Is privatisation and water pricing a sensible
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
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
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
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
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
There are a number of flaws and fallacies with the paradigm of water
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
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
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
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