Small-clawed otters are an excellent biological indicator species, located at the top of the food chain and with a wide geographical distribution. They are highly sensitive to habitat disturbance — ranging from destruction to pollution — and their numbers give scientists an indication of the general health of their environment.

In the last 60 years, the range of the small-clawed otter has shrunk considerably, moving from west to east. The main potential threat to Asian small-clawed otters is destruction of habitats due to changing land use patterns and increased development. In many parts of Asia, the habitats have been reduced due to reclamation of peat swamp forests and mangroves, aquaculture activities along the inter-tidal wetlands and loss of hill streams. In India the primary reason for loss of habitats are tea and coffee plantation along the hills, as well as loss of mangroves in the coastal areas due to aquaculture, increased human settlements and siltation of smaller hill streams due to deforestation. Increased influx of pesticides into the streams from the plantations reduces the quality of the habitats.

The next important threat to Asian small-clawed otter is reduction in prey biomass due to overexploitation. Pollution is probably the single most serious factor causing decline in the population of many fish species. Reduction in prey biomass affects otter populations, and organochloric and heavy metal contamination interferes with the normal physiology of otters, leading to the decline in population.

It is unknown how many Asian small-clawed otters exist in the wild, but there have been periods of rapid population decline. Camera traps set to study fishing cats frequently capture shots of otters.

In 1981, a Species Survival Plan program was established for the Asian small-clawed otter, to be used as a model for other, more endangered social otter species. It was generally believed that otters would be difficult to breed reliably in human care, so work on appropriate husbandry procedures was begun on the small-clawed otters. Although not yet endangered, this is a valuable species to begin research on before breeding of other endangered otters was needed. By 1985 the first studbook was published and three years later a full master plan was developed. Intensive work has been done to learn more about the female reproductive cycle and the unique diseases to which this animal is susceptible.