Water for free means no water at all

By Acumen on June 18, 2007

This piece in The Huffington Post by Marc Gunther highlights a really exciting trend in the water sector around the convergence of business and provision of safe water. This is an issue we have been working on since 2003, and we have been excited to partner with many of the organizations he cites, including the Global Water Challenge, WaterHealth International, and the Coca-Cola Company.

Gunther addresses what has been a controversial polemic between water as a resource versus water as a human right and makes the argument that treating water as a resource for those who can afford to pay will make it more readily accessible to those who can’t. He brings up some great points, and I wanted to add some of our reflections on the true cost of water faced by those who are often qualified as too poor to pay.

It might be possible that a government would cross-subsidize water, charging wealthier customers more and poorer customers less, but this is different from charging nothing at all. There are a few problems with any system, public or private, that provides water for free to a large segment of the population: First it eliminates the interest of entrepreneurs, distributors, innovators and investors to find cheaper and more reliable ways to make water available to those who need it most.

In India, an estimated 600 million people lack access to safe drinking water, and 1,600 people die every day there due to water-borne diseases. Given that 80% of India’s population lives on less than $2 dollars per day, one could say that these people can’t afford to pay for water and should get it for free. Though these people may all deserve to get safe reliable water for free, there is no government, donor or technology that we have ever seen that can solve this problem with free water, even if all the wealthy Indians were willing to pay more for their water and pay their water bills on time. Even those who don’t pay for water with money, do pay in lost time and lost wages due to health impacts. As a result, these individuals are forced to make trade-offs between working and collecting water, or paying for water or paying for healthcare They also often do pay in cash (at high rates) for more reliable water that what they get from “free” public services. Unfortunately, this happens often through more “unofficial” or “informal” channels and so is not well documented.

Second, water is a precious and increasingly scarce resource, and one on which life depends. Undervalued water will lead to wasted water, a point that Gunther addresses. Those living on less than $2 a day are acutely aware of this, especially since most of them pay a significant portion of their incomes for intermediate access to water that has to be treated at home, often using methods like boiling, which are slow and expensive. So finding a fair price for water and investing in improved quality and distribution could lower the cost for end-users who now often pay twice: once for the water, and again to treat it. If governments had greater confidence that they could rely on revenues for water that they distribute, they would perhaps be more willing to invest in improved infrastructure, and in reducing the significant leakage that leads to massive losses of water in urban water systems.

So I would argue that we should go even further when we argue that water should be treated as a resource – not so that it can be made available for free to those who can’t afford it, but rather so that the greatest entrepreneurs and innovators in the world, including some of the companies mentioned, can see their way to making the unmet needs of over a billion people their top priority for social and business reasons. This will mean making water safe, reliable, and perhaps most importantly, affordable for all.

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