{"id":132236,"date":"2024-09-16T19:43:35","date_gmt":"2024-09-16T14:13:35","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=editorial-analysis&#038;p=132236"},"modified":"2024-09-18T18:54:08","modified_gmt":"2024-09-18T13:24:08","slug":"water-pricing-should-reflect-its-true-value","status":"publish","type":"editorial-analysis","link":"https:\/\/pwonlyias.com\/stage\/editorial-analysis\/water-pricing-should-reflect-its-true-value","title":{"rendered":"Water Pricing Should Reflect Its True Value"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">More than 40% of India consists of arid or semi-arid regions, characterised by erratic and scanty rainfall. The situation is further aggravated by climate change, which has disrupted rainfall patterns and intensified water shortages nationwide. There is also variation in rainfall, both spatial and temporal. According to a 2019 NITI Aayog study, by 2050, India\u2019s water supply is expected to decline to half of the anticipated demand, making effective demand-side water management an urgent priority. This results in severe water stress and scarcity, impacting millions of lives and livelihoods across these areas.\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<table style=\"width: 100.099%;\">\n<tbody>\n<tr>\n<th style=\"width: 100%; border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle;\"><span style=\"color: #000000;\"><b>Arid and Semi Arid regions:<\/b><\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Arid regions<\/b><span style=\"font-weight: 400;\"> are areas that receive very little precipitation, with an <\/span><b>annual rainfall ranging from 0 to 250 millimetres<\/b><span style=\"font-weight: 400;\">. These regions are often characterised by extreme dryness and sparse vegetation, such as deserts.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Semi-arid regions<\/b><span style=\"font-weight: 400;\"> receive <\/span><b>annual rainfall between 250 and 500 millimetres<\/b><span style=\"font-weight: 400;\">. These areas experience more rainfall than arid regions but still have long dry seasons, supporting grasslands and scrublands rather than dense forests.<\/span><\/span><\/li>\n<\/ul>\n<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n<table style=\"width: 100%;\">\n<tbody>\n<tr>\n<th style=\"width: 100%; border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle;\"><span style=\"color: #000000;\"><b>Types of Variation: Spatial and Temporal<\/b><\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\"><b>Spatial variation<\/b><span style=\"font-weight: 400;\"> refers to anything related to space or location. It describes how things are distributed, arranged, or structured across a particular area.\u00a0<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>For example:<\/b><span style=\"font-weight: 400;\"> It might describe how rainfall varies<\/span><b> across different regions.<\/b><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000000;\"><b>Temporal variation <\/b><span style=\"font-weight: 400;\">refers to anything related to time. It describes how things change or occur over time.<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>For example:<\/b><span style=\"font-weight: 400;\"> It would describe how rainfall changes over time (e.g., <\/span><b>during different seasons or years).<\/b><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span style=\"font-size: 18pt;\"><b>Water as an Economic Good<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Evolution of Water Perception:<\/b><span style=\"font-weight: 400;\"> Historically, water was considered a free, non-economic resource, much like air. However, rapid population growth, increased demand for food (which requires more water for production), lifestyle changes (such as more cars being used and water required to wash them), and economic growth have shifted this perception.\u00a0 As it became clear that<\/span><b> water is a finite resource, the idea that it could be provided for free became unsustainable, as people would exploit it carelessly<\/b><span style=\"font-weight: 400;\">.\u00a0 If managed improperly, this could lead to water stress and depletion.\u00a0 Consequently, water is now recognized as an economic good.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Dublin Principle of the UN: <\/b><span style=\"font-weight: 400;\">The concept of water as an economic good, similar to other resources like laptops, cars etc. should be implemented universally. This idea was emphasised by the <\/span><b>UN&#8217;s Dublin Principle (1992).<\/b><span style=\"font-weight: 400;\"> Water should not be provided for free; only when it has a value will people use it wisely. Otherwise, its importance will be undermined.\u00a0\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/www.pw.live\/batches\/upsc?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"nofollow noopener\">Enroll now for UPSC Online Course<\/a><\/span><\/p>\n<table style=\"width: 99.8983%;\">\n<tbody>\n<tr>\n<th style=\"border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle; width: 100%;\"><span style=\"color: #000000;\"><b>Food For Thought<\/b><\/span><\/p>\n<p><span style=\"color: #000000;\"><b>Demerit goods or non-merit goods<\/b><span style=\"font-weight: 400;\"> are those whose use leads to negative consequences for both the consumer or individual and society at large. For example, smoking harms the consumer and poses risks to society, which is why smoking and alcohol are heavily taxed.<\/span><\/span><\/p>\n<p><span style=\"color: #000000;\"><b>Why is irrigation water considered a non-merit good?<\/b><\/span><\/p>\n<p><span style=\"font-weight: 400; color: #000000;\">If it is considered a non-merit good, then why are there not restrictions similar to those imposed on items like alcohol and cigarettes? Instead, subsidies are provided for irrigation water. This situation presents an irony.\u00a0\u00a0<\/span><\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span style=\"font-size: 18pt;\"><b>Water Pricing in National Policies<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>National Water Policy (NWP), 1987:<\/b><span style=\"font-weight: 400;\"> The National Water Policy (NWP) of 1987 introduced the concept that <\/span><b>water should be priced to reflect its scarcity and to encourage water-efficient practices. <\/b><span style=\"font-weight: 400;\">The intention was for the pricing to cover operation and maintenance (O&#038;M) costs as well as contribute to fixed costs, such as the salaries of workers and irrigation infrastructure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>NWP of 2002:<\/b><span style=\"font-weight: 400;\"> The NWP of 2002 suggested that <\/span><b>water rates should initially cover O&#038;M costs and later contribute to a portion of capital costs, such as infrastructure development (e.g., reservoirs, dams).