🗣️ "Water is Too Cheap!"

Host: Antoine Walter
Category: 🗣️ Opinion

Podcast’s Essential Bites:

[1:13] “What makes the water’s price and why does it vary so widely from one place to another? To understand this, we first have to switch from price to cost. […] Depending on the level of pollution you're introducing in [the] water or where you're located, your local utility will have to add more or less treatments at the outlet, lay more or less pipes to collect your sewage and employ more or less people to deal with all of this. When you add up everything […] you obtain the cost of water. And unless you all have spring water in your garden at the top of a slope, […] you now understand why water can be free.”

[3:52] “When we're seeing cost or price of water, the name is maybe misleading. In fact, it's the cost or price of water treatment.”

[4:09] “So, water has a cost, but how much of that cost shall we charge to people to turn it into a price? Regulations like the European Water Framework Directive tell us that we shall take account of the principle of recovery of the cost of water services, including environmental and resource costs. Notice that I haven't covered those yet, because unless you're Danish, I'd bet that your local utility doesn't charge you for that. They should, but they don't. […] In a nutshell, water prices worldwide usually simply don't cover the water costs, even in the most restrictive definition. And I do believe this is a bad thing.”

[5:26] “There are usually two objections whenever I address this topic. First, water shall be free because 99% of the molecules in our body are actually water. But water is free. What's not, is its sourcing in the ground or surface water reservoir, its treatment, its conveying in an infrastructure that has to be built and maintained, its handling once used, its treatment, its discharge to the environment, its impact and its overall management as a resource. […] If you want to make a basic supply of some liters per day and person free, fine. As long as it's part of a tariff structure where at the end of the day, you're still fully recovering the cost of the water service. It's going to be artificially free, but technically speaking, the first let's say 15 liters may be free.”

[6:14] “The second objection is in my […] opinion, much more valid. It's easy for me […]to say that my water is too cheap and I shall pay more. I'm privileged and I know it. After all, access to water is a human right and it sounds wrong to say that we shall pay more for a human right. Now, to be precise, the human right is not bluntly to water but to affordable water, which raises the question of how affordable is water and how affordable would it still be if we were to fully recover the costs through water tariffs. Today in OECD countries water can represent as low as 0.2% of US households’ average income.”

[7:00] “When it comes to defining affordability, international financial institutions generally agree to place it somewhere between 3 and 5% of the household income. So at first sight, we may conclude that at least in OECD countries, water is in fact affordable today. Now on the second loop and if we focus on the 10% poorest people in those countries, the picture changes. […] We’d all experience unaffordable water. That's why tariffs enabling full cost recovery still shouldn't mean that everybody pays the same. You can leverage cross subsidies from other users to establish a social water tariff by playing on the tariff structure. And still, we're talking here of OECD countries, which probably aren't the most to be pitied.”

[8:06] “If you don't have a safe source of water, you will die whether directly from thirst or indirectly from waterborne diseases. This means that today one way or the other, every human on Earth is fighting hard to get his share of mandatory water to sustain his and his family members’ lives. And that doesn't come for free. For instance, in Papua New Guinea the bottom income […] of the population spends 54% of their daily earnings for 50 litres of water, which is the minimum amount needed to cover basic needs according to the Word Health Organization. […] In Madagascar or Mozambique. As soon as you don't have access to at least a community tap, you will have to spend 45% of your income on water. That's what's at stake.”

[9:01] “In his “Global Water Funding” book David Lloyd Owen provides an affordable tariff scenario, split down by geographical regions with the bottom 20% of households ranked by income never have to allocate more than 4% of their revenue to water and sanitation services. As a result, these tariffs would cover 91% of the world’s financial needs to provide water and sanitation for all, aka SDG 6, and arguably at a cheaper expense for the poorest inhabitants of Earth than the status quo […]. Hence this governing principle for water to be affordable for all we need it to be collectively managed. That way we can leverage scale effects, ensure quality and collectively share the costs.”

[9:47] “Currently utilities aren't reaching full cost recovery at all. So how do they cope with that financing gap? […] There are two ways to cover those costs: subsidies, direct or indirect […] and transfers. […] This basically means that you [either] decide that pollution through wastewater is okay and someone will have to pay someday to depollute or you transfer the charge of, for instance infrastructure renewal to the next generation. […] Many international studies have proven a three key mechanism to be effective, where full cost recovery is achieved through the combination of tariffs, taxes, aka subsidies, and transfers, in this definition from donors or charities. The thing is [this] comes with major risks. Transparency International estimates that 10-30% of water funding is being lost to corruption.”

[11:26] “Water tariffs have two additional welcomed side effects. First, they sent a direct signal regarding the value of the water resource and of the water and sanitation services. Then, they bring an incentive for more worthy practices. […] Supplying water to the International Space Station is quite a challenge. […] One liter of water delivered at the ISS […] costs $22,000. Hence, the incentive is exceptionally strong to reduce as much as possible the water use up there. This is why the entire system with four astronauts on board is designed to run on only one glass of water per day thanks to humankind's most advanced water recycling tools.”

Rating: 💧💧💧💧

🎙️ Full Episode: Apple | Spotify | YouTube (Original Title: "Water is Too Cheap! Here's Why Raising the Price NOW will make it Affordable.")
🕰️ 14 min | 🗓️ 10/04/2021
✅ Time saved: 12 min

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