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10. Water resources in world, water supply to cities and settlements.

Water resources

A natural wetland

Water resources are sources of water that are useful or potentially useful to humans. Uses of water

include agricultural, industrial, household, recreational and environmental activities. Virtually all of these

human uses require fresh water.

97% of water on the Earth is salt water, leaving only 3% as fresh water of which slightly over two thirds isfrozen in glaciers and polar ice caps. [1] The remaining unfrozen freshwater is mainly found as

groundwater, with only a small fraction present above ground or in the air.

Fresh water is a renewable resource, yet the world's supply of clean, fresh water is steadily decreasing.

Water demand already exceeds supply in many parts of the world and as the world population continues

to rise, so too does the water demand. Awareness of the global importance of preserving water for

ecosystem services has only recently emerged as, during the 20th century, more than half the worlds

wetlands have been lost along with their valuable environmental services. Biodiversity-rich freshwater

ecosystems are currently declining faster than marine or land ecosystems. The framework for allocatingwater resources to water users (where such a framework exists) is known as water rights.

A graphical distribution of the locations of water on Earth.

Contents

y 1 Sources of fresh water

o 1.1 Surface water

o

1.2 Under river flow o 1.3 Ground water o 1.4 Desalination

o 1.5 Frozen water


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y 2 Uses of fresh water

o 2.1 Agricultural

o 2.2 Industrial

o 2.3 Household

o 2.4 Recreationo 2.5 Environmental

y 3 Water stress

o 3.1 Population growth

o 3.2 Expansion of business activity

o 3.3 Rapid urbanization

o 3.4 Climate change

o 3.5 Depletion of aquiferso 3.6 Pollution and water protection

o 3.7 Water and conflict y 4 World water supply and distribution

y 5 Economic considerations

o 5.1 Business response

S ources of fresh water

Main article: Surface water

Lake Chungar and Parinacota volcano in northern Chile

Surface water is water in a river, lake or fresh water wetland. Surface water is naturally replenished byprecipitation and naturally lost through discharge to the oceans, evaporation, and sub-surface seepage.

Although the only natural input to any surface water system is precipitation within its watershed, the totalquantity of water in that system at any given time is also dependent on many other factors. These factorsinclude storage capacity in lakes, wetlands and artificial reservoirs, the permeability of the soil beneaththese storage bodies, the runoff characteristics of the land in the watershed, the timing of the precipitationand local evaporation rates. All of these factors also affect the proportions of water lost.


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H uman activities can have a large and sometimes devastating impact on these factors. H umans oftenincrease storage capacity by constructing reservoirs and decrease it by draining wetlands. H umans oftenincrease runoff quantities and velocities by paving areas and channelizing stream flow.

The total quantity of water available at any given time is an important consideration. Some human water users have an intermittent need for water. For example, many farms require large quantