Water for people.pdf - WHO Thailand Digital Repository

3 3 8 / M A N A G E M E N T C H A L L E N G E S : S T E W A R D S H I P A N D G O V E R N A N C ERecognizing and Valuing the Many Faces of Wateralthough water has several characteristics that make itdifferent than other commodities, water-pricing reformsare affected by the same parameters as reforms in othersectors. A balance is sought between supply anddemand, and the market mechanisms can play animportant role in doing that, although governments mayneed to provide some form of check-and-control.For example, pricing for both use and pollution is levied in Croatia(see box 13.8).Table 13.5 illustrates the wide range of variation in waterpricing in developed countries of the world.The practical implications of water pricing are contentious inmany countries for the following main reasons:■ Water prices are expected to serve various and often conflictingpurposes, including: cost recovery, economic efficiency andsocial equity.■ Water provides several services: drinking water, water forirrigation, hydropower, navigation, fisheries, tourism, pollutioncontrol, health of ecosystems. Each of these services arerequired to be valued differently, although in some cases servicesare provided simultaneously. This raises the question of howjoint services should be valued and priced.Table 13.5: Comparison of water pricing in developed countriesCountry US$/m 3Germany 1.91Denmark 1.64Belgium 1.54Netherlands 1.25France 1.23United Kingdom 1.18Italy 0.76Finland 0.69Ireland 0.63Sweden 0.58Spain 0.57United States 0.51Australia 0.50South Africa 0.47Canada 0.40These figures are based on supply for consumers in offices occupying 5,000 m 2 of city spaceand using 10,000 m 3 /year. Developed countries show a wide range of variation in waterpricing, from the lower cost in Canada to five times as much in Germany.Source: Watertech Online, 2001.■ Water resources are of critical importance for ecosystems and allefforts to embody this value in a price are fraught withconceptual difficulty and are highly debatable in practice.■ Social acceptance of paying for water is often low because ofcustomary law and a long tradition of providing water at aminimal charge.■ Water prices are often made uniform across a country despitethe fact that marginal costs of water mobilization anddistribution vary between regions.■ There is often social strife and conflict between different waterusers within an area or between different regions within acountry, lobbying for favourable terms of water supply.■ It is in many cases practically or economically not feasible tomeasure actual use or consumption of water. In such cases,water pricing becomes approximate and somewhat vague.■ The polluter pays principle can often not be applied because ofuncontrollable (legal or illegal) water pollution.■ The user pays principle sometimes fails because of uncontrollable(legal or illegal) access to water resources.As reflected in the above, the problem of water pricing is partlyconceptual and partly institutional. At the Bonn Conference, theMinisterial Declaration acknowledged these problems, as did themajor groups.Role in regulating water marketsValuing water has an important role to play in regulating the watermarkets of the world. As mentioned before, in Chile, water rightscan be freely traded within the irrigation subsector, like real estateproperty rights. About 30 percent of the households in Amman,Jordan, have decided to obtain additional water from the privatemarket because accessible piped quantities are not sufficient. Thechoice to purchase water on the open market considersenvironmental and household characteristics and depends on thevalue prescribed to water by the households.Economic valuation of water is at the core of watermanagement: giving water a price helps to define how far we arefrom achieving the Millennium targets, and what economic effortsare needed. It helps to define a framework for sharing water inwhich all water users are fully responsible. It is an efficient tool, yetit has to be used with caution if water management is to promotethe human right to water.