The worth of water
Tim Chan Than lives inTuol Sen Chey on the outskirts of Phnom Penh, Cambodia’s capital.. A widow with three children, she earns about 6,000 riels ($1.50) a day for this. She lives nearby down muddy dirt roads, in a cluster of ramshackle huts of corrugated iron, salvaged wood and tarpaulins. Ms Tha’s life seems as miserable an example of urban poverty as could be found anywhere.

Another difficulty was to overcome the prejudice against running a public utility as a business. When PPWSA’s proposal for universal tariffs went to the cabinet in 1993, it was unanimously rejected. But Mr Chan earned the trust of Hun Sen, then one of two prime ministers, and, since 1997, the only, increasingly autocratic, one. His support has helped Mr Chan show that the poor will gladly pay for water if it is cheap, reliable and safe.

The water table in north-western India is falling at an alarming rate. The reason is politics. Bad politics. And the bad pricing that follows from it.

Am I sure it isn’t because of global warming, or climate change? Well, I can’t say I’m sure, because I’m not a climatologist, but here are the words of Matt Rodell, a hydrologist at NASA, the US space agency that mapped Indian water tables: “We looked at the rainfall record and during this decade, it’s relatively steady — there have been some up and down years but generally there’s no drought situation, there’s no major trend in rainfall. [...] We would expect the groundwater level to stay where it is unless there is an excessive stress due to people pumping too much water.”

And why were people pumping too much water? As an economist, I would suspect it had to do with the fact that the electricity for pumping was either free, as in Punjab, or hugely subsidised, as in most states of the country. And, with electricity being supplied by government entities, the pricing decision was fundamentally a political one. Groundwater, in any case, has no price attached to it – which is a fundamental disaster from an economist’s point of view.

When a good (or service) is under-priced, supply will overwhelm demand. There are only two ways of dealing with this – one is to ration the good; in other words, construct a political framework as to how to allocate the resource. The other is to allow the price to rise…

However..
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Second, water is not like oil – it is like gold – from a commodity perspective. All the water that has been on earth from day one continues to reside on earth even today – the forms may change – sea to glaciers, back to sea, etc – but not a single molecule of water has been destroyed on earth. It is not possible to destroy water.
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Yes, it’s not possible to destroy water, but it is very much possible to pollute water and make it unfit for consumption. Ever heard of dead zones caused by runoffs from chemicals used in agriculture? Shouldn’t there be no dead zones, given that we’re living in the wonderful age of science and technology, and with so much information at our hands?

You do tend to get carried away with making certain assumptions in your statements or ignoring certain facts, with all that certitude that comes with the ideology of blaming the state for all ills.

I agree with you that water scarcity may exist in the future, just like it does today, even in Mumbai. But, the cause is not an actual “shortage” of water but wrong price signals and market domination by one player – the state.

First, if you look at the Cambodia model – in Phnom Penh, 97% of water lines are metered – up to a certain consumption level, you are not charged anything – and then above that level, there is an inverted price structure, where the more you consume, the more you pay per unit – two advantages of this model – the poor get access to the same quality of potable water as the rich and the inverted structure ensures that all the water is paid for, and second, the pricing gets you to conserve water.

Second, water is not like oil – it is like gold – from a commodity perspective. All the water that has been on earth from day one continues to reside on earth even today – the forms may change – sea to glaciers, back to sea, etc – but not a single molecule of water has been destroyed on earth. It is not possible to destroy water. Therefore, the policy framework has to be different – starting from the premise that there is sufficient water for 6bn people, for 12bn people, etc – it is just the form of consumption and storage and recycling that becomes important.

Therefore, the pricing models for water is what is the most critical part of policy making – and, it is useless to argue, as the jholawallahs do, that water is a right that you should not have to pay for. Food is equally a right (from a life persepective) – yet you pay for it, right? Why should water be different – it is just a different food group.

Second point and equally important point – the poor already pay for water, in more heinous ways – either, via extortion rates, to the water mafia in Mumbai or by the cost of time and health by walking 5-20kms each day for water – that also has a cost. And, these are fungible – if the woman of the family did not walk 20kms every day, she could be more productive in other ways, increasing income for her family – so, there is a putative and direct money cost. Never figured out why the jholawallahs do not get this simple argument.

Anyway, the main point is there is sufficient water for everybody and there will be sufficient water for everybody on this plant for the foreseeable future – they key is to get the price model right.

I will get off my soapbox now, thanks!

Cheers

Having said that, I am not entirely certain that there will be no scarcity…or to be more precise, I am not entirely certain that the population will have *access* to clean and safe water without doing something dramatically different.