<\/b><span style=\"font-weight: 400;\"> The pricing structure was recommended to be linked to service quality, meaning that if water quality, pressure, and delivery levels are high, the rates should be higher, and vice versa. Additionally, subsidies should be well-targeted and transparent (available in the public domain).\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>NWP of 2012:<\/b><span style=\"font-weight: 400;\"> By 2012, the NWP recommended that water <\/span><b>pricing be based on volumetric usage. <\/b><span style=\"font-weight: 400;\">For example, using 1 unit of water could cost Rs. 10, while using 1,000 units could cost Rs. 10,000. The responsibility for setting pricing should be under a regulatory authority dedicated to this purpose.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Current Challenges<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Ad-Hoc Water Pricing Mechanisms:<\/b><span style=\"font-weight: 400;\"> Despite the recommendations of the NWP 2012, many states still l<\/span><b>ack independent Water Regulatory Authorities (WRAs<\/b><span style=\"font-weight: 400;\">), leading to ad-hoc and non-transparent water pricing systems. For example,\u00a0 Kerala did not revise its water rates for 47 years.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">In contrast, Karnataka has specific water rates for different crops, with more water-intensive crops incurring higher rates. Water rates also vary based on irrigation types used.\u00a0 For instance, the rate for sugarcane under lift irrigation is \u20b92,965.16 per hectare, whereas for flow irrigation it is \u20b9988.39 per hectare.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Non-Coherence in Guidelines:<\/b><span style=\"font-weight: 400;\"> In groundwater regulation, 20 states\/UTs (such as Maharashtra and Rajasthan) follow Central Ground Water Authority (CGWA) guidelines, while 16 states\/UTs have their own regulations. However, there is a <\/span><b>lack of alignment<\/b><span style=\"font-weight: 400;\"> between state and central guidelines.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Unregulated and Unpriced Groundwater: <\/b><span style=\"font-weight: 400;\">Currently, groundwater is largely unregulated and unpriced for most rural, urban domestic purposes, agricultural activities, and small enterprises, leading to unchecked exploitation. Although there are charges for large enterprises and areas classified as safe, semi-critical, critical, or over-exploited, groundwater pricing is linked to withdrawal rates and aquifer criticality.\u00a0<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">For example, in safe areas, charges are \u20b91 per m\u00b3, while in over-exploited areas, the charge is \u20b98 per m\u00b3. However,<\/span><b> agriculture, the largest groundwater user, is not subject to these regulations.\u00a0\u00a0<\/b><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+CSE+Books\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Check Out UPSC CSE Books From PW Store<\/span><\/a><\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>International Best Practices in Water Pricing<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Volumetric Pricing: <\/b><span style=\"font-weight: 400;\">In many OECD countries, water pricing is based on a volumetric model, which promotes economic efficiency by aligning prices with marginal water costs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Two-part tariff system: <\/b><span style=\"font-weight: 400;\">A common approach is the two-part tariff system, which includes a<\/span><b> fixed cost component and a volumetric component<\/b><span style=\"font-weight: 400;\">. This system is used in countries such as the US, Jordan, the UK, Australia, and France, particularly for irrigation water.<\/span><\/li>\n<li><b>Volumetric Pricing:<\/b><span style=\"font-weight: 400;\"> Countries like China, South Africa, Australia, Israel, and Chile employ volumetric groundwater pricing. This model charges users based on the amount of groundwater extracted, encouraging efficient use.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Seasonal Pricing:<\/b><span style=\"font-weight: 400;\"> South Africa implements seasonal pricing based on groundwater availability. For example, during periods of high availability in summer, the water rate is lower, whereas, in drier winter months, the rate increases to incentivize water conservation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Demand and Supply:<\/b><span style=\"font-weight: 400;\"> Australia uses a market-based approach where water rates are influenced by demand and supply dynamics. The trading system allows users to buy and sell water entitlements, promoting flexibility and efficient water use.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Way Forward<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Adopting Water as an Economic Good: <\/b><span style=\"font-weight: 400;\">Water should be universally recognized as an economic good, including in the agricultural sector. In irrigation, cost recovery should cover operation and maintenance (O&#038;M) costs and at least 1% interest on capital employed, as recommended by the former Planning Commission.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Implementing Volumetric Pricing for Irrigation: <\/b><span style=\"font-weight: 400;\">A volumetric pricing system should be introduced in the irrigation sector. Incentives should be provided for adopting water-efficient technologies, such as drip and sprinkler irrigation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Including Groundwater Users Under Pricing Models: <\/b><span style=\"font-weight: 400;\">Groundwater users should be included in water pricing regulations. Volumetric pricing should apply to all uses, including irrigation, to ensure comprehensive water management.