Should Water be Priced?

On Thursday I attended the high-level panel on “feeding the billions“. Based on comments by the panelists that were hinting at the importance of “valuing water”, I wanted to get an unequivocal answer to whether or not water pricing was a good approach to manage water scarcity.

2012 Stockholm Water Prize Laureates Seminar. Copyright Patrick Keys, All Rights Reserved.

So, rather than clumsily ramble through a question, I wrote the question out in specific words to try and avoid any weaseling in the responses that I received. It’s not often you have such a high-powered captive audience, and I wanted to make the most of it!

The Question

“There has been a lot of discussion about how food production systems operate in a distorted market. Several people have pointed out that the market needs to allocate food more efficiently and to reduce waste, but cannot do so without a signal of the scarcity of its most valuable input – water. Acknowledging that it will inevitably be a challenge from the human rights dimension, should irrigation water be priced at a nontrivial amount to help manage water, yes or no, and why?”

The Responses

And, here are the video responses in the order of their replies.

Professor Emeritus Tony Allan, Kings College London

Professor Johan Rockström, Stockholm Resilience Centre

Dr. Colin Chartres, Director General, International Water Management Institute

Professor Emerita Rita Colwell, University of Maryland

So interesting to say the least! No consensus, some equivocating, but also some opinions.

Rationing vs. Pricing

Interestingly, the recipient of the Norman Borlaug Award for Field Research and Innovation award Dr. Aditi Mukherjee approached me afterwards and said that pricing water is simply not possible in many developing countries, i.e. India.
She suggested that rationing can achieve the same scarcity signal to a market as pricing does, but that rationing has the characteristic of being politically feasible whereas pricing is not. Now like the panelists, Dr. Mukherjee is very much an expert in her own discipline. That does not mean I cannot disagree, but I am certainly inclined to trust that what she says is fundamentally true.

A signal of scarcity is needed

Another key point she mentioned was that the discussion of pricing agricultural water for subsistence is perverse when considering the food waste and overconsumption in the developed countries. I agree. But, overconsumption is fueled by ready access to cheap food, which is in turn made cheap because the input water has low or not cost. One way (pricing) or another (rationing), any effort to increase water and food security must provide for the scarcity of water to be signaled to the consumer market.