Analysis: Scarcity Pricing Will Not Solve Water Crisis

Analysis: Scarcity Pricing Will Not Solve Water Crisis

India has only 2% of the world’s fresh water supply but 17% of the population. The present predicament of people in Bengaluru, skipping work to stand in long queues for a bucket of water, is a sobering reminder

Ajit RanadeUpdated: Wednesday, March 20, 2024, 11:19 PM IST
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A factory using a water-intensive chemical process in Gujarat had a problem. It was the onset of summer. The assured industrial supply of water was not forthcoming. Despite efficient use and recycling there was acute water shortage, which threatened to shut down the factory. The manager had to resort to tanker water, buying at the rate of 5000 litres for about Rs 1500. He was willing to bid even higher. He needed perhaps hundreds of trucks per day. This was good news for farmers in the neighborhood, most of whom had borewells on their farms. Their own wells supplied water for the crops they were growing. But selling water to the factory was more lucrative. This was a win-win situation, with the factory continuing its profitable production and farmers getting more money from selling water.

This is, however, not a win from a social point of view. Firstly, just because someone is willing to pay a higher price, it does not mean that ground water can be depleted indiscriminately. Private benefits are much smaller than the social loss of water tables. Secondly, diverting water from food crops to produce industrial chemical products might make private sense, but is socially not optimal. In that sense the farmers’ private ownership of borewells do not give them unlimited rights to overexploit ground water. Highly subsidised electricity makes pumping out water artificially cheaper in any case.

The above is a true story played out in thousands of different forms. If rich country consumers want to bid a higher price for India’s basmati rice, can we increase our exports of rice indiscriminately? Normally all export restrictions on farm output should be relaxed, if it helps increase the farmers’ incomes. But in this case, it amounts to export of water, of which there is acute shortage in India. Last year India exported 22 million tonnes of rice which earned about 90,000 crore in foreign exchange. But it also amounted to an export of at least 88 trillion litres of water. The scarcity cost of that water for our country is much more than what was earned in foreign exchange. The same is true for sugar exports. The argument of selling water-intensive crops to the highest bidder for their dollars is similar to industry buying water from private borewells which are meant for farming.

It is not just on World Water Day, March 22, that we need to ponder on water scarcity. India has only 2% of the world’s fresh water supply but 17% of the population. The present predicament of people in Bengaluru, skipping work to stand in long queues for a bucket of water, is a sobering reminder. A few years ago we had water trains running to Latur district in Maharashtra, making over 100 ferries of half a million litres each. Water shortages have even led to shutdowns of thermal power plants, since there wasn’t enough water for the cooling. These power outages between 2017 and 2021 were estimated to be 8.2 terawatt hours of energy, or equivalent to power supply to 1.5 million households. The World Resources Institute says that bad water management can cause GDP losses to be as high as 7-12% in countries like India and China.

A country is called water stressed if it has less than 1700 cubic metres of usable water per person. India is much below 1000. By comparison the United States has more than 8000 per person. India had more than 3000 back in 1951. So clearly a rising population is a cause of water stress. To add to the population pressure is the continuing quality deterioration of existing sources of water supply. This results from inadequate water treatment, or even phenomena like arsenic poisoning. In a written reply in Parliament, the Union Minister for Jal Shakti said that arsenic was detected in groundwater in 230 districts, fluoride in 469 districts, covering most States across the country. Groundwater contamination is a serious phenomenon which makes the problem of water scarcity more acute. Adding to this is the mindless overextraction of groundwater from private wells, as exemplified in water sold for industrial use because it is lucrative. The overextraction is aggravated by cheap or free electricity (which ironically also suffers from power outage due to lack of water for cooling thermal power plants).

Tackling water scarcity must be one of our highest national priorities, requiring action at policy level, across levels of government, from civil society and collectively at the level of each household. It should cover the following aspects. Firstly water conservation, including practice of rainwater harvesting. Secondly improving efficiency of usage, and moving away from water guzzling crops, or at least changing the method. Thirdly encouraging reuse and recycling. Almost 90% of water use, except drinking, cooking and bathing can use recycled water. Pune city has started several recycling plants, and citizens can summon a tanker of recycled water for free using an app. Fourthly we need a comprehensive policy and regulation for water governance. Do we allow unlimited groundwater extraction on private land? Fifth, is the introduction of technology to meter usage, detect, reduce and stop leakages, or using satellite imagery to map water bodies. This also includes rehabilitation of reservoirs and tanks, as has been done in States like Tamil Nadu by civil society. Sixth is raising public awareness. Here the most promising way, whether to reduce usage of plastic, or burning of firecrackers, or conservation of water, is through the minds of young school students. An extensive campaign on raising water stress consciousness among children starting even at the kindergarten level will have the maximum impact in the long run. A recent Tata commercial showing kids singing nursery rhymes (Jack and Jill went up the hill to fetch a pail of water, but there was no water) was an example of a very effective advocacy campaign for water stress awareness. On this World Water Day, let us reiterate our commitment to conserving our most precious resource.

Dr Ajit Ranade is a noted Pune-based economist. Syndicate: The Billion Press (email: editor@thebillionpress.org)

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