Pakistan is confronting a complex water crisis. Ranked 5th amongst the 23 most water-insecure countries globally in the 2023 Global Water Security Assessment by the United Nations, Pakistan faces low water resource availability, intricate water governance, disparate access to safe drinking water, and limited storage capacity. With about 38% of domestic wastewater effectively treated nationwide, annual per capita water availability has dropped below 1,000 cubic metres – less than half an Olympic swimming pool – firmly placing Pakistan in the critical “water-scarce” category.
Over 90% of agricultural production depends on the Indus River basin, the country’s primary water source, whilst its 30-day water storage capacity is significantly below the 1,000-day benchmark recommended for arid regions. In 2021, Pakistan extracted 162% of its total renewable freshwater resources, highlighting the country’s challenges to achieving clean water and sanitation under Sustainable Development Goal 6 (SDG 6).
Water scarcity refers to insufficient resources to meet demand, whilst water insecurity includes concerns about quantity, safety, reliability and affordability, all vital for health, livelihoods and socio-economic progress.
Despite these challenges, Pakistan relies heavily on two water-intensive industries: textiles and tanneries, which together drive its exports and employ millions.
Can a critically water-insecure country reconcile its economic ambitions with its own environmental realities?
For the UK-funded Sustainable Manufacturing and Environmental Pollution (SMEP) Programme, implemented in partnership with UNCTAD, the answer lies in trialling bold and tailored solutions that aim to transform these water-intensive industries by embedding sustainable consumption and production practices (SDG 12) through ongoing technology and regulatory innovation, trials and adaptation.
Addressing the cost of growth: every drop counts
The numbers tell a sobering story. Pakistan’s textile and leather sectors contribute significantly to the national economy, with the textiles industry alone accounting for 8.5% of the country’s GDP. According to UNCTAD, these sectors generate over US$ 17 billion in export earnings, accounting for nearly 60% of merchandise exports.[1] They employ 40% of the country’s industrial workforce, with tanneries providing livelihoods for thousands and forming an essential link in global leather supply chains.[2] The country also holds a prominent position in the global cotton market, supplying over $3 billion worth of raw cotton, yarn, and fabric.[3]
However, these industries not only consume vast amount of water but also pollute waterways, posing a dual threat to agriculture – the country’s backbone of food security and its largest water user (93%). As industrial and domestic water demand rises to 15% this year (from a previous 2% and 5% respectively), agriculture faces the twin risks of water scarcity and contamination, amplifying the danger of food insecurity. Optimising efficiency in water-intensive sectors has never been so urgent.
Between 2020 and 2021, Pakistan produced 1.048 billion square metres of fabric, underscoring the vast scale of its textile industry. Dyeing processes for such production volumes are highly water-intensive, consuming up to approximately 200 tonnes of water per tonne of fabric – an amount that could meet the daily needs of over 1,000 people. Leather production, closely linked to the livestock industry in Pakistan, adds to this environmental burden through challenges such as chrome tanning, wastewater contamination, and water and energy-intensive processes.
External demand for sustainable practices is the main driver for these industries, including those in Pakistan, to review their practices.
The question of whether Pakistan’s most vital industries can adapt to a resource-constrained future remains at the forefront of SMEP’s work.
Rethinking manufacturing through circularity and innovation
From textiles to leather manufacturing, SMEP is supporting transformative pilot projects across Pakistan that promote sustainable water management (SDG Target 6.5), efficiency in water use (SDG Target 6.4) and circularity challenges in wastewater treatment and water quality (SDG Target 6.5). Whilst still in the early stages of implementation, these initiatives are trialling ecosystems and water-related solutions (SDG Target 6.6) to reduce water dependency, improve traceability, and create value from industrial waste.
In Pakistan’s textile sector, SMEP’s SAFECONOMY project is piloting locally fabricated Molecular Distortion Technology (MDT) to treat wastewater. This innovative method removes up to 98% of pollutants, enables 90% water reuse, and reduces energy use and emissions through solar-integrated heating. Tested at two textile factories, it aligns with international standards (e.g., Zero Discharge of Hazardous Chemicals (ZDHC)), and supports the dissemination of sustainable production practices within the industry.
To further promote efficient systems to capture value and promote circularity, SMEP efforts are also focused on producing recycled materials, such as yarns and fabrics, and extending the lifespan of imported second-hand clothes (SHC) through analysis and upcycle of tailoring offcuts. In collaboration with Reverse Resources and Pakistan’s National Textile University, SMEP is testing a digital traceability system to enhance textile recycling and optimise waste use.
By improving recycling efficiency, particularly for post-industrial textile waste (and soon, extending to post-consumer textile waste), these innovations address challenges such as sorting textiles by colour and content, (such as cotton or polyester), to reduce reliance on water-intensive processes. This approach not only eases the strain on Pakistan’s limited water resources whilst highlighting the challenge mirrored across other industries such as tanneries, where SMEP is harnessing opportunities to drive sustainable practices and scale Pakistan’s circular economy.
In the tannery sector, World Wide Fund for Nature (WWF)-Pakistan leads a consortium of research and development/academic institutions, a government-owned organisation and private sector to develop a SMEP-backed traceability system that ensure compliance with Pakistan’s National Environmental Quality Standards but also meets international industry standards like those of the Leather Working Group (LWG) and Zero Discharge of Hazardous Chemicals (ZDHC) Programme, and ISO standards for leather (e.g., ISO 14001 on environmental management systems (EMS)).
Although hides are a by-product of the meat sector in the country, traceability is crucial as 95% of hides and skins come from informal slaughter, with limited supply chain oversight. The proposed Digital Product Passport (DPP) system, delivered through a mobile and web-based app, combined with cost-effective tagging, could enhance transparency across the leather production process, from slaughter to export, ensuring compliance with European Union environmental regulations – a critical market for the industry. It also addresses key challenges such as chemical use, environmental impact, and occupational health, supporting the sector’s progress towards compliance with global sustainability and ethical standards.
Additionally, the project aims to advance cleaner production in the sector through recycling leather processing waste, such as trimmings, fleshing, and shavings, into water-resistant surfactants, promoting circularity and reducing landfill use.
To combat wastewater pollution, locally produced lipase enzymes are being introduced to replace toxic organic solvents and imported agents, enabling more regionalised supply chains, cleaner production and improved worker safety. Their local availability reduces costs, making them a more economical alternative to imported agents.
Nevertheless, project challenges persist as Pakistan’s tanneries continue to struggle with other areas of the value-chain, such as challenges in the phasing out of chrome-based tanning, due to the high costs and limited availability of alternatives. Energy-efficient solutions, including steam generators with scrubbers and potential solar water heating, are also being piloted through SMEP support to reduce reliance on natural gas.
Bridging national policy gaps whilst advancing global alignment
Scaling sustainable solutions remains a key challenge for Pakistan’s textile and leather industries. Whilst compliance with international standards has enabled access to premium markets, opportunities to strengthen implementation of domestic regulatory frameworks and incentivise sustainable practices in the industry remain.
Pakistan’s textile and leather industries, central to its economy, significantly depend on scarce water reserves, presenting challenges related to resource depletion and pollution.
On one side, global markets increasingly demand compliance with stringent environmental standards (e.g., European Union Corporate Sustainability Due Diligence Directive (EU CSDDD); on the other, the country’s chronic water scarcity and high levels of pollution threaten not only these resource-intensive sectors but also public health. With approximately 53,000 children under five dying annually from waterborne diseases, worsened by poor sanitation and unsafe water, the severe strain on Pakistan’s freshwater resources urgently requires industrial practices that reflect water’s true value as a precious and critical resource for long-term sustainable development.
Weak regulatory oversight and self-regulation have left industries grappling with the dual challenges of managing dwindling water supplies and mitigating their environmental impact, exacerbating economic and social risks.
Pakistan’s path toward sustainable manufacturing hinges on balancing economic realities with environmental responsibilities. Adopting Extended Producer Responsibility (EPR) in Pakistan could offer a pathway to reduce waste management burden on the government. However, implementing EPR in resource-constrained settings, like in Pakistan, requires addressing significant barriers, such as limited infrastructure, industry resistance, and enforcement challenges, whilst also incentivising producers to gradually adopt sustainable practices and invest in circular solutions. Tax rebates or duty exemptions on goods and services used in cleaner production technologies could play a key role in easing the transition for businesses, whilst co-financed pilot projects offer a practical model for sharing financial risks. Such partnerships, as modelled by SMEP and its partners on the ground, have the potential to showcase the economic viability of sustainable practices, fostering collaboration and trust-building with regulators.
Improving implementation and oversight is equally crucial. Pakistan has introduced voluntary compliance schemes, e.g., the Self-Monitoring and Reporting Tool (SMART) and international standards like ISO 14001, which encourage industries to monitor and improve their environmental performance. However, challenges persist, including the cost of enforcement and limited societal buy-in, which undermine the effectiveness of enforcement. Environmental regulations are often perceived as conflicting with economic growth priorities, contributing to resistance towards compliance and lower adherence compared to other policy areas. SMEP-supported pilot projects in Pakistan, currently in their implementation and testing phases, aim to address these gaps by showcasing how circular economy principles and sustainable manufacturing practices can reduce pollution and the strain on the country’s scarce water and resource reserves through innovative approaches towards regulatory compliance that drive economic growth, unlock trade opportunities, and contribute to improved health and living standards. These initiatives illustrate how sustainability can drive innovation and resilience, reframing environmental policies as enablers of industrial transformation and global competitiveness.
The stakes are global: redefining sustainability in a critically water-insecure world
Pakistan’s textile and leather industries are microcosms of the broader global challenges facing resource-intensive sectors.
As one of the largest textile exporters in the world, Pakistan’s role in the global value chain draws attention to stark inequalities in circularity: producing for exports whilst managing imported textile waste. Whilst this sector grapples with its own paradox, international markets demand higher environmental standards – the economic burden of which often falls disproportionately on producers in developing countries.
Pakistan is demonstrating the early potential for resource-intensive industries to transition to sustainable practices whilst adapting to local environmental constraints and global demand. Whether the country can scale innovation to transform its industries and whether the global market will support these efforts, remains an open question, but one that is essential for its progress towards the attainment of SDG 6 at scale. What is certain is that Pakistan’s path forward is a test for the future of sustainability in a world where every drop of water counts.
Read more on SMEP's Pakistan-based projects
Maria Durleva
UNCTAD Programme Management Officer
Elzette Henshilwood
SMEP PMA Portfolio Manager: Textiles and Tanneries
Review and formatting provided by fellow UNCTAD colleagues, Glen Wilson and Lorenzo Formenti, as well as SMEP PMA members, Amanda Dinan and Staci Warrington.
