Water Visions : Make Water Profitable



Some pretty scary scenarios are built around global warming and its worst effects. One of them is that India could potentially lose half its population or even more to some spectacular monsoon failures; the country could come apart, leading to a potential World War over water.

Declaimer: This article written was originally in March 2011 and some of the data points may be outdated.

I had visions of such a scenario recently when I found that the early monsoons had delivered only 45% of their Long Period Average (LPA), which itself is a moving average, naturally trending downwards. Knowing the government’s penchant for fudging bad news, especially related to agriculture, I knew that the actual situation on the ground could be much worse.

Delhi did have its first water casualty

Delhi did have its first “water casualty”, a man dead because of a fight over water. There were violent protests in the streets, as much over power as over water supplies. With the first trickle of pre-monsoon showers, they have died down somewhat, and life has returned to normal. Delhi lives on other people’s power and other people’s water, shamelessly depriving smaller towns of their due; as if that was not enough, it contributes disproportionately to water pollution in the Yamuna.

There is a big reason why I am optimistic about power, but not about water. Privatization of distribution networks is now irreversible, and the results have started to show. Can you imagine the situation if the DVB had still been around? Even Shiela Dixit has said as much.

With power theft down by more than half, the rest of the story in T & D losses will be easier. Technical reasons account for about 6%, so there is just 6% of theft left before we reach the international norm of 6% T & D Losses. The Govt has started to go after the technical reasons too, with the recent BIS guideline changing the CFL industry from Low Power Factor (LPF) to High Power Factor (HPF).

Once you have a good customer (the discus) who pays on time, there is an incentive to improve generation and it becomes like any other business. There are clear price signals to indicate a mismatch between demand & supply, and an incentive to produce more to cover a shortage. NDPL has taken an initiative to harness ‘citizens’ power’, with users being allowed to produce and store their own solar power which is clean, sustainable, and permanent.

None of this is true of water. Water, like hospitals, remains subject to a peculiarly irrational policy. The State wants to keep it free so that it keeps getting misused. The State has a monopoly over investments in water, which is nothing but a monopoly over the right to mess up the sector completely.

Education, Health Care, and Water

Education, Health Care, and Water: all remain in the State sector, ALL remain artificially unprofitable and ALL remain in short supply. Of these, only a water shortage can kill you, which is why our short-sighted Water Policy is more criminal than what we have been doing in Education and Health Care.

Just imagine this: if the Govt were to treat investment into the water on par with investment into Alternate/ Solar Power, then it would offer 100% Depreciation for desalination plants. Big, huge Desalination Plants would come up on the coastline; thereafter, the Govt just buys the water and pipes it into the Bhakra Nangal Canal. It would be a big hedge against monsoon failure and would save millions of lives.

The River Linking Project would have cost Rs.5000 cr in 1951, but we chose to set up public sector units instead. In 1971, the Project would have cost Rs.50,000 cr, but we chose to nationalize banks instead. Today, it will cost Rs.500,000 cr but we choose to hold the Commonwealth Games instead. We can’t find a Prime Minister who will preserve his place in history by investing in a project that will change the face of India forever.

Few countries in the world are as dependent on a rickety weather phenomenon called the Trade Winds. Nobody really understands fully how (and why) billions of tons of water get picked up from the oceans and deposited on the Himalayan mountainsides, without fail, and with minimal variation, over millions of years. That is why India is green, with the world’s largest bio-diversity, and manages to house the world’s second-largest mass of people. Shouldn’t we have a standby for such a rickety machine, especially when Global Warming is going to wreak havoc with the world’s weather patterns?

And what does it take? We must be having an estimate of just how much water falls short every year, and all we need to do is to build a standby desalination capacity that runs on Solar Energy. Then it is just a piping problem. If you can get the water to Rishikesh/ Bhakra Nangal, the Indus, Manali/ Beas, and a few other river origins, you would be able to shore up water supplies all year around. Remember, the piping capacity has to be just a fraction of the river capacity because the pipes will flow all year round, while the rain-fed river sources generate most of their water during the monsoons.

Then you have all your life (I mean the country’s life) to invest in River Linking Systems, micro-irrigation of arid regions, and redevelopment of degraded wasteland. Remember, the water does not have to be potable, drinking water: it just has to be desalinated and filtered, semi-potable water that is needed for agriculture and non-drinking usage. This would release enough fresh-water supplies for drinking purposes in the cities, which is anyway less than 5% of total water usage.

The project would cost less than the Rs.150,000 cr allocated to the IT Database Project (also known as the Nandan Nilekani Project), and it would be the best Rs.100,000 cr ever spent. I expect a Reliance or a Mittal to get into the act immediately.

I said this during the Oil Crisis too, when oil prices went to $150. With the potential capability to bring down consumption by 95%, all you have to do it to install the right price signals for water. When water gets REALLY precious, cars will not be washed anymore, and maybe we will even stop bathing if it gets sufficiently short. More important, it should get sufficiently profitable for someone to be able to think about producing more.

I can understand the government’s political dilemma. If there is one thing more politically tricky than agriculture/ food, it would be water. No Govt can even touch water pricing.

…and this is where the IT Project becomes important. The ability to target a Water Subsidy to the right places is crucial before you can even think of pricing water right. Shiela Dixit should worry now about the next summer; she may not have power as a big problem, but water could kill a lot of us.

I don’t understand how an El Nino happens, but its occurrence is linked to the effects of Global Warming. Not only will it happen more frequently, but its effects will get worse. Meanwhile, I like the speed with which the consensus is getting built around Global Warming. I like the US thrust towards geothermal, and the recent Clean Energy Act passed by Obama’s Govt, setting up a cap-and-trade scheme for the US. The targets are steep: 12% reduction over 2005 levels by 2020, and 83% reduction by 2050. That means that somewhere around 2030, the US will go completely green. Maybe faster, if innovation and entrepreneurship are to live up to its historical reputation. I believe that this is how the US will come back as a major economic force, within the next generation.

India has never had the leadership, vision, or foresight to do anything different. This may be its chance. If Manmohan Singh can do a “Shiela Dixit” this time round, he should be choosing 3-5 major projects that make a visible impact on the country. Water, Education, and Health Care privatization, making these sectors profitable for Public Private Partnership (PPP) and then finding the capital, that is the only challenge. In the case of water, the last is easy: this could be part of any Fiscal Stimulus Plan and can be linked to Employment Guarantee Schemes (EGS).



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