CE 397: Transboundary Waters
March 27, 2012
International Water Pricing
Sili Liu
Jill Kjellsson
Introduction
• Value of Water:
Social, Economic, Ecological, Religious, Moral and Cultural
• Water has been Globalized, Commodified, and Privatized
• 1992 Dublin Statement:
“Water has an economic value in all its competing uses and should be
recognized as an economic good”
• 1992 United Nations Agenda 21
“integrated water resources management is based on the perception of
water as an integral part of the ecosystem, a natural resource and a
social and economic good, whose quantity and quality determine the
nature of its utilization”
Arguments for treating water
as an economic good:
Arguments for treating water
as a human right:
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Market-based approach will ensure
that people are better stewards of
water resources
Encourages conservation
Improves quality
Helps allocate water to maximize
benefits
•
Ensures water for all
Helps set priorities of water policy
Focuses attention on resolving
water conflict
Helps safeguard other human rights
World Bank
The World Bank is one of the few institutions
provides integrated support nationally and regionally
across the macroeconomic, financial, technical,
social and environmental dimensions. It does this
through by helping countries create sound water
management practices that focus on getting the right
policies in place, building the capacity of
governments, technical assistance and analytic work.
Policy Advice: The Bank provides advice on water-related
policies and programs through analytical and advisory
work, policy dialogue and technical assistance. Analytic
and advisory work includes Economic and Sector Work
(ESW) which includes formal and informal studies of critical
issues, either at the regional level, country level. This work
is a key instrument Long-term strategic analyses of country
sectors and for building institutional capacity.
http://www.worldwaterforum6.org/en/
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Privatizing water utilities and commercializing water resources.
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The water privatization policy of the World Bank articulated in
a 1992 paper entitled “Improving Water Resources
Management.”
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"Effective water resource management requires that water be
treated as an economic good."
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“private participation in water and wastewater utilities has
generally resulted in sharp efficiency gains, improved service, and
faster investment in expanding service."
Case 1. EU Water Framework Directive
Cost Policy
• Operation and maintenance costs
• Capital costs
• Opportunity costs
• Resource costs
• Social costs
• Environmental damage costs
• Long run marginal costs
0.83
1.56
EU average
3.25
Denmark
2.66
Germany
5.63
2.85
The Netherlands
1 US dollar = 0.7539 euros
United Kingdom
Belgium
2.92
France
5.09
3.35
Finland
Sweden
3.76
Unit €/m3
3.87
Spain
Italy
https://www.cdt.org/privacy/eudirective/EU_Directive_.html
Case 1. EU Water Framework Directive
1. Member States shall take account of the principle of recovery of the costs of water services,
including environmental and resource costs, having regard to the economic analysis conducted
according to Annex III, and in accordance in particular with the polluter pays principle.
Member states shall ensure by 2010:
• that water-pricing policies provide adequate incentives for users to use water resources
efficiently, and thereby contribute to the environmental objectives of this Directive,
• an adequate contribution of the different water uses, disaggregated into at least industry,
households and agriculture, to the recovery of the costs of water services, based on the
economic analysis conducted according to Annex III and taking account of the polluter pays
principle.
2. Member States may in so doing have regard to the social, environmental and economic effects of
the recovery as well as the geographic and climatic conditions of the region or regions affected.
3. Member States shall report in the river basin management plans on the planned steps towards
implementing paragraph 1 which will contribute to achieving the environmental objectives of this
Directive and on the contribution made by the various water uses to the recovery of the costs of
water services.
4. Nothing in this Article shall prevent the funding of particular preventive or remedial measures in
order to achieve the objective of this Directive.
5. Member States shall not be in breach of this Directive if they decide in accordance with
established practices not to apply the provisions of paragraph 1, second sentence, and for that
purpose the relevant provisions of paragraph 2, for a given water use activity, where this does not
compromise the purposes and the achievement of the objectives of this Directive. Member States
shall report the reasons for not fully applying paragraph 1, second sentence, in the river basin
management plans
https://www.cdt.org/privacy/eudirective/EU_Directive_.html
Case 2. Investing in Asia’s Water Sector
Overview:
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Government Control
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Water shortage and water pollution
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Low price for water supply
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A new market for water transaction
Focus: China
China accounts for 22% of the world’s population, but it is endowed with only 7% of the
world’s fresh water. Adding to the challenges of insufficient water supply are problems of
pollution.
By comparison to countries with four times the available resource, China’s price for water
is between 70-80% lower.
Case 2. Investing in Asia’s Water Sector
Focus: China
So what can be done?
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The first is to reduce China’s water pollution and, globally, address the
threat of climate change.
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The second is to increase the supply of usable water in the places in
China that lack it, through desalination and by redirecting water from
south to north. -In the Tianjin-Binhai development zone, on the western
shore of the Bohai Sea, China has built a 12 billion-yuan ($1.9 billion)
desalination plant, using the latest Israeli technology. In addition, the
nation is embarking on the world’s largest water-diversion project, to reroute part of the Yangtze along three channels to the north.
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The third solution: better pricing of existing water resources. Water is
Earth’s most valuable commodity, and yet in most countries it is given
away free -- as if it had no value at all.
