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Challenge of water pricing


July 5, 2016

Increasing urbanisation in Pakistan is exerting population pressure on the cities. The burgeoning population further limits capacity to utilise existing insufficient public services and infrastructure. This eventually leads to horizontal expansion of cities in the absence of any well-framed laws, and thus further constrains resources, which affect basic human needs and rights such as drinking water.

For example, the water quality has drastically declined in Faisalabad, the industrial hub of Pakistan. A survey-based research study, ‘Access to drinking water in urban Faisalabad: A cautious case for water pricing’ was published by LEAD Pakistan, in collaboration with the International Growth Centre (IGC) and University of Queensland, Australia. The study analyses the household water demand in the rapidly urbanising metropolitan city of Faisalabad. Its findings are based on the survey conducted by aforementioned organisations with a sample size of 1,200 households in Faisalabad.

The findings highlight that about 52 percent of the residents of Faisalabad municipality use unfiltered water for drinking and other household uses. These residents include people living in unplanned settlements particularly, in slum areas. It further reveals that water consumption patterns cannot be changed in Faisalabad through simple water pricing technique. However, it may help generate revenue for local authorities to improve infrastructure and services’ delivery.

According to the policy brief, “The sustainable use of water can be promoted through installing water efficient devices and launching educational campaigns promoting efficient use of water. Such initiatives can help promote long-term goals of sustainable water consumption in Faisalabad....this model ... can be implemented in the other cities in Pakistan”.

One must note that water, being a basic need for survival, is not sensitive to price. However, its usage may change in secondary activities, such as ornamental garden irrigation or swimming pools. The policy brief further reveals that households with higher incomes consume more water. It also informs that households that used to consume unfiltered water began consuming filtered water with an increase in income.

Access to water is another key variable that impacts water consumption. The policy brief says that communities living near water resources consume more water, as it takes less time and resources for obtaining water from clean sources ie filtration plants.

Water supply from the Water and Sanitation Authority (Wasa) and canal water are the biggest sources of unfiltered water. The price charged by Wasa is highly subsidised. According to its six-year business plan, the price charged by Wasa is 4.25 times lower than the ongoing market rate in Faisalabad. This low price has resulted in year-on-year deficits and requests for financial support by Wasa.

In addition, the recovery rate for payments has been around 30-35 percent for the past 30 years. This low recovery rate and below market pricing have resulted in serious problems for Wasa, such as degrading water infrastructure, poor quality water and lack of maintenance.

The nexus of Wasa’s inability to generate enough revenue, low water price and poor quality of water needs to be addressed in an integrated manner.

The policy brief further highlights that the water supply system can be upgraded through appropriate water pricing policies. This can play an important role in the provision of improved services and expansion, through the utilisation of generated revenue.

Furthermore, water pricing should be coupled with public health education programmes. These programmes should highlight the benefits of clean drinking water. The local government and Wasa should focus on supplying safe drinking water to the neglected slum areas, investing in infrastructure and improving management strategies. These governance institutions should explore opportunities for international development donor funding. Also, funding options can be explored from global initiatives, such as the newly launched UN Sustainable Development Goals, where SDG6 is focused on water and sanitation delivery for all.

Effective water pricing is needed and so is some level of trackable government concessions, rather than blanket subsidies, for low-income population groups initiatives like water conservation awareness through educational campaigns, informational tools and encouraging use of water efficient devices that can help to promote sustainable consumption of water. And on the national level, Pakistan needs a ‘Water Policy’, which can ensure that the people of this country have access to safe drinking water.

Ultimately, any policy on water must consider that access to safe drinking water is a basic human right. The media and civil society can serve as watchdogs, by ensuring that the government authorities provide this natural resource to all areas.

Since water policy and health policy are inextricable in this context, pricing signals that emanate from health awareness about the benefits of clean water must remain an essential part of public management in Pakistan. Awareness campaigns on the necessity of using safe drinking water can help sensitise people to pay for it.

The writer is a freelance contributor.

Email: [email protected]

Twitter: @SyedMAbubakar