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.
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Tuesday Re-Cap @ World Water Week

Here’s a quick update from today’s events. Another day of unexpected insights, great conversations, and total exhaustion. Wouldn’t have it any other way! The themes highlighted below happened to come up several times throughout the day, which made me think that they were worth sharing…

1. Be provocative – Today during one of the sessions, Ned Breslin activated the audience by challenging the idea that data collection was the ‘answer to the problem’, by saying that we needed to do something with the data puke. This totally caught me off guard, and I think sort of grabbed the audience and shook them a little. I felt bad for the speaker following Ned, since the speaker had to go right back to talking about data… woops! Ned’s comments though set the tone for the rest of the session by really asking people to move beyond patting each other on the back and trying to apply the ideals of open data sourcing with action. Later in the day, the same idea of provocation came up with the “inward investment in agriculture” session, which sought to take a critical eye to the framing of land grabbing as 100% negative. The panel, comprised of African leaders, international NGO reps, European government workers, and international financiers, was in general pro-land deals, insofar as the deals are just, sustainable, and enfranchising. This is not a perspective that is heard lately in the media, and I liked the discourse. Great, new thinking.

 

2. Everybody knows the value of water…. ? – During the ‘open data’ session this morning, one of the panelists mentioned that everybody knows the value of water, and I balked. This is not the case at all – everybody may need water, and everybody may think they value water, but very few pay a price that reflects its scarcity or criticality for our survival. I challenged the speaker on this point – but time elapsed before we could really discuss things. The same theme emerged later during the ‘inward investment’ session, when I suggested that the discussion of land grabs must be accompanied by the inclusion of water rights, particularly water as a property right (from the David Zetland school of thought). This spun the conversation up in a dynamic way…. right when the panel was ending! Not enough time to really get into water pricing and the granting of water property rights as a vehicle for sustainable water access, but such is life 🙂

 

3. Leverage your network, and if you don’t have one, create oneThe past few days I’ve realized the power of Twitter. This sounds silly, but the fact that I have had the opportunity to connect with multiple people (including representatives from the US State Dept., World Bank, and the directors of Water for People, and Circle of Blue) simply because I do something that is freely accessible (that is – tweeting) is pretty phenomenal. I’ve invested a lot of time in blogging, twitter, and other internet-based ‘networks’, but the fact that I’m known as the ‘twitter-guy’ at World Water Week gives me pause. The key reason that I’m known for this is because I decided to do it. Someone else could decide to madly tweet throughout the sessions also (which would be great to have the company!), and they might suddenly be encountering the people and organizations that are shaking things up in the water world.

 

Tomorrow I hope to keep up the provocation, networking, and engagement – despite my inevitable zombie walk as a result of tonight’s late hour 🙂

The QANAT: June 9-15, 2012

What is The QANAT? A weekly digest of highlights (from news websites, blogs, etc.) related to water security, broken up by topic.

The QANAT is named after an ancient water supply system comprised of a series of vertical shafts that drain into a long horizontal tunnel, connecting a mountain aquifer to a community, field, or livestock pond.  Check the wikipedia page for an excellent overview.

WATER SUPPLIES

Water Plan to take effect by 2012China Daily  (June 11, 2012)

 A policy featuring the principle of water rights is undergoing a test run in Zhangye, Gansu province. Farmers there are given a water quota based on the scale of the land they are cultivating and the types of plants they grow. If they use less water than they are given, they can trade the quota left for money.

    • Pat’s thoughts: Amazing. I can’t believe China is leading the charge on this. I’m very interested to see how well this works.
Smart hand pumps promise cleaner water in Africa. BBC News  (June 8, 2012)

…researchers at Oxford University have developed the idea of using the availability of mobile networks to signal when hand pumps are no longer working. They have built and tested the idea of implanting a mobile data transmitter into the handle of the pump.

    • Pat’s thoughts: Mechanical training of local community members should be an integral part of this; otherwise there’s (yet another) bottleneck with the external aid community.
Officials call for action as Bethlehem villages run dry. Ma’an News  (June 11, 2012)

Without water, and without… water rights, there can be no viable or sovereign Palestinian state,” Attili warned.

    • Pat’s thoughts: True. But there would be very little to stop Palestinians from drilling new wells, if Israel Defense forces were to withdraw from Palestinian lands and functionally eliminate their ability to monitor these activities.

CONFLICT

Dams and Politics in Turkey: Utilizing Water, Developing Conflict. Middle East Policy Council  (2012)

On July 11, 2009, the government of Turkey announced the construction of… eleven dams in the Hakkari and Sirnak provinces along the border with Iraq and Iran. These dams are not constructed for hydroelectric power purposes. Neither will they be used for irrigation, since the area is sparsely populated… These additional dams are being constructed as a wall of water, with the sole purpose of making it difficult for PKK guerrilla fighters to penetrate Turkey’s borders.

    • Pat’s thoughts: Very interesting. If this assertion is true, then this is a blatant use of water infrastructure as primarily a defensive measure. Can anyone think of instances where this is the primary use of the infrastructure?

ECONOMICS

As water bills rise, utilities struggle for funds. Reuters  (June 12, 2012)

About 85 percent of respondents said average water consumers had little to no understanding of the gap between what they pay and how much it costs to provide water and wastewater services.

    • Pat’s thoughts: Let prices rise to reflect costs and the consumers will realize how much water is worth.

AGRICULTURE & LAND

Land and Rio+20: Protecting an Irreplaceable Resource. IFPRI  (June 13, 2012)

Called land degradation and, in arid and semi-arid regions, desertification, this phenomenon leads to an annual loss of 75 billion tons of fertile soil. “About 24 percent of global land area has been affected by land degradation,” writes IFPRI Senior Researcher Ephraim Nkonya…

    • Pat’s thoughts: This is a sleeping dragon in terms of potential impact on global food supplies. Its definitely an awake dragon for the small-holder farmers throughout currently Africa dealing with this. For more on this, check out David Montgomery’s “Dirt: The Erosion of Civilization
Squeezing Africa dry: behind every land grab is a water grab. GRAIN  (June 11, 2012)

Those who have been buying up vast stretches of farmland in recent years, whether they are based in Addis Ababa, Dubai or London, understand that the access to water they gain, often included for free and without restriction, may well be worth more over the long-term, than the land deals themselves.

    • Pat’s thoughts: Fantastic work here. Henk Hobbelink (GRAIN’s director) contacted me sometime ago about the issue of land grabs and since then has produced this great piece. I’ll be digging into this over the weekend and expect to share more detailed thoughts with you then.