Case 3. Middle East: Turkey and Cyprus
• Turkey is the only country in the
middle east with an abundant
supply of freshwater resources
• Southeast Anatolia Development
Project (GAP)
– 22 dams
– 19 hydropower plants
– 1.8 million ha ag land
– 3.8 million jobs
• Turkey has reportedly discussed
water exports with many
countries including Cyprus, Israel,
Libya, Malta, Greece, and Jordan
Case 3. Middle East: Turkey and Cyprus
• North Cyprus annual demand for
water is 106.6 million m3
• Safe yield from:
– Aquifers – 74 million cubic meters
– Rivers – 13 million
– Dams – 7 million
• Water deficit is therefore
approximately 12.5 million m3
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Transport via tanker:
– Amount – 40,000 m3 / year
– Cost – US$1.13
• 80km undersea pipeline project
– Amount – 75 million m3/ year
Case 4. Canada and the U.S.
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Canada is the world’s largest single
owner of freshwater resources
1986 – Government of British
Columbia issued licenses to allow the
export of freshwater
1991 – Snowcap, one of the first of
these, joined forces with Sun Belt
Corporation
1996 – BC Water Protection Act bans
new or expanded licenses
1999 – Water Protection Act, Canada
bans bulk water export
Sun Belt sued the government of
British Columbia under the North
American Free Trade Agreement
(NAFTA) which generally prohibits the
restriction of the exportation of goods
Conclusion
• The question has arisen, whether water should be treated as an economic
good or if should be protected and guaranteed to all as a human right
• Water pricing has been suggested to improve water quality, help in
allocation, and encourage conservation
• Others argue that pricing water is morally objectionable in that it prevents
certain populations who cannot afford to pay from accessing water
Questions and Discussions
1. Do you agree that it is appropriate to treat our waters as a commercial
good?
2. If water were more expensive, do you think it would affect your water use
patterns?
3. Do you think that putting a price on water is the best way to improve the
scarcity and quality issues that developing countries are facing with their
waters? Can you think of any other ways?
4. How will public concerns about water pollution effect the current water
policy, water pricing, and the potential future investment?
Works Cited
Anderson, Kristin M., and Lisa J. Gaines. "International Water Pricing: An Overview and Historic and Modern
Case Studies." 2009. Web. 25 Mar. 2012.
<http://www.transboundarywaters.orst.edu/research/case_studies/Documents/International%20Water%20Pri
cing.pdf>.
Brooks, David B. and Mehmet, Ozay. Water Balances in Eastern Mediterranean. IDRC. 1 January 2000.
Canada. Law and Government Division. Bulk Water Removals, Water Exports and the NAFTA. By David
Johansen. PRB 00-41E, 20 Feb. 2001. Web. 21 Mar. 2012. <http://publications.gc.ca/CollectionR/LoPBdP/BP/prb0041-e.htm>.
Delli, Priscoli Jerome., and Aaron T. Wolf. Managing and Transforming Water Conflicts. Cambridge: Cambridge
UP, 2009. Print.
Grigg, Neil S. Total Water Management: Practices for a Sustainable Future. Denver: American Water Works
Association, 2008. Print.
Sheila M. Olmstead, and Robert N. Stavins. Managing Water Demand. Pioneer in Institute, No39, July 2007
The World Bank Website: http://water.worldbank.org/water/about-us
"Turkey Prepares to Send Water to Turkish Cyprus." Hürriyet Daily News. 24 Mar. 2012. Web. 25 Mar. 2012.
<http://www.hurriyetdailynews.com/turkey-prepares-to-send-water-to-turkish-cyprus.aspx?pageID=238>.
Yalcinkay, Sedat. “The Euphrates and Tigris River Basin: CE 397 Assignment.” 15 Feb. 2010. Web. 25 Mar. 2012.
<http://www.ce.utexas.edu/prof/mckinney/ce397/Topics/Tigris/Euphrates-Tigris%282010%29.pdf>
Photo Credits
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Photo Credit: "Middle East Map of Rivers." Map. WorldAtlas. Web.
<http://www.worldatlas.com/webimage/countrys/menewriv.gif>
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Photo Credit: “snow cap of golden ears “(outdoorphotos, Jan 2009) Golden Ears
Provincial Park <http://media-cdn.tripadvisor.com/media/photos/01/21/41/eb/snow-cap-of-golden-ears.jpg>
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Photo Credit:
<http://photos.mongabay.com/j/namericasnow_tmo_201004.568.jpg>
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Photo Credit: <http://wildliferesearch.org/wp-content/uploads/2011/10/Bottledwater.jpg>
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Photo Credit:
<http://www.celsias.com/media/uploads/admin/water_privatization.jpg>
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Photo Credit: <http://t3.gstatic.com/images?q=tbn:ANd9GcRXOE4qLc60dT3OLqXOK862Tu75QFCmEnKJgT9h2OBla414WL43bYjw6-Aog>
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Photo Credit: <http://www.tri-cityplumbing.com/images/pages/waterfiltration.jpg>
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Photo Credit: <http://www.fastcompany.com/files/feature-water2LG.jpg>