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BW Businessworld

... And Management

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A book by three analysts, Thirsty Nation presents a set of data and arguments to make the case for better management of water through financial markets. In doing so, it falls into a trap that has also ensnared defence analysts; that of looking at water as an input for activities ranging from agriculture to industry rather than as a resource. And like any resource held in a public trust, putting the state’s responsibility of holding it for the common good rather than common goods.

An impressive list of people have contributed to the first part, ‘Why This Book’. It includes the head of the IDFC Foundation, academics, industrialists and even a former Union minister for water resources. Strangely, there is no voice from the non-profit sector even while there are comments from YES Bank’s Country Head for Responsible Banking. The selection is from a small segment of organisations for some of whom water may be of peripheral concern. The reasons for the book are to advance financial instruments for water management. That is a major departure from  the current thinking of managing water in an integrated manner as a resource.

Somewhere along the book, I missed the plot though. The reasoning does not carry through. There is exquisite detail on water for drinking, sanitation, use in agriculture, industry, energy and other areas. The chapter on water footprints tries to explain the concept with examples, even though water footprints have fallen out of favour of researchers and water policymakers owing to their inadequacy and clunkiness. The policy chapter analyses the national water policy from the point of view of establishing an economic value for water, saying India needs more carrots than sticks.

 Nitya Jacob
What would have been useful here is a financial analysis of the coping costs of getting water by people in different economic strata, rural and urban. This would have brought out the economic value of water — an opportunity missed. Even the chapter on pricing does not make a concrete suggestion despite presenting cases from other countries. Pricing is one way to conserve water, but as it constitutes a minuscule fraction of any cost (industry, energy or agriculture) that is completely disproportionate to its criticality, financial instruments will not work.

The book then goes onto virtual water trade — the concept that water is embedded in goods as it is used to produce them. For example, a certain quantity of water is used to grow maize that is then exported. The exporting nation is effectively exporting its water, while the importing nation is importing water. This argument links to the water footprint and is also falling out of favour. The book would have done better to assess water use in agriculture or industry and how it can be made more efficient.

In the chapter ‘Bottle With A Narrow Neck’, the book analyses infrastruc-ture hurdles. It presents the case of public-private partnerships (PPP) through the examples of Nagpur and the ‘Gujarat model of governance’ in which the state government has made hundreds of  thousands of small water conservation structures. PPP models have not gained traction in India owing to public and political opposition, the rotten state of infrastructure and poor returns. The only successful city-wide example is Jamshedpur where the Tatas have provided water and sewage services since the city was founded. The reasons why PPP models have not worked are not elaborated unfortunately.

Thirsty Nation valiantly tries to plug the leaks by saying there is need for more information, education, pricing (through trade in water futures as well), adaptive policies, financial and economic incentives, research and regional cooperation. The chapter ‘Plumbing the Gaps’ is aimed more at selling India’s water sector as an attractive investment prospect rather than suggesting concrete reforms. The areas for investment remain unclear though, given the murkiness of data and abysmal governance.

The book is a good source of data but has missed an opportunity to value water and make a case for financial reform of water utilities. Most utilities are in dire straits owing to political opportunism, and the financial analysts who brought this volume together could have easily analysed and suggested how to change the situation. We may have to wait for “Thirstier Nation” to understand this. 

Jacob is head of policy at WaterAid India

(This story was published in BW | Businessworld Issue Dated 25-08-2014)