Preventing water misuse: Time to put the right value to water?

World over, water is grossly undervalued and not priced as per its real cost, this leads to an overexploitation and wastage of water in all sectors, especially in Agriculture (as discussed in earlier parts of this series). To add to these woes, water resources are depleting at an alarming rate, with India reporting a 64% decline in groundwater level. United Nations estimates that by 2025, 1.8 billion people would be living in countries with absolute water scarcity and two-thirds of the world population could be under water stress. Hence the value of water is increasing with each passing day and therefore its tariff should be determined by loading all cost elements such as purification, recycling, retreatment, storage, transportation, etc. into overall water price. This will encourage efficient water use and environmental sustainability.

Pricing: While it may be argued that charging for water is unfair considering that access to water was declared a basic right by the UN General Assembly in 2010, the reality is that its disciplined and responsible use is the only way to save and sustain water resources over time. Australia, Denmark and Germany are shining examples of managing this resource through increased usage efficiency and optimum water tariff.

Regulatory bodies in India could potentially develop a pricing model which promotes efficient use of water while ensuring that it is accessible to the underserved/underprivileged. Tariff should ideally be based on three parameters i.e. quantum of water consumed, use of best practices in water consumption and purchasing power of customer. Its applicability should cover all sectors i.e.  Agriculture, Domestic, Industrial cum Commercial.

  • Quantum/volume of water consumed: Should be standardized for a given customer segment but should vary across segments i.e. water allotted to a farmer for irrigation would be significantly higher than a Domestic consumer.

Differential tariff should be charged in a given segment based on volume consumed i.e. a large manufacturing plant would use more water than an SME, therefore it should be charged a higher tariff. Hence for a given category of customer, the price should increase in proportion to volume.

  • Use: Best practices (for water conservation) adopted by any customer should be rewarded with a lower tariff.
  • Affordability or purchasing power of a customer: Water is a necessity and basic right; hence, it should be made affordable to the under-privileged sections of society i.e. small land holding farmers followed by domestic users, large farmers and industry, in that order.

Subsidy: In most countries, water is provided by municipalities at subsidised tariffs. It is proposed to restructure the pricing model based on affordability and usage; a proposed framework of subsidy (comprising of both user category and water consumption) is laid out below.

 

Affordability

Usage

High

Medium

Low

Unrestricted

High Tariff

High Tariff

Medium Tariff

Managed

High Tariff

Medium Tariff

Low Tariff

Restricted

Medium Tariff

Low Tariff

Low Tariff

 

Water Tariffs and Water use efficiency

While some countries like Saudi Arabia, Cuba and Syria charge low tariffs to make water affordable for the poor, other countries charge a higher tariff to promote accountability and appreciation for this scarce resource. In 2019, Denmark charged an average tariff of $5.35/m3, Sweden charged $4.85 and Germany charged $2.55/m3

Germany is a classic example of water management through strong political will, owing to which the country boasts of lower per capita water use as compared to other developed nations. While forecasts made in the 1970s had predicted an increase in per capita water use to over 200 litres per day, the consumption in Germany actually decreased by about 13% from 145 liters per day in 199o to 127 litres per day in 2010. This was primarily due to increase in water tariffs. Today public water utilities in Germany abstract only three 3% of total renewable water resources.

A similar trend was observed in Hungary where an increase in water prices from €0.2 to €0.5 per cubic meter in the 1990s resulted in a decline in the country’s per capita water consumption from 160 litres to 100 litres per day.

 

Need for stricter water tariffs in India

While desalination, wastewater recycling and adopting less water intensive crops in agriculture are a few viable options to augment water supply, they may not help in driving effective water conservation in the country. As observed from above instances, water (mis)use has been controlled only when the water tariffs are raised considerably to ‘cost plus’ levels.

The increase in tariffs should be supported by building water conservation awareness in the communities and buttressing it with strong enforcement of regulations, noncompliance of which should lead to high penalties and other punitive actions.

Unfortunately, ‘free water’ and subsidized electricity are the populistic tools used in India to woo the voters, especially farmers, the reversal of which will require not only political will but also the fortitude to follow it through; the question is, do we (as a country) have the gumption to do it?

 

Note: https://socialissuesindia.wordpress.com/2017/12/27/alarming-fall-in-groundwater-levels-in-india/

http://www.fao.org/land-water/water/water-scarcity/en/

Such as drip irrigation, rainwater harvesting, retreating the wastewater before discharging etc.

https://tariffs.ib-net.org/sites/IBNET/VisualSearch/IndexCurrentUSD?Weight=0&ServiceId=3&Yearid=2019&perPage=50

http://www.ejbe.org/EJBE2009Vol02No03p91VASA.pdf

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