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Effective
and efficient utilisation of our priceless water resources
to avoid wastage and to control demand, requires an
appropriate pricing policy. There is need for integrated
pricing structures especially in groundwater extraction
and that for agriculture, industry, navigation etc. The
pricing policy should match not only the costs of supply
(i.e. O & M and capital costs) but also opportunity costs,
economic externality costs and environmental externality
costs. Integrated pricing structure demands significant
changes in current laws, regulatory mechanisms,
operational transpirency and facilities.
While drafting water pricing, water rights should be well
defined without which the issue of water pricing and its
enforcement could not be effective. Also there is
immediate need to target the subsidies to selected (needy)
groups as can be seen from Punjab where both water and
electricity are supplied free and the needy group is not
able to utilize it. Another important point in this
context is affordability of water by the users and its
equity implications.
In India where even the full water supply cost could not
be recovered then how could one consider recovering the
full economic cost. Also the water price should not only
be determined on the basis of pure economic considerations
but on social considerations as well. Hence giving an
economic value to water without sacrificing social and
environmental imperatives is a challenge for both
government and for society.
Water price should not be determined only on the basis of
pure economic considerations but on social consideration
as well there are enough evidences to show that farmers
were not averse to pay higher water charges provided
supply of water is assured to them.
Marginal value (MV) of water should not measured without
reference to the time factor. For example during the
period of floods the MV of water might be zero but during
the periods of drought, the MV of water might be very
high. In case of urban water supply and important
question that one is faced is how to define and charge
differential prices of water for different sections of the
society.
Project cost overruns occur on account of several
interacting factors like delays in land procurement, entry
of new organizations, revision of cost estimate by the
project authority itself, etc. It is suggested that
consultation with the local people at the stage of
planning the project is an important way of moulding
public opinion in favour of the project. A bottom up
rather than top down approach is likely to yield better
results.
Of the different cost concepts, the question that what
would it cost to make water available is very
significant. Such knowledge is essential to enable a more
informed decision making for fixing the water tariffs to
be charged from different users, extend of subsidies going
to the sector.
Introducing water pricing for the purpose of controlling
demand require significant changes in current laws,
regulating mechanism, operational procedures and
facilities.
(Source:
International Conference On Sustainable Development Of
water Resources, New Delhi, November 27-30, 2000.)
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