HDR 2006 Chapter 2: Water for human consumption
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| Human Development Report 2006 - Beyond Scarcity: Power, Poverty and the Global Water Crisis |
| Report Overview | Chapter 1: Ending the Crisis in Water and Sanitation | Chapter 2: Water for human consumption | Chapter 3: The vast deficit in sanitation | Chapter 4: Water scarcity, risk and vulnerability | Chapter 5: Water competition in agriculture| | Chapter 6: Managing transboundary waters | Links to the Millennium Development Goals | Notes and Bibliography | UNDP Fast Facts |
| Background and issues papers:
(Link to full list of Papers for download) |
| Related WaterWiki articles:
Water Rights and Wrongs | Summary of Live Forum: HDR 2006 - From the Report to Action on the Ground |
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Providing water for life
"The human right to water”, declares the United Nations Committee on Economic, Social and Cultural Rights, (OSCE) “entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic use.” These five core attributes represent the foundations for water security. Yet they are widely violated.
Why is it that poor people get less access to clean water and pay more for it? In urban areas the cheapest, most reliable source of water is usually the utility that maintains the network. Poor households are less likely to be connected to the network—and more likely to get their water from a variety of unimproved sources. In Dar es Salaam, Tanzania, or Ouagadougou, Burkina Faso, fewer than 30% of households are connected.
When households are not connected, they have limited options. Either they collect water from untreated sources or a public source, or they purchase water from a range of intermediaries, including standpipe operators, water vendors and tanker truck operators. The debate on water privatization has tended to overlook the fact that the vast majority of the poor are already purchasing their water in private markets. These markets deliver water of variable quality at high prices.
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High prices for the poor
Distance from the utility inflates prices. As water passes through intermediaries and each adds transport and marketing costs, prices are ratcheted up. Poor people living in slums often pay 5–10 times more per litre of water than wealthy people living in the same city.
Utility pricing policies add to the problems. Most utilities now implement rising block tariff systems. These aim to combine equity with efficiency by raising the price with the volume of water used. In practice, the effect is often to lock the poorest households into the higher tariff bands. The reason: the intermediaries serving poor households are buying water in bulk at the highest rate. In Dakar poor households using standpipes pay more than three times the price paid by households connected to the utility.
If utility prices are so much cheaper, why do poor households not connect to the utility? Often because they are unable to afford the connection fee: even in the poorest countries this can exceed $100. In Manila the cost of connecting to the utility represents about three months’ income for the poorest 20% of households, rising to six months’ in urban Kenya. Location is another barrier to entry. In many cities utilities refuse to connect households lacking formal property titles, thereby excluding some of the poorest households.
Rural households face distinct problems. Living beyond formal networks, rural communities typically manage their own water systems, though government agencies are involved in service provision. Most agencies have operated on a “command and control” model, often supplying inappropriate technologies to inappropriate locations with little consultation. The result has been a combination of underfinancing and low coverage, with rural women bearing the costs by collecting water from distant sources.
See also Scaling up community management of rural water suppy
The key role of public providers
In recent years international debate on the human right to water has been dominated by polarized exchanges over the appropriate roles of the private and public sectors. Important issues have been raised—but the dialogue has generated more heat than light.
Some privatization programmes have produced positive results. But the overall record is not encouraging. From Argentina to Bolivia,and from the Philippines to the United States, the conviction that the private sector offers a “magic bullet” for unleashing the equity and efficiency needed to accelerate progress towards water for all has proven to be misplaced. While these past failures of water concessions do not provide evidence that the private sector has no role to play, they do point to the need for greater caution, regulation and a commitment to equity in public-private partnerships.
Two specific aspects of water provision in countries with low coverage rates caution against an undue reliance on the private sector. First, the water sector has many of the characteristics of a natural monopoly. In the absence of a strong regulatory capacity to protect the public interest through the rules on pricing and investment, there are dangers of monopolistic abuse. Second, in countries with high levels of poverty among unserved populations, public finance is a requirement for extended access regardless of whether the provider is public or private.
