Catalog

	Table of Contents
p. 8 of 13 BACK | NEXT I. The Context II. The Need For a Comprehensive Water Policy III. The Policy A. An Overview B. National Policies and Reforms C. Water Resource Management D. Improving Water Services E. Conserving Water F. Promoting Regional Cooperation G. Fostering Participation H. Improving Governance IV. The Policy and ADB's Poverty Reduction Strategy V. Getting the Policy to Work

Water For All: The Water Policy of the Asian Development Bank : III. The Policy

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E. Conserving Water

43. Cost Recovery. Conservation of water and its sustainable use are increasingly critical factors in managing a scarce resource. Governments and civil society need to see water as an economic good. Financial incentives for optimizing water use will be strengthened through a mix of water charges, market-based instruments, and penalties. Public awareness programs will reinforce the incentives. The incentives include water use rights, licenses and charges, tradable permits, effluent charges, water treatment fees, access fees, environmental liabilities, fishing rights, and tax incentives. Managing water demand is a function of efficient pricing, effective regulation, and appropriate education and awareness. ADB will promote tariff reforms through its water-related projects and programs to modify structures and rates so that they reward conservation and penalize waste.

44. ADB will consistently advise governments of the need to adopt cost recovery principles in their water policies and strategies. The expansion of access to water and the improved provision of water services require that capital costs be funded mainly from within the sector by accessing debt markets and developing appropriate tariff structures. Consumers will be expected to meet the full operating and maintenance costs of water facilities and service provision in urban and rural water supply and sanitation schemes subject to subsidy considerations (para. 46). ADB will also promote the inclusion of environmental externalities and the recovery of resource management costs in tariff systems adopted by the DMCs.

45. Evidence from scores of water projects shows that the poor are increasingly willing to pay for water services that are predictable and effective. Governments have been consistently mistaken in their assertions that charging farmers for irrigation services is not possible because of their inability to pay. Several irrigation regimes in the region, including those in Indonesia, Pakistan, Thailand, and Viet Nam, show that farmers, including poor farmers, are willing to pay for irrigation services that are efficient and reliable. Likewise, requiring the poor to pay for the true costs of urban and rural water supplies is possible and has been found to be an effective means of sustaining the services and involving the poor in their management. ADB will continue to press for and support policies that provide for explicit participation of the poor in water-related projects; simultaneously, it will promote the phased elimination of direct subsidies to the poor for accessing basic water services in line with an increase in affordability levels.

46. Subsidies are a controversial issue in the water sector. ADB will support subsidies for water services in the following circumstances: (i) where treated water uses have beneficial external effects in preventing health problems, (ii) where the transaction costs of measuring usage are very high, and (iii) where a limited quantity of treated water for the poor is regarded as a basic human need. Taken together, these circumstances may justify a limited lifeline element in tariff policy. Other forms of subsidies, such as cross-subsidization between systems, will be reviewed to ensure that targeting is efficient and transparent. However, in the long term, governments and regulatory agencies will be persuaded to phase out subsidies as economic conditions improve.

47. Regulation. To serve the best interests of both consumers and the managers of water resources, the system of pricing, incentives, and penalties, regardless of its simplicity or sophistication, requires to be regulated. Regulatory systems need to be established to ensure that laws, standards, rules, and regulations are equitably and consistently applied. In most DMCs, such systems are absent and it is left to the government to play the role of provider and regulator. Regulatory frameworks for the maintenance and enhancement of water quality, as well as the conservation of water resources, will receive particular attention. ADB will promote the establishment of regulatory systems through its policy dialogue with the DMCs and by leveraging its loan and technical assistance programs to this end.

48. Awareness and Education. ADB will also promote wide-ranging public awareness and community education programs especially among women, youth, and farmer groups to broadcast the message of water no longer being a gift from the gods but a resource that needs prudent management. In particular, education that helps communities understand the linkages between water, sanitation, health, and productivity will be encouraged. In its water-related projects and programs, ADB will incorporate components that educate the industry on the efficient use of water, and the need for higher prices for both water use and effluent treatment and discharge. Clearly, the mindsets of people have to change. It is insufficient for policymakers to approach water resource management differently; those who consume water also need to recognize the critical nature of the resource.

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