RECENT years have witnessed rapid
increases in the cost of
investment in new irrigation
projects, while at the same time,
there has been a marked
degradation in water quality, a
slower growth in crop productivity
in irrigated areas and
increased competition for water
for non-agricultural uses.
These developments necessitate
clear water resource policies
that will maintain growth in
irrigated agricultural production,
facilitate efficient allocation of
water across sectors and reverse
the ongoing degradation of the
resource base.
Water is the most abundant element
on earth, covering
about 1,400 million cubic
kilometres (cii km), equal to more
than 70 per cent of the planet's
surface, of which only 0.003
per cent is actually useable - the
rest forming part of oceans
and polar ice caps. This implies
that in air average Year, rivers
supply over 40,000 cu km of fresh
water. Against this, human
society is able to abstract only a
little over 3,000 cu km
annually. This availability too is
limited by the fact that water
cannot be exported over long
distances.
In most countries, public
officials decide who gets water,
at what price and how it is used.
They assume responsibility
for building and operating the
necessary hydraulic infrastructure. The track record of such
administered systems, however,
has been far from satisfactory.
Despite growing scarcity and
the high cost of infrastructure,
water is typically underpriced
and used wastefully. The average
cost of water produced by
World Bank-financed water supply
projects (1966-1981) was
,about US $1.29 per 1,000 gallons
(one gallon is equivalent to
3.8 litres); the average tariff
was about US $0.69 per 1,000 gallons. Since the mean level of
unaccounted-for water was about
35 per cent, the effective price
was about us $0.45 for the same.
The existing uneven systems of
water distribution have
tended to favour the relatively
affluent. Wealthier farmers get
easier access to water rights.
Similarly, while better-off urban
residents in developing countries
enjoy access to cheap
municipal water, the poor have to
take recourse to expensive
private water venders. Dale
Whittington and his colleagues, in
Water Vending and Development:
Lessons from Two Countries,
note that households which
purchase water from private vendors pay two to six times more
permonth on air average- for
one-tenth as much water - than
households with municipal
connections.
Moreover, nearly half the world's
population, mostly in
developing countries, suffers from
diseases resulting from
insufficient or contaminated
water. According to the World
Health Organization, 2,000 million
people worldwide are at
risk from water-borne and
mod-borne diseases. These are also
the cause behind more than five
million deaths each year of
children. If we do not radically
change the way in which we use
water, we may find much of it no
longer useable - at least not 9
without expensive specialised
treatment.
There are several policy options for arresting degradation
and improving productivity in irrigated areas: technological
solutions, reform of public management of irrigation systems,
communal water management, establishment of tradeable
property rights in water and development of markets in water
rights. This article will concentrate on the last option.
Market-based allocation of water has the potential of securing
water supply for high-value uses, without the need for developing costly and environmentally damaging new sources of
supply. Moreover, if markets function properly, price signals
can provide the information needed for efficient water allocation. In most countries where water is costly or scarce, systems
of rights for water use have evolved implicitly through custom
or explicitly through regulations. These water rights specify
how water in a river is to be divided between alternative ends
such as industrial, agricultural and domestic, as well as
between individual users within a sector, such as water companies and farmers.
Worldwide, 69 per cent of water is used in agriculture, 23
per cent in industry and only 8 per cent for domestic purposes. Typically, the state owns the water and the hydraulic infrastructure for storing and conveying it (canals, dams, reservoirs) in order to ensure that the water becomes available
where and when needed, It also endows rights to individuals
or entities for particular uses.
The key characteristic of tradeable water rights is that these
are secure and can be traded under the guidelines established
within a legal, regulatory and institutional framework. Water
rights should be separate from land and thus may be traded
independently. Ideally, water rights should be sold at freely
negotiated prices to anyone for any purpose. Holders of tradeable water rights would be bound to follow laws and regulations such as those relating to water quality; in addition, there
may be requirements ensuring that a certain minimum flow in
a stream or a river is maintained for environmental reasons
and that third party water rights are not damaged by water
trade.
The enforcement of tradeable water rights - which can be
defined volumetrically (as a share of stream flow or stock of
water in a reservoir) - may be carried out by the same means
and institutions as conventional water rights. User associations can play a crucial role here, even acting as substitute for
formal legal action and serving as pressure groups to enhance
efficiency of the bureaucracy.
