Raise the Price of Water, Experts Say

Published on May 5th, 2010 | by

Water is a finite resource. It may seem abundant when you look at a globe, but the amount of water in the world that can be used for human purposes is not so large.

With a real water crisis looming, one solution the World Bank and the OECD, representing major economies of the world, are now pushing for is substantially increasing the price of water around the world.

However, this is a controversial topic, since official UN statistics show that about 1 billion people currently lack access to clean drinking water and twice that many don’t have proper sanitation.

Image Credit: stevendepolo The best way to deal with increasing water shortage concerns is putting a higher price on water, water and economic experts say.
One of the best ways to deal with increasing water shortage concerns is by putting a higher price on water, water and economic experts say.

The problem that the World Bank, OECD and others are trying to solve is that the extremely wasteful habits of consumers, farmers and industry are heavily subsidized in many countries, allowing them to continue these unsustainable practices. Plus, investment of a higher degree is needed to build new systems and repair old ones.

The 2010 Global Water Intelligence market report says that the industry needs to spend $571 billion a year to maintain and improve water infrastructure networks and treatment plants to meet rising world demand, which is over three times this year’s projected spending.

Largely in response to this, putting a higher price on water was the key focus of a recent conference of industry leaders held by Global Water Intelligence in Paris.

The OECD also recently issued three water reports calling for an increase in the price of water in order to address critical world water issues. “Putting a price on water will make us aware of the scarcity and make us take better care of it,” said Angel Gurría, the OECD secretary-general.

At a private, high-level World Bank meeting in New York on April 23, Lars Thunell, chief executive officer of the International Finance Corporation, also reportedly brought this issue up for discussion. “Everyone said water must be somehow valued: whether you call it cost, or price, or cost recover,” said Usha Rao-Monari, senior manager of the IFC’s infrastructure department. “It’s not an infinite resource, and anything that’s not an infinite resource must be valued.”

I recently wrote about water expert Robert Glennon’s thoughts on the biggest misuse and most harmful uses of water. Something I did not include in that piece was that Glennon also thinks a critical step we need to take to address world water problems is we need to price it.

We must recognize a human right to water for life’s necessities. The richest country in the history of the world can surely make that commitment to its citizens. Honoring that right does not involve a large quantity of water–only about 1% of the water that is used each day in the United States. For the other 99%, we need to encourage conservation and stewardship by pricing it appropriately: in general, the more you use the more you pay. Under this system, Americans, whether homeowners, farmers or industry would vote with their pocketbooks as to how they use water.

With climate change significantly affecting rainfall, major quickly developing economies and population growth, experts are saying that nearly half the world’s population may not have access to sustainable clean water for daily needs soon. Pricing it in rich, developed countries may be one of the best solutions to that problem.


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1 comment

  • Don’t we already pay for water in towns and cities? Those who receive municipal water at their homes and businesses already pay for it monthly or quarterly.

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