It’s time to treat water as an economic good

Water should be treated as an economic good, according to the 1992 United Nations Dublin Declaration. It has economic value for all of its competing uses. Considering the resource and financial sustainability aspects, water pricing is one way to address the above issues.

For a long time in India, water was considered a free good and governments only set the price of water in certain cases. Taking inspiration from the telecommunications and electricity sectors, this has now changed to some extent as the government has taken the decision to position water regulators. Ideally, water pricing should be effectively implemented by regulators in order to maintain the quality of supply and the efficient use of the water resource.

A strong pricing strategy must be in place for each state water regulator, ensuring uniform state water rates, subsidies, and other factors such as unmetered water , connection cost and metering. The tariff determination approach is normally based on the cost of the service or the ability of different users to pay for the service or a combination of both.

Moreover, in the context of water pricing, it is imperative to separate water users, domestic and non-domestic, and to design tariffs by category.

National water policy

At the central level, the 2012 National Water Policy (PNT) highlighted the need for regulatory bodies. The policy provides for a framework water law that will facilitate the establishment of regulatory authorities to plan, manage and regulate water resources.

Furthermore, it prescribes equitable access to water at an equitable price through an independent statutory water regulatory authority to be established by each state. To ensure efficient use of water in the domestic, agricultural and industrial sectors, a wide range of stakeholder consultations are also required at the state level.

The NWP defines the role of water regulatory authorities, but does not elaborate much on their functions. Their role would also be to advise government and other agencies to regulate water use, in addition to regulating water rates.

In the wide range of water pricing, the tariff system focuses on the different aspects of pricing as well as the involvement of multiple stakeholders in the water sector such as transport companies, utilities distribution, private operators and consumers.

Regulatory bodies

Under the tariff system, the regulator has the authority to authorize bulk water volumetric entitlement based on availability and duration.

Until a few years ago, Maharashtra was the only state to have a functional water regulatory authority since 2005. Following in Maharashtra’s footsteps, Uttar Pradesh has also enacted a law to establish a commission Water Regulator in 2014. Andhra Pradesh Water Regulator lacks power in various regulatory aspects and only has an advisory role. Similarly, the Gujarat Water Regulator, established under an Executive Notice, lacks a comprehensive regulatory framework.

Several other states such as Kerala, Jharkhand and Jammu and Kashmir have also set up water regulatory bodies. It should be noted, however, that not all regulators follow a similar framework.

For example, while most have the power to regulate the equitable distribution and quality of water and establish a tariff system, some have the power to regulate tariffs only in specific sectors (irrigation, industrial, domestic or their combination) and have no jurisdictional power. for the settlement of disputes.

The Punjab experience

Punjab was the latest to set up a water regulator, in 2020. It has the mandate to manage and regulate water use in the state to achieve sustainable groundwater management balanced with people’s livelihood needs. It can also establish standards for the optimal use of surface water.

Additionally, if water users do not meet individual targets through conservation measures, users will not be entitled to water credits to that extent, and will even be required to pay that amount to the Authority as part of its charges for the use of groundwater.

The regulator uses these groundwater usage charges to implement government conservation programs.

Unfortunately, the Punjab regulator has no mandate for water pricing. They do, however, undertake these steps using an indirect route through water conservation measures, forcing users to conserve water. If the water savings come, for example, from the agricultural sector, they can be reallocated to other sectors that have a high demand.

The establishment of independent water regulators with clearly defined roles to ensure the efficiency and transparency of the water pricing process is essential. There is a greater need for policy reforms and a solid framework, within which the regulator can plan, develop and deliver water services. If such reforms were synthesized, the water regulator would have a more important role than that of a mere adviser.

They can then establish tariff guidelines for water supply billing, provide a link between government, water utilities and consumers, advocate best practices in tariffs among different stakeholders, monitor the quality of supply, encourage water utilities to establish benchmarks for the quality of supply. , resolve disputes between stakeholders, etc.

These will ensure better water security for years to come.

Sarkar is an Emeritus Fellow of TERI, New Delhi and former Secretary, Ministry of Water Resources, Government of India; Tigala is an Associate Researcher in the Water Resources Division, TERI

Published on

June 17, 2022