The debate on privatization has sometimes diverted attention from the pressing issue of public utility reform. Public providers dominate water provision, accounting for more than 90% of the water delivered through networks in developing countries. Many publicly owned utilities are failing the poor, combining inefficiency and unaccountability in management with inequity in financing and pricing. But some public utilities—Porto Alegre in Brazil is an outstanding example—have succeeded in making water affordable and accessible to all.
There are now real opportunities to learn from failures and build on successes. The criterion for assessing policy should not be public or private but performance or nonperformance for the poor.
Some countries have registered rapid progress in water provision. From Colombia to Senegal and South Africa innovative strategies have been developed for extending access to poor households in urban areas. While rural populations continue to lag behind urban populations globally, countries as diverse as Morocco and Uganda have sustained rapid increases in coverage. What are the keys to success?
See also Public-Private Partnerships in the Water Sector
Political leadership and attainable targets make the difference
As emphasized throughout the Report, there are no ready-made solutions. Policies that produce positive outcomes for the poor in one setting can fail in another. However, some broad lessons emerge from the success stories.The first, and perhaps the most important, is that political leadership matters. The second is that progress depends on setting attainable targets in national plans that are backed by financing provisions and strategies for overcoming inequality.
This does not mean uncritical support for blanket subsidies. Well designed subsidies in Chile, Colombia and South Africa do reach the poor—and do make a difference. But in many cases subsidies ostensibly designed to enhance equity in utility pricing provide large transfers to the wealthy, with few benefits for poor households that are not connected to utilities. Similarly, in much of Sub- Saharan Africa higher income households with connections to utilities derive the greatest gains from water sold at prices far below the level needed to cover operations and maintenance costs.
See also Water governance
Regulation and sustainable cost-recovery are vital to equity and efficiency
Because water networks are natural monopolies, regulation needs to ensure that providers meet standards for efficiency and equity—in effect, protecting the interests of the user. Strong, independent regulatory bodies have been difficult to establish in many developing countries, leading to political interference and nonaccountability. But efforts to build regulation through dialogue between utility providers and citizens have yielded some major advances—as in Hyderabad, India.
More broadly, it is important that governments extend the regulatory remit beyond formal network providers to the informal markets that poor people use. Regulation does not mean curtailing the activities of private providers serving the poor. But it does mean working with these providers to ensure adherence to rules on equitable pricing and water quality.
Sustainable and equitable cost-recovery is part of any reform programme. In many cases there are strong grounds for increasing water prices to more realistic levels and for improving the efficiency of water management: in many countries water losses are too high and revenue collection is too low to finance a viable system.
What is sustainable and equitable varies across countries. In many low-income countries the scope for cost-recovery is limited by poverty and low average incomes. Public spending backed by aid is critical. Middle-income countries have more scope for equitable cost-recovery if governments put in place mechanisms to limit the financial burden on poor households.
Middle-income and some low-income countries also have the potential to draw more on local capital markets. This is an area in which international support can make a difference through credit guarantees and other mechanisms that reduce interest rates and market perceptions of risk.
Building on the national and global planning framework set out in Chapter 1, core strategies for overcoming national inequalities in access to water include:
- Setting clear targets for reducing inequality as part of the national poverty reduction strategy and Millennium Development Goal reporting system, including halving disparities in coverage between rich and poor.
- Establishing lifeline tariffs that provide sufficient water for basic needs free of charge or at affordable rates, as in South Africa.
- Ensuring that no household has to spend more than 3% of its income to meet its water needs.
- Targeting subsidies for connections and water use to poor households, as developed in Chile and Colombia.
- Increasing investments in standpipe provision as a transitional strategy to make clean, affordable water available to the poor.
- Enacting legislation that empowers people to hold providers to account.
- Incorporating into public-private partnership contracts clear benchmarks for equity in the extension of affordable access to poor households.
- Developing regulatory systems that are effective and politically independent, with a remit that stretches from the utility network to informal providers.
Further Readings
Read the Full Chapter 
Hdr 2006 chapter 2.pdf
Public-Private Partnerships in the Water Sector
Scaling up community management of rural water suppy
Source
This article is based on the HDR 2006 Summary Report. HDR2006 English Summary.pdf
