The wettest spot on earth has no drinking water ! Cherrapunji, in northeast India, epitomises the contradictions of the water scenario on the blue planet. It is reasonable to expect that water should be freely available on a globe where three-quarters of the surface of the planet is covered with water. On the other hand, delivering to human settlements, water of acceptable quality, with reasonable regularity and in adequate quantity, requires investments in infrastructure and management. Irrespective of the amount of water available, these will not be forth-coming unless there are appropriate institutions and corresponding incentives. Given the nature of the public sector water utilities in India, and many places around the world, the scarcity of drinking water in Cherrapunji is not an aberration, but an inevitable consequence of institutional failure. The contributors in this volume analyse the incentive structure of water supply systems. Through a range of case studies from different countries, the authors showcase the wide range of grassroots endeavours to tackle the water situation by the people. The authors explain the phenomenon of de facto water markets already functioning in many parts of the planet. The book calls for a greater appreciation of market-oriented water sector reforms.

Barun S. Mitra is the Director of Liberty Institute, an independent think tank based in New Delhi, which is engaged in public policy research and advocacy with the aim of promoting economic and political freedoms. He received the Julian L. Simon Award for his contribution in explaining the role of market economics in harnessing human ingenuity and creativity, leading to improvement in economic wellbeing and environmental quality. He is a member of the Mont Pelerin Society.

Kendra Okonski is Director of the Environment Programme at International Policy Network, a London-based development charity. She is the editor or co-editor of several publications and frequently contributes to print and broadcast media in the realm of development and environment issues. She is a fellow of the Royal Society for the Arts and a Council Member of the University of Buckingham. She has a degree in economics from Hillsdale College.

Mohit Satyanand is presently the Chairman of the board of Liberty Institute, an independent public policy research and advocacy organisation. He has been vocal in debates regarding public policy, particularly in the areas of education and public utilities. An entrepreneur, investor and strategic management advisor, he has been equally active in setting up and overseeing not-for-profit initiatives in the rehabilitation of street children, in rural development and in promoting innovative music. An avid trekker and photographer in the Indian Himalayas, he has written the Uttaranchal chapter for a book on trekking in India (Outlook Group).

List of Tables, Figures and Boxes

Contributors to the Volume

Introduction: Why Markets Matter

Section 1
Institutions and Incentives

1. Is India Running Out of Water? The Simon-Kahn Approach to Sustainable Water Management
— Paul P. Appasamy

Illusion and Reality

Relevance for India

Institutional Framework

Conclusion

2. Managing Water: The Pragmatic View
— V. Santhakumar

The Missing Pieces

Advocating Solutions

3. Incentives Matter: The Case for Market Valuation of Water
— Andrew P. Morriss

Markets as Low Cost Signal Mechanisms

Markets as Dynamic Signal Mechanisms

Market Incentives to Create New Knowledge

Markets Enable Diverse Human Ends

Criticisms of Water Markets in Perspective

The Alternatives to Markets

Foundations for Water Markets

4. The Shifting Pattern of Agricultural Water and Land Use
— Indur M. Goklany

US Trends: 1910 to 2004

The Environmental Transition Hypothesis

5. Water Sector Reforms: Making it Work by Navigating the Blockages
— Chetan Pandit

Need for Reforms

Roadblocks Galore

Opposition from Activists

Conclusion

Section 2
Water markets in india

6. The Challenges Confronting Urban Water Sector Reforms in Urban India
— Maithili Ramachandran

Drinking Water

Striking a Balance between Efficiency and Equity

Water Pricing

Conclusion

7. Poor Provision of Household Water in India:
How Entrepreneurs Respond to the Public Sector’s Failure
— Laveesh Bhandari and Aarti Khare

Human Water Requirements

The Public Provision of Water and Existing Scarcity

The Uncovered 30 Per Cent

The Poor in Urban India

Environmental Impact of Poor Water Supply: Overuse of Subsurface Water

Private Sector Responses

Private Piped Water Supply: A Case Study from Delhi

Discussion

Policy Implications

Conclusion

8. Public-Private Partnership in Urban Water Management: The Case of Tirupur
— Prakash Nelliyat

Tirupur’s Knitwear/Hosiery Industry

Textile Processing and Water Requirements

Industrial Water Market

Domestic Water Supply Issues

Conclusion

9. The Rain Catchers of Saurashtra, Gujarat
— Ambrish Mehta

Saurashtra–An Overview

The Movement Begins

Evaluating the Rain Catcher Movement

Limited Capacity for Groundwater Recharge

Wider Implications

Section 3
International water sector reform initiatives

10. The Reality of Water Provision in Urban Africa
— Franklin Cudjoe and Kendra Okonski

Background

Public versus Private Provision of Water

Discussion

The Right Kind of ‘Privatisation’

