Reader Dan continues his series on water issues.
Many legal, institutional, and administrative preconditions such as the need for enforcement mechanisms, clear methods of complaint/dispute resolution and administrative transparency, are common to any pricing tool. (my emphasis) However, volume-based, demand management tools require infrastructure capable of volumetric measurement.
Sampath (1992) observes that pricing is dependent on type of physical delivery system suggesting that volumetric pricing is only possible under demand and closed pipe systems as opposed to rotation and continuous flow systems. However Malano and van Hofwegen (1999) take a broader view and describe the classes of service delivery including all the on-request (or arranged) types of delivery. In practice there is a wide range and mix of delivery services and service standard negotiation. The extent to which different service modalities are arranged in such projects as VWRAP, cited above, indicate the complexity of the issue. However. even though there may well be potential for changed patterns of water delivery, volumetric pricing to farmers does not appear suitable on the vast majority of surface irrigation systems in developing countries – including all those where rice is grown. In the case of VWRAP, it is anticipated that at the level of the water user associations, there will be contracts specifying volumetric deliveries, but no volumetric pricing as such. The primary emphasis is on delivering an agreed level of service and building the capacity of the service provider to do so by modernizing management and infrastructure.
Many social, political, economic, cultural and geographical factors affect pricing and production, highlighting the diversity of irrigation systems in general. Thus, various commentators emphasize the need to take diversity into account when implementing water pricing. Molle (2001) points out that economists could come to face similar criticism to engineers for being too discipline-oriented and unrealistic. Ahmad (2000) emphasizes: ‘There is not a general strategy or model to adopt for a specific water pricing policy of a country. Every country has to develop its own strategy.’ There is a danger of pursuing a ‘one-model-fits-all approach’ because administrators find such an approach easier to implement. Therefore, there needs to be a change of attitude within agencies implementing reforms.
I want to reinforce Bruce Webb’s and MG’s comments as well as my own with this note from my last post. I thought drinking water and agriculture needed separate evaluations aside from the food issues themselves. One is the delivery as a closed pipe system from source to customer as is more common for drinking water systems.
Another for agricultural use that one day might have to be closed pipe like oil as water might be treated as a scarce commodity, but currently is not as open irrigation schemes consider water as a relatively non-scarce commodity.
The difficulties to consider in capitalization of infrastructure with varied market and needs of different locales is complex.
The jurisdictional issues make for a fragmentation that might be necessary instead of something to iron out as in the WTO GATS format. Benefits and costs with a very special need to guarantee proper regulation is a pre-requisite. These are normal preconditions to ANY pricing strategy, and involve negotiation by the parties involved. Current WTO GATS 2000 expansion needs a look.