The effects of climate change, rapid industrialization and population growth on water resources could lead to health and social issues that could cost billions of dollars annually, it said.
"If the present unsatisfactory trends continue, in one or two decades, Asian developing countries are likely to face and cope with a crisis on water quality management that is unprecedented in human history," Ajit Biswas wrote in the report.
The report, entitled "Asian Water Development Outlook," was submitted to the Asia-Pacific Water Forum in Singapore, which will discuss the issue at a summit in Japan next week.
The report also comes before a U.N. meeting in Indonesia next week to discuss a successor to the Kyoto Protocol on climate change.
"Water quality management has mostly been a neglected issue in Asian developing member countries. The annual economic cost is likely to be billions of dollars," Biswas wrote.
The report said massive urbanization will present new types of water-related challenges.
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In contrast to cities in developed countries such as Tokyo, developing countries have fallen behind in the collection, treatment, and safe disposal of wastewater, it said.
Climate change is likely to increase the frequency of extreme events like droughts and floods and introduce high levels of risks and uncertainties that the water industry may not be able to handle with confidence, Biswas said.
The report, written by a team of water specialists, covers 12 Asian countries: Bangladesh, Cambodia, China, Fiji, India, Indonesia, Kazakhstan, Pakistan, the Philippines, Samoa, Sri Lanka and Vietnam.
The ADB report recommends major changes in water governance practices in most Asian developing countries, and to look to successful models such as in Singapore and Cambodia which had improved monitoring of water consumption.
The report also called for countries to improve the accessibility of data on water quality.
(Reporting by Daryl Loo, editing by Neil Chatterjee and Sanjeev Miglani)
© 2007 Reuters