Africa’s Informal Water Entrepreneurs

Conclusion

11. Water Governance in China: The Failure of a Top-Down Approach
— Wang Xinbo

Geographical Background

Water Resources Management

Introduction of Water Rights

Water Quality Governance

Governance of Water Services

Regulation Framework

A Survey of the Water Service Industry

Summary and Conclusion

12. Expanding Quality WSS Coverage in India: Meeting the Goals of the Future
— Amir Ullah Khan and Harsh Vivek

Introduction

Section I—Access and Coverage of WSS in Urban and Rural India

WSS Situation in Urban India

WSS Analysis for Different Classes of Cities

Section II—Institutions and Policies Governing WSS in India

Section III—Health and The Impact of WSS
 

13. Reforming Water Policies in Latin America: Some Lessons from Chile and Ecuador
— Douglas Southgate and Eugenio Figueroa B.

The Disadvantages of Subsidised Prices and

The Benefits of Reform: Potable Water in Quito

The Disadvantages of Irrigation Subsidies and

Impediments to Pricing Reform: The Case of Ecuador

The Imperative of Irrigation Pricing Reform

Pro-Market Water Policies in Chile

Summary and Conclusions

14. How Not to Reorganise an Industry: Privatisation, Liberalisation and Scottish Water
— Colin Robinson

Scotland’s Water

Scottish Water: Efficiency and Standards of Service

Nationalisation and its Problems

English, Welsh and Scottish Water: Problems of Nationalised Monopoly

Starting a Revival? The 2005 Water Services Act

Privatisation and Liberalisation

What to Do

Index

Paul P. Appasamy is Professor and Member-Secretary, Centre of Excellence in Environmental Economics, Madras School of Economics.

Laveesh Bhandari received his Ph.D. in Economics from Boston University in 1996, being awarded the ‘Best Thesis in International Economics’ by India’s EXIM Bank. He has worked in the financial sector (Manhattan Funds, USA) where he was involved in the valuation of derivatives, in the development sector (National Council of Applied Economic Research, New Delhi) and now heads Indicus Analytics in New Delhi. He has also taught economics at Boston University and IIT Delhi.

Franklin Cudjoe directs the Ghanaian think tank Imani: The Centre for Humane Education, whose vision is to educate and create a core of young scholars that will promote market oriented policies throughout Africa. Prior to founding Imani, he was a programme officer and research assistant at the Institute of Economic Affairs in Ghana.

Eugenio Figueroa B. is Professor of Economics at the Department of Economics and Director of the Center for Environmental and Natural Resource Economics (CENRE) at the School of Economics and Business, and Executive Director of the National Center for the Environment (CENMA), at the University of Chile. He is also Adjunct Professor at the University of Alberta’s Business School. He obtained his Ph.D. in Agricultural and Natural Resource Economics from the University of Maryland and his Masters in Economics from the University of Toronto. He also obtained his Doctorate in Veterinary Medicine (D.V.M.) and Bachelor in Animal Sciences from the University of Chile.

Indur M. Goklany is Assistant Director, Science & Technology Policy, U.S. Department of the Interior. During his 30-plus years in federal and state governments, and the private sector, he has written over 100 monographs, book chapters and papers on topics ranging from climate change, human well-being, economic development, technological change, and biotechnology to sustainable development.

Amir Ullah Khan graduated from the Department of Electronics and Communication Engineering at Osmania University, Hyderabad. He then studied management at the Institute of Rural Management, Anand (IRMA). He did his doctorate on ‘Intellectual Property Issues in International Trade’. In 1993, he joined the Indian Civil Services after which he worked for four years with the United Nations Development Programme (UNDP). He has several years of academic experience at the Indian School of Finance and Management, where he taught economics and management at the chapters of the School in New Delhi, Madras and London. Subsequently, he worked as the Executive Director and Editor, Encyclopaedia Britannica (India) and as Fellow with the India Development Foundation. He is currently at the PHD Chamber of Commerce and Business.

Aarti Khare is an economist trained at Delhi School of Economics. She has conducted various studies on the Indian economy, business and markets. She has analysed the performance of the Indian economy at the national, state and sub-state level. She is currently researching the market for fast-moving consumer goods in India.