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Establishing Metering Infrastructure: <\/b><span style=\"font-weight: 400;\">Incentives should be provided for installing metres and promoting water conservation. Additionally, water audit-based credits can encourage efficient water use.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/www.pw.live\/batches\/upsc\/pw-only-ias?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"nofollow noopener\">Enroll now for UPSC Online Classes<\/a><\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>Conclusion<\/b><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Effective water pricing, particularly through the adoption of volumetric systems, will promote sustainable water use and encourage the adoption of efficient technologies. Recognizing water as an economic good must be universally implemented to address India\u2019s growing water scarcity, ensure equitable distribution, and foster a more responsible approach to water management.<\/span><\/p>\n<table style=\"width: 99.8996%;\">\n<tbody>\n<tr>\n<th style=\"width: 100%; border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle;\"><span style=\"color: #000000;\"><b>Mains Question:<\/b><\/span><\/p>\n<p><span style=\"color: #000000;\"><a style=\"color: #000000;\" href=\"https:\/\/pwonlyias.com\/stage\/mains-answer-writing\/india-faces-significant-challenges-in-water-management-particularly-in-pricing-and-regulation-critically-examine-the-current-water-pricing-policies-in-india-their-shortcomings-and-suggest-reforms-d-2\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Q. India faces significant challenges in water management particularly in pricing and regulation. Critically examine the current water pricing policies in India, their shortcomings, and suggest reforms drawing from international best practices to ensure sustainable water use across all sectors. (15M, 250 words)<\/span><\/a><\/span><\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n<table style=\"width: 99.8278%;\">\n<tbody>\n<tr>\n<td style=\"width: 137.709%; text-align: center; border-style: solid; border-color: #000000;\" colspan=\"2\"><span style=\"font-size: 18pt;\"><b>Must Read<\/b><\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 50.5357%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/pwonlyias.com\/stage\/editorial-analysis\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">UPSC Daily Editorials<\/span><\/a><\/td>\n<td style=\"width: 87.173%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/pwonlyias.com\/stage\/daily-current-affairs\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">UPSC Daily Current Affairs<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 50.5357%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books\/upsc-textbooks?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+Textbooks\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC NCERT Textbooks From PW Store<\/span><\/a><\/td>\n<td style=\"width: 87.173%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books\/upsc-modules?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+Modules\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC Modules From PW Store<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 50.5357%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books\/upsc-previous-year-papers?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+Previous+Year+Papers\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out Previous Years Papers From PW Store<\/span><\/a><\/td>\n<td style=\"width: 87.173%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/pwonlyias.com\/stage\/upsc-test-series-courses\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">UPSC Test Series 2024<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 50.5357%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/pwonlyias.com\/stage\/quiz\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Daily Current Affairs Quiz<\/span><\/a><\/td>\n<td style=\"width: 87.173%; text-align: center; border-style: solid; border-color: #000000;\"><a href=\"https:\/\/pwonlyias.com\/stage\/mains-answer-writing\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Daily Main Answer Writing<\/span><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 137.709%; text-align: center; border-style: solid; border-color: #000000;\" colspan=\"2\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+CSE+Books\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC CSE Books From PW Store<\/span><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>More than 40% of India consists of arid or semi-arid regions, characterised by erratic and scanty rainfall. The situation is further aggravated by climate change, which has disrupted rainfall patterns and intensified water shortages nationwide. There is also variation in rainfall, both spatial and temporal. According to a 2019 NITI Aayog study, by 2050, India\u2019s&hellip; <a class=\"more-link\" href=\"https:\/\/pwonlyias.com\/stage\/editorial-analysis\/water-pricing-should-reflect-its-true-value\">Continue reading <span class=\"screen-reader-text\">Water Pricing Should Reflect Its True Value<\/span><\/a><\/p>\n","protected":false},"author":11,"featured_media":132650,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"tags":[],"paper-wise":[2089],"subject":[],"acf":[],"_links":{"self":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/editorial-analysis\/132236"}],"collection":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/editorial-analysis"}],"about":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/types\/editorial-analysis"}],"author":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/comments?post=132236"}],"version-history":[{"count":2,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/editorial-analysis\/132236\/revisions"}],"predecessor-version":[{"id":132240,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/editorial-analysis\/132236\/revisions\/132240"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media\/132650"}],"wp:attachment":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media?parent=132236"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/tags?post=132236"},{"taxonomy":"paper-wise","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/paper-wise?post=132236"},{"taxonomy":"subject","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/subject?post=132236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}