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International Water Pricing

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:

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International Water Pricing

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  1. CE 397: Transboundary Waters March 27, 2012 International Water Pricing Sili Liu Jill Kjellsson

  2. 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”

  3. Arguments for treating water as an economic good: Arguments for treating water as a human right: Ensures water for all Helps set priorities of water policy Focuses attention on resolving water conflict Helps safeguard other human rights • Market-based approach will ensure that people are better stewards of water resources • Encourages conservation • Improves quality • Helps allocate water to maximize benefits

  4. 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/

  5. Privatizing water utilities and commercializing water resources. • The water privatization policy of the World Bank articulated in a 1992 paper entitled “Improving Water Resources Management.” • "Effective water resource management requires that water be treated as an economic good." • “private participation in water and wastewater utilities has generally resulted in sharp efficiency gains, improved service, and faster investment in expanding service."

  6. 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 1 US dollar = 0.7539 euros https://www.cdt.org/privacy/eudirective/EU_Directive_.html

  7. 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 Article 9 https://www.cdt.org/privacy/eudirective/EU_Directive_.html

  8. Case 2.Investing in Asia’s Water Sector Overview: • Government Control • Water shortage and water pollution • Low price for water supply • 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.

  9. Case 2.Investing in Asia’s Water Sector Focus: China • So what can be done? • The first is to reduce China’s water pollution and, globally, address the threat of climate change. • 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 re-route part of the Yangtze along three channels to the north. • 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.

  10. 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

  11. 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 • Transport via tanker: • Amount – 40,000 m3 / year • Cost – US$1.13 • 80km undersea pipeline project • Amount – 75 million m3/ year

  12. Case 4. Canada and the U.S. • 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

  13. 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

  14. Questions and Discussions Do you agree that it is appropriate to treat our waters as a commercial good? If water were more expensive, do you think it would affect your water use patterns? Do you think that putting a price on water is the best way to improve the scarcity and quality issuesthat developing countries are facing with their waters? Can you think of any other ways? How will public concerns about water pollution effect the current water policy, water pricing, and the potential future investment?

  15. 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%20Pricing.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/Collection-R/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>

  16. Photo Credits • Photo Credit: "Middle East Map of Rivers." Map. WorldAtlas. Web. <http://www.worldatlas.com/webimage/countrys/menewriv.gif> • Photo Credit: “snow cap of golden ears “(outdoorphotos, Jan 2009) Golden Ears Provincial Park <http://media-cdn.tripadvisor.com/media/photo-s/01/21/41/eb/snow-cap-of-golden-ears.jpg> • Photo Credit: <http://photos.mongabay.com/j/namericasnow_tmo_201004.568.jpg> • Photo Credit: <http://wildliferesearch.org/wp-content/uploads/2011/10/Bottled-water.jpg> • Photo Credit: <http://www.celsias.com/media/uploads/admin/water_privatization.jpg> • Photo Credit: <http://t3.gstatic.com/images?q=tbn:ANd9GcRXOE4-qLc60dT3OLqXOK862Tu75QFCmEnKJgT9h2OBla414WL43bYjw6-Aog> • Photo Credit: <http://www.tri-cityplumbing.com/images/pages/water-filtration.jpg> • Photo Credit: <http://www.fastcompany.com/files/feature-water2LG.jpg>

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