Apply the food model to achieve water security

Monday, 21 March 2005
Parth J Shah
Financial Express

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!