Ambrish Mehta is a graduate in biology, and a senior member of an Action Research in Community Health and Development (ARCH), a non-governmental organisation based in Gujarat, India. After graduation in 1980, he started working on the issue of proper rehabilitation of the tribal people affected by the Sardar Sarovar Project, a large multipurpose dam on the Narmada River. During this period, he also became interested in environmental issues relating to forests and water and started studying them.

Andrew P. Morriss is Galen J. Roush Professor of Business Law & Regulation at Case School of Law in Cleveland, Ohio; Senior Fellow, Property & Environment Research Center, Bozeman, Montana; and Senior Scholar, The Mercatus Center at George Mason University, Virginia. He received his Ph.D. in economics from MIT, his J.D. and M.Pub.Aff. from the University of Texas at Austin, and his A.B. from Princeton University.

Prakash Nelliyat is working as Research Associate at Madras School of Economics, Chennai, India. He completed his masters degree in economics (University of Calicut), M.Phil in environmental economics (University of Madras) and recently submitted his doctoral thesis on “Industrial Growth and Environmental Degradation: A Case Study of Industrial Pollution in Tirupur” to the University of Madras. Prakash has more than 10 years research experience in the areas of water resources management, environmental economics, and sustainability issues at Madras Institute of Development Studies and Madras School of Economics and 5 years teaching experience in economics and rural development at Indira Gandhi National Open University. He has presented a number of papers in national and international seminars and has also published few articles. Prakash was a visiting scholar at Department of Water and Environmental Studies, Linkoping University, Sweden during August-October 2002.

Chetan Pandit graduated in Civil Engineering from the Indian Institute of Technology (IIT) Delhi, and went on to obtain Masters in Engineering Hydrology from Galway, Ireland. A water sector professional with 30 years standing, he works for the Government of India, where presently he is Chief Engineer of the Upper Yamuna River Board.

Maithili Ramachandran completed her B.A. in Economics from Stella Maris College, Chennai and her M.Sc. from the Madras School of Economics (MSE). She worked as Research Assistant on a couple of projects at MSE, including a Small Area Estimation of Child Malnutrition and Poverty in Uttar Pradesh and Designing a Betterment Levy for the IT Corridor in Chennai. Her research interests lie mainly in the fields of Development Economics, International Trade and Gender. She did her Masters thesis on Vulnerability and Health and hopes to pursue her Ph.D. in these fields.

Colin Robinson was appointed in 1968 to the Chair of Economics at the University of Surrey. There he founded the Department of Economics and is now Emeritus Professor. From 1992 to 2002, he was Editorial Director of the Institute of Economic Affairs, a think tank in London.

V. Santhakumar started his career as a civil engineer. After completing his Ph.D. in public policy studies from the Indian Institute of Technology, Chennai, he joined the Centre for Development Studies (CDS), Trivandrum, as a faculty member and is currently working there as on Associate Fellow (Associate Professor). He has worked on issues of institutional efficiency and reforms in the provision on public services. He has also analysed the institutions governing the management of natural resources and environment in a number of research articles. Some of these have been published in the journal of Environment and Development Economics and Economic and Political Weekly and in edited volumes.

Douglas Southgate is a natural resource economist with a Ph.D. from the University of Wisconsin, and has been a faculty member at Ohio State University since 1980. His research focuses mainly on environmental issues in the developing world, such as tropical deforestation and the economics of watershed management.

Harsh Vivek works at the India Development Foundation (IDF) as a researcher, and the managing editor of the Journal of Rural Markets, published by the India Development Foundation. He is an Economics graduate from the University of Delhi and a management graduate from the Institute of Rural Management, Anand (IRMA) in 2004. He has worked at the International Water Management Institute (Anand), after which he joined the India Development Foundation. He has worked with Dr. Amir Ullah Khan on several projects in agriculture and international trade. He has also worked as a visiting co-faculty with Dr. Khan at the Birla Institute of Management and Technology, Greater Noida where he taught the course called ‘Fundamentals of Agribusiness’. Dr. Amir Ullah Khan and Harsh Vivek co-authored the publication from IDF and CII titled ‘India-Pakistan: Partnering for a Prosperous South-Asia’, which is expected to be officially released soon in both India and Pakistan.

Wang Xinbo is associate professor at Capital University of Economy and Business (CUEB), Beijing, China, and co-director of the China Sustainable Development Research Center at CUEB. He is a Ph.D. candidate in the graduate school of China Academy of Social Sciences (CASS), and earned an MA in economics in 1988. From 1988–1992, he worked in the CASS Institute for Industrial Economics. From 2000–2004, he worked at the Unirule Institute of Economics in Beijing, and he is now an honorary research fellow of the institute.