horizon. The government is moving toward a groundwater usage tax and stricter tariff structures, which will significantly raise costs for inefficient factories.

Finally, global market access is tightening. Under the European Union's Corporate Sustainability Due Diligence Directive (CS3D), brands are legally required to ensure environmental responsibility across their supply chains. Factories that cannot demonstrate responsible water use, traceable data and effective wastewater management risk losing contracts in their most valuable export markets.

From pilots to scale

The good news is that industrial water reuse is no longer experimental. It is technically mature and increasingly viable economically – when three conditions align: reliable treatment to "fit-for-purpose" quality, predictable reuse demand within or near the factory, and an enabling policy and finance framework.

In Bangladesh, this transition is already under way. Many factories—particularly in textiles—are piloting recycling systems, reuse loops and improved treatment processes. However, most of these efforts remain small-scale and fragmented, delivering limited basin-level impact.

The challenge now is scale.

WRG is working closely with the government, international brands and industry bodies such as BGMEA to create the conditions for large-scale investment. Policy evolution is supporting this shift, including a draft Industrial Water Use Policy focused on optimisation and reuse, green and climate-resilient economic zone guidelines, and incentive frameworks linked to green finance. New instruments – such as wastewater reuse certificates and performance-based standards – are also being explored to unlock central bank green finance windows.

The role of PPPs

Public–private partnerships (PPPs) are emerging as one of the few mechanisms capable of scaling solutions at pace. By aggregating wastewater treatment and reuse across industrial clusters, PPPs can reduce unit costs, shift operational risk to specialised operators, and make projects bankable through long-term contracts.

Bangladesh's wastewater investment gap is estimated at $6.6 billion by 2040—far beyond the reach of public funding alone. WRG-supported PPP programmes are therefore blending public finance with private capital and technical expertise. Current initiatives include municipal wastewater PPPs in Gazipur, Common Effluent Treatment Plant (CETP) PPPs in Mirsarai, Jamalpur and Srihatta economic zones, and multiple factory-level pilots under the World Bank's Metro Dhaka Water Security and Resilience programme. Together, these aim to mobilise over $500 million to treat tens of millions of cubic metres of wastewater annually.

Momentum and gaps

Receptiveness to sustainable water practices is high and growing in Bangladesh's export-oriented sectors, particularly garments and textiles. Trade associations such as BGMEA and BKMEA actively participate in policy platforms, steering committees and pilot investments. Momentum is strongest where brand pressure, green finance and PPP frameworks align.

Yet adoption remains uneven. Smaller factories outside economic zones face persistent barriers: low freshwater tariffs, limited access to capital, skills gaps and weak enforcement. As EU rules tighten and buyers demand sensor-verified data, chemical traceability and credible reuse, these firms will feel the greatest strain unless they can connect to shared infrastructure and affordable finance.

A decisive decade ahead

Over the next decade, Bangladesh's industrial water management is likely to shift from fragmented, factory-by-factory compliance to programmatic, climate-resilient systems built around shared treatment and reuse, municipal–industrial partnerships, data-driven incentives and diversified water sources.

The direction is clear. The question now is speed and scale.

If policy reform, enforcement, finance and institutional capacity can move together, water circularity could become not a constraint – but a competitive advantage – for Bangladesh's industrial future.

Md Mahady Hassan is a Water Specialist, Country Coordinator, WRG Programme at the World Bank Group