Asia - It is a myth that the poor cannot pay for water

Floods in Thailand, rethinking the 200-year-old flush toilet, corporate approach to solving Asia’s water problems, decoding the ‘good practices’ in water governance, myths that plague healthcare in Asia, ripple effects of water woes…

These are only some of the presentations by Seetharam Kallidaikurichi, Director, Global Asia Institute, National University of Singapore, Singapore (http://bit.ly/F4TSeetharamK), listed in his ‘faculty profile’ page of the National University of Singapore site. It was a great pleasure, therefore, to meet up with Seetharam at Great World City, Singapore, and learn a lot about his work.

A new paradigm of “business unusual” is needed that can solve the Asia’s water and wastewater problems in a cost-effective and equitable manner, observes Seetharam. This will require a new form of partnership, called GCS; it is an innovative hybrid of the earlier models, with all three partners – government, corporate (public or private), and society – he explains, during the recent interaction with Business Line.

“In GCS, the government is not the service provider but the regulator that governs. The corporate can be either a public or private agency that has the capacity, autonomy, and accountability to deliver reliable services. The society proactively supports and monitors that the water reaches the poor at affordable prices, with reliable quality and most importantly ensures that customers pay the bills promptly.” Our conversation continues over the email.

Are we investing enough in water?

Certainly not enough. We need to invest more, and more importantly smartly in water, as there is a huge backlog of required investments. Water is life. In dollar terms, as per estimates made in 2008, nearly US$100 billion needs to be invested annually to improve water in Asia. (Please see: www.lkyspp.nus.edu.sg/iwp/Other_Publications/Public-Private-Sensex-April-June09.pdf.)

Is public spending on water in the right track?

Our research confirms that spending more money does not automatically solve the water problems. Before pouring more public funds into water, it is important for governments to set the right policies that create an enabling environment that will result in better services. The total investment needed to improve water services is well beyond the existing levels allocated by the governments in their budgets, if the current policies are pursued.

How can cost of providing water to the public be brought down without sacrificing quality?

It is clear that there is no international consensus on this issue. In some countries, water is regarded as a public good and is available for free. In other countries, it is heavily subsidised by taxpayers. The main reason for the prevailing unacceptable situation is widespread mismanagement of the water, including the view that water for domestic use should be supplied free of cost.

In my view, it is a myth that the people, especially the poor cannot pay for water. Evidence from research shows that once safe drinking water is provided in household taps in a reliable manner, people are willing to pay. In countries such as Singapore, water is not subsidised and is sold to domestic consumers at full cost. This has not created hardship for our lower-income families.

Are there innovative and effective pricing models for water distribution that you would like to discuss?

In a highly popular recently published book, “Running Out of Water,” Harvard Professor Peter Rogers emphasises that there is actually confusion about three fundamental concepts of setting tariffs for water. These concepts are cost, value and price of water. The cost of water comprises O&M costs, capital costs, opportunity costs, and costs of economic and environmental externalities.

The value of water includes the direct benefits to users, benefits from returned flows, indirect benefits, and even the intrinsic value of water for its own sake. The price is the tariff set by the political system, which may or may not include subsidies. Professor Rogers argues that a good tariff policy for water has to include social, environmental and equity considerations.

Any other points of interest?

There is an ongoing heated debate in the public domain about whether public private partnership or PPP is actually appropriate in water. In many countries, PPP in the water sector has been judged as Problem for the government, Pain for the poor and eroded Profits for the private parties.

Success is not determined by whether the water utility is public or private. Currently, the top three of the most efficient water service providers in the world, viz. Singapore, Phnom Penh, and Tokyo, are all in Asia and run by the government.

Private sector water utilities such as Manila Water and Jamshedpur’s JUSCO are also highly successful. Finally, civil society organisations in India have demonstrated how rural water supply and sanitation can be expeditiously and sustainably delivered through social mobilisation and innovative partnerships involving private companies.

This is where the GCS discussion becomes relevant.

D. MURALI

The Hindu

Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.