Scarcity pricing will not solve water crisis

India needs holistic conservation efforts and equitable resource management.

A factory using a water-intensive chemical process in Gujarat faced a challenge as summer began. An assured industrial supply of water was not forthcoming. Despite efficient use and recycling, there was an acute water shortage, which threatened to shut down the factory. Resorting to buying tanker water at Rs 1500 for 5000 litres became necessary, with the manager willing to pay even more. He needed perhaps hundreds of trucks per day. This high demand presented an opportunity for local farmers, most of whom had borewells on their farms. Their own wells irrigated their crops, but they found selling water to the factory 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, simply because someone is willing to pay a higher price does not mean that groundwater can be depleted indiscriminately. The private gains from selling water are much smaller than the social loss of water tables. Secondly, diverting water from agriculture to produce industrial chemical products may be financially advantageous but not socially optimal. In that sense, the private ownership of borewells does not grant unlimited rights to over-exploit groundwater, especially with heavily subsidised electricity artificially reducing pumping costs. 

The above is a true story played out in thousands of different forms. If consumers in a rich country are willing to pay 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 the export of water, of which there is an acute shortage in India. Last year, India exported 22 million metric tonnes of rice, which earned about Rs 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 India is higher than what was earned in foreign exchange. The same is true for sugar exports. The argument for selling water-intensive crops to the highest bidder for their dollars is similar to industries buying water meant for farming from private borewells. 

It is not just on World Water Day, which is today, that we need to ponder 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 cooling. These power outages between 2017 and 2021 were estimated to be 8.2 terawatt hours of energy, or equivalent to the 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 to 12% in countries like India and China.

A country is called water-stressed if it has less than 1,700 cubic metres of usable water per person. India is much below 1,000. By comparison, the United States has more than 8,000 per person. India had more than 3,000 back in 1951. Clearly, a rising population is one of the causes of water stress. The continuing deterioration in the quality of existing sources of water supply due to inadequate water treatment and contamination, such as arsenic poisoning and fluoride poising, adds to the water stress. In a written reply to Parliament, the Union Minister for Jal Shakti said that arsenic was detected in groundwater in 230 districts and 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 over extraction 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 outages due to a lack of water for cooling thermal power plants.

Tackling water scarcity should be among the highest national priorities, requiring action at the policy level, across levels of government, from civil society, and collectively at the level of individual households. It should cover the following aspects:

Water conservation, including rainwater harvesting.

Improve the efficiency of usage, moving away from water-guzzling crops, or at least change the method.

Encourage reuse and recycling. Almost 90% of the water used, except for drinking, cooking, and bathing, can be recycled. Pune city has started several recycling plants, and citizens can summon a tanker of recycled water for free using an app.

We need a comprehensive policy and regulation for water governance. Do we allow unlimited groundwater extraction on private land?

Introduce technology to measure usage, detect, reduce, and stop leakages, or use satellite imagery to map water bodies. This also includes the rehabilitation of reservoirs and tanks, as has been done in states like Tamil Nadu by civil society.

Raise public awareness. Here the most promising way, whether to reduce usage of plastic, 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 children 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.

(The writer is a noted Pune-based economist)
(Syndicate: The Billion Press)