The issue of water in this part of the world is back in the spotlight with a case before the Permanent Court of Arbitration this week between Pakistan and India. Pakistan claims a new hydroelectric plant India is building on the Kishanganga River (known as the Neelum River in Pakistan) in Kashmir will rob it of water that rightfully belongs to it. This is the political reality of this water-short century. Water is becoming a powerful weapon of diplomacy, even of coercion, and a new point of dispute. And South Asia's geography, demography and climate portend a global problem. A security report from the US Director of National Intelligence released this year says that over the next decade ''many countries … will experience water problems - shortages, poor water quality, or floods - that will risk instability and state failure''. ''As a result of demographic and economic development pressures, North Africa, the Middle East and South Asia will face major challenges coping with water problems.''

Disputes are likely between countries, between states within countries, and even between cities and communities. Water shortages will probably drive nation states towards diplomatic solutions and to sharing agreements, the report says, but extremists will ''almost certainly'' target vulnerable water infrastructure. ''Beyond the next 10 years, water in shared basins will increasingly be used as leverage, the use of water as a weapon or to further terrorist objectives also will become more likely.'' US Secretary of State Hillary Clinton told her department: ''These threats are real.'' Already, water has become part of the terrorist call-to-arms. Alleged mastermind of the 2008 Mumbai attacks Hafiz Saeed has railed often against India for it's so-called ''water terrorism'', threatening ''water flows or blood''. Lashkar-e-Taiba, an outlawed terror group, regularly threatens to blow up India's dams, and violent condemnation of India's water policies is cheered on by a growing hard line.

Last year, Pakistani newspaper Nawa-i-Waqt urged the government: ''Pakistan should convey to India that a war is possible on the issue of water and this time war will be a nuclear one.'' Most experts argue a declared war between nations in the nearfuture is unlikely, but as pressure grows, smaller conflicts will flare across the region. The Strategic Foresight Group has postulated the idea of an ''arc of hydro insecurity'', stretching from Vietnam through China, South Asia, to Iran, Iraq and other Middle East countries, through to Egypt and Kenya in East Africa. Scarce water will drive up food prices, destabilise governments and spark mass migrations. A Dutch study found that by the middle of this century, shrinking glaciers will reduce the flow of water to the Indus by 8 per cent.

A Princeton study published in Science magazine last year found ''the observed precipitation decrease can be attributed mainly to human-influenced aerosols emissions''. Demographics are changing too. As India develops, a wealthier population will eat more meat, requiring more energy and water-intensive agriculture. Environmental author B. G. Verghese told The Age : ''Water, and the energy that comes from water, affects every household. If you have a 12-hour blackout, children cannot do their homework, factories cannot operate. If the well is empty and the women have to walk to the next village for water, mini water-wars break out between villages, fighting over the last bucket. ''More people will be killed by insanitary water than by all the sum total of all the wars and all the insurgencies that might be fought.'' Mr Verghese said while water will lead to disagreements between countries, and could spur a deterioration in diplomatic relationships, ''I don't think it will lead to war''.

''The only country that could go to war on this question is Pakistan, and Pakistan simply has no case.'' The current Pakistan-India water dispute is the sharp relief of a still-hazy problem. And it is a test of a decades-old water-sharing agreement that has withstood three wars, constant territorial disputes, nuclear tests and terrorist attacks. The Indus Water Treaty, signed in 1960, gives Pakistan rights over the Indus Valley's three western rivers. India controls the three rivers to the east. The treaty is important, in particular to Pakistan, which is downstream from India, and relies on its neighbour's adherence to it for survival. But the treaty is beginning to crack under new pressures, and Pakistan's increasing anxiety about its neighbour's activities on its watercourses.

India has no fewer than 45 dams or power stations completed, planned or proposed on Pakistan's western rivers, which Islamabad believes will give Delhi control over how much water flows over the border, and the ability to destroy Pakistan's agriculture, starve its people and ruin its economy. India dismisses Pakistan's fears as paranoid and without scientific basis. It says it has adhered to the treaty and dams do not affect its neighbour. But after 15 rounds of bilateral talks the parties are back in the Permanent Court of Arbitration next week. But India, too, feels vulnerable. There are rumours China might attempt to change the course of the Tsangpo/Brahmaputra River in Tibet. China has denied such a plan, but the idea worries India.