Is privatisation and water pricing a sensible policy?
Apply the food model to achieve water security
PARTH J SHAH
The Financial Express , March 22, 2005
Water is indeed essential for survival. But so is food. Should food be priced? Consider how we have organised the food sector to assure that everyone has some minimum quantity of food. The production of food is entirely in private hands-from raw food to processed food to prepared food. Those who can afford to do so buy their food at market-determined prices. For those who cannot, we have the public distribution system (PDS) to provide subsidised food.
Given PDS inefficiencies, we are moving towards a food stamp system, the sooner the better. In sum, we have achieved food security by keeping the production private and consumption at market prices for those who can afford it; for the rest, consumption is subsidised. Can we apply our food model to achieve water security?
I think so. The only hindrance is the mindset. It did take a while for people to accept that food should be priced; hopefully the understanding that water should also be priced wouldn't take that long. Pricing of water, despite all the commotion and grand-standing, does not mean that the poor would lack access. Actually, many surveys suggest that under the current policy of free water, the poor pay a far higher price than the rich. Collectivised agriculture has never provided food security. Collectivised water is equally disastrous.
The three main uses of water are domestic, industrial and agricultural. Andhra Pradesh has demonstrated that participatory irrigation management (PIM) works: farmers form water user associations and take charge of maintenance of canal network as well as collection of fees for the water delivered. PIM should become the national model for management and pricing of irrigation water. Industrial water will be delivered by private companies for a fee. No one has any issue with private delivery and pricing here.
Domestic water consumption is by rural and urban households. Many small towns in Kerala have taken charge of their water delivery and pricing through water- user cooperatives. Olavanna in Kozhikode district has more than 25 cooperatives managing piped water delivery to households. Such village cooperatives are the most efficient means of domestic water delivery, where for-profit companies are unlikely to venture.
The primary issue for urban areas is not so much privatisation, but competition. The idea of handing over water delivery to one or two private companies is without real merit. Turning one government monopoly supplier into a private monopoly, or duopoly, is not much of an improvement. This type of uncompetitive privatisation should be avoided at all costs.
How do we create competitive delivery of urban water? Empower each ward of the city to contract with a company (government or private) for the delivery of water. A contestable market would emerge with multiple delivery companies. If a ward finds the company failing on its contract, it would be easier to find an alternative-a company from the neighbouring ward.
Those who cannot afford to pay the rate at which their ward has contracted for water delivery can be helped in at least two ways. One, decide on 'free' allocation per family and then pay for that amount of water from general tax revenue. The charges for the water consumed above the 'free' quota will be paid by each family. The second method is to subsidise only the poor. The ward identifies the poor families and pays for their water bill fully, or up to a specified limit.
Ward-level competitive and decentralised delivery and management of subsidies is the optimal solution. All households, whether poor or rich, are metered individually, or as a group determined by the ward. Many still think that metering water is a Herculean task. They forget that we meter every phone call made from each telephone line, when households have multiple telephone lines. Similarly, today's technology can meter water not only in each household, but also from each tap in the household! The issue is not of technology, but of mindset.
We did not achieve food security by putting government in charge of production and distribution of food. We did so by creating a system where those who can afford to do so buy their food in the market and those who cannot pay a subsidised rate. A similar system would help us gain water security. Denationalisation and community stewardship is the remedy.
First, allocate permanent water rights by firming up current project allocations ( FE, Feb 22) and then put the delivery of water in the hands of communities, cooperatives, or companies. There is no free lunch or drink!
The writer is president, Centre for Civil Society, Delhi
Community rights are vital for ecology and democracy
The language of the 'price' of water has emerged in the context of water privatisation. Ecologically and culturally speaking, water is priceless. When society stops treating it as priceless and stops conserving every drop, society ends up polluting and over-exploiting this precious resource. This is how we have created a water crisis.
Now we are being told that putting a 'price' on water is necessary to overcome the crisis and provide clean drinking water to all. Privatisation of water services, and commodification of water is being offered as a solution by the World Bank, ADB and other donors.
There are a number of flaws and fallacies with the paradigm of water privatisation.
The current push to privatise water is a recipe for destroying our scarce water resources and for excluding the poor from their water share. Parading as the anonymous market, the rich and powerful use the state to appropriate water from nature and people through the prior-appropriation doctrine. Private interest groups systematically ignore the option of community control over water. Because water falls on earth in a dispersed manner, because every living being needs water, decentralised management and democratic ownership are the only efficient, sustainable, and equitable systems for the sustenance of all. Beyond the state and the market lies the power of community participation. Beyond bureaucracies and corporate
power lies the promise of water democracy.
Water is a commons because it is the ecological basis of all life and because its sustainability and equitable allocation depend on cooperation among community members. Although it has been managed as a commons throughout human history and across diverse cultures, and although most communities manage water resources as common property, or have access to water as a commonly shared public good even today, privatisation of water resources is gaining momentum.
First, water is a common resource, a public good. Privatisation in effect is 'enclosure' of the water commons, with inevitable consequences of exclusion of those who cannot access the 'water market,' due to lack of purchasing power. Instead of leading to equitable distribution of scarce resources, privatisation rewards the rich waster, and punishes the poor. It creates a hydrological divide, taking water from poor rural regions to rich metropolitan cities and within cities, to rich localities.
The 24x7 project for south Delhi being financed by the World Bank with a $110 million loan, and the Sonia Vihar plant, which will serve south Delhi with commodified Gangajal brought from the Tehri dam is an example of this 'cherry picking' of profitable customers. The Delhi privatisation also exposes the myth of 'full cost recovery'.
According to this myth, prices of water must go up because private investors must get a return on their investments. However, all investments related to the Sonia Vihar plant, being contracted to Suez, the world's biggest water corporation, have been made by the public. The company has made no investment. It was paid Rs 200 crore by the government, when the Jal Board could have built it for Rs 100 crore. If the 'full cost recovery' argument had to be carried to its logical conclusion, Suez owes the people of India Rs 1 trillion for the public expenditure on Tehri Dam, the Ganga canal, new pipelines from Murad Nagar and the plant at Sonia Vihar.
Increase in rates, does not reflect costs of operations and maintenance either. The rate increase announced by the Delhi government will mop up 10 times more than is needed to run water supply. This 10-fold increase is not necessary for running a public service, but for guaranteeing super profits to greedy corporations, through the pressures of the World Bank.
Creating enclaves of water markets for the privileged, with huge subsides and a huge debt burden, wil not solve the water problem for the poor. We need water democracy, not water privatisation.
Community rights are necessary for both, ecology and democracy. Bureaucratic control by distant and external agencies and market control by commercial interests and corporations create disincentives for conservation. Local communities do not conserve water or maintain water systems if external agencies-bureaucratic or commercial- are the only beneficiaries of their efforts and resources.
Higher prices under free-market conditions will not lead to conservation. Given the tremendous economic inequalities, there is a great possibility that the economically powerful will waste water while the poor will pay the price.
The writer is director, Research Foundation for Science, Technology and Ecology, Delhi