Tradeable water property rights endow water with an
implicit value that creates an inbuilt incentive to conserve
water and to put it to the most productive use. For example, if
farmers were able to sell their water rights at freely negotiated
prices, some of them might choose to generate extra income
by selling the surplus rights. If well-defined rights are established, owners would have an incentive to invest in water-saving techniques. Moreover, such a system would provide an
impetus to the efforts to battle degradation of water resources.
For example, a farmer at the head of the canal who
overuses water, causing waterlogging through excess
seepage and percolation, would conserve resources
if he could trade the excess water instead.
In addition to stimulating growth directly by
improving the productivity of water, tradeable water
rights can encourage investment and growth in
activities that require assured supplies of large quantities of water. These must assure investors that their
water rights will not be subordinated to those of
other users during shortages. It is interesting to note
that Chile's sustained annual growth of six per cent
in agriculture during the 1980s occurred despite the
absence of public investments in new hydraulic
infrastructure from 1975 to 1990.
In terms of moolah How much will new water supply and sewarage cost? |
|||||
1990 population served (millions) | 2000 total population (million) | Additional population to be served (million) | Assumed unit cost, US $/person | Total cost, US $ (million)' | |
Urban water supply | 1,089 | 1,900 | 811 | 130 | 105,000 |
Urban sewerage | 955 | 1,900 | 945 | 350 | 331,000 |
Total | 436,000 | ||||
Source: United Nations Economics and Social Council |
To allow water users to secure water on a permanent basis and
to facilitate water leasing, some countries have permitted
tradeable property rights in water: tinder Chile's 1981 water
law, the state grants users property rights to water without
charge. It auctions new water rights. Subject to certain regulations, these rights can then be sold to anyone for any purpose
at freely negotiated prices. They may also he used as loan collateral. By increasing the efficiency of water use through the
introduction of these rights and by placing decisions for
investing in water-related infrastructure in private hands, government investment has been drastically reduced.
In recent years, Mexico and several states in Australia have
established property rights to water. fit northern Colorado, US,
water brokers assist in millions of dollars of water trades annually and commercial banks routinely accept water rights as
loan collateral. Peru's 1993 constitution treats land and water
resources equally, permitting tradeable property rights to
water. Property rights may be given free of charge to those
who already hold water rights by custom or by licence. Rights
for unused water are auctioned to ensure that availability of
water to others is not reduced and the minimum ecological
flow is maintained.
The three major goals of India's national water policy -
conjunctive use, supplemental irrigation and switchover
to water-saving cropping patterns and irrigation technologies
cannot be achieved in an economic and institutional
vacuum. The System Of tradeable water rights might prove
beneficial here; but a realistic appraisal of the feasibility of
establishing and managing such a complex system in the
Indian context is necessary.
Traditional water-sharing arrangements and
distribution systems, capable of being developed
into water rights networks, could be studied --
for example, the 200-year old phad system in
Dhole (Maharashtra), the pani panchayat system
of Pone and the shejpali system of western
Maharashtra. Also, there are officially granted
non-transferrable water lease systems prevalent
in the deltaic regions of Orissa, West Bengal and
Madhya Pradesh.
In the proposed system of tradeable water
rights, there is the danger of widespread
monopolies. Such a possibility warrants an efficient regulatory
framework, which will also have to supervise the initial
allocation of the rights. Besides, there is sometimes art interdependence of water sources - Such as that between stream
flows and underground aquifers - which may require extensive and costly monitoring of the amount of water drawn from
each source. The impartiality and transparency of the procedure will be crucial for the acceptance of such a system.
Although many farmers see the potential benefits in
water trading, certain agricultural- rural interests have
opposed rapid privatisation of water trading, fearing
economic losses following massive transfers of water to cities.
Finally, there are the humanitarian, national security
and other beneficiary aspects of flood, pollution and
disease control along Water courses which should be given due
consideration.
The system of having tradeable property rights to water,
thus, assumes significance for India, where, as per the estimates of the Central Groundwater Commission, in January
1993, 324 blocks were suffering from over-exploitation of
groundwater. Studies by the Delhi-based Council for Social
Development have shown the emergence of a new class of
waterlords (similar to landlords) who appropriate the bulk of
the water in a region without paying charges. These grim realities should prod the government into a serious rethink of its
prevailing policies.
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