BY KATRINA HAMLIN

A dispute over water shut down India’s prized tech hub of Bengaluru. It is a sobering reminder that environmental crises are costly, and indiscriminate. Multinationals like Accenture, Samsung, and Thomson Reuters suffered disruption; India’s flagship IT giants including Infosys and Wipro closed their offices for an impromptu holiday. Although the city’s top industry is hardly water-intensive, it is nonetheless far from waterproof.

A century-long spat over supplies from the nearby Cauvery River escalated into violent protests this week in which at least one person died and hundreds were arrested: offices, transport systems and malls were all shuttered as the usually hectic hub was subject to a curfew. Some neighbourhoods remained in lock-down on Wednesday. The Associated Chambers of Commerce of India (ASSOCHAM) estimates that the disruption will cost as much as $3.7 billion in losses for the region’s business community.

Environmental risks are increasingly making themselves felt in the country. An earlier study by ASSOCHAM suggested that drought would cost the Indian economy as much as $100 billion in 2016. Meanwhile, air pollution cost the country the equivalent of 8.5 percent of GDP in forgone labour output and welfare losses in 2013, according to a World Bank report released last week.

A severe drought has certainly made the problem in Bengaluru worse. But higher water prices, tighter regulation and better management of natural resources could have averted the latest crisis. Global firms that have set up shop in the city will want to know that the government has a plan to address a problem that could significantly raise the cost and risks of doing business in the low-cost hub. Indeed, the fortunes of India’s $140 billion IT outsourcing sector depends on it.

First published Sept. 14, 2016

IMAGE: REUTERS/Sujay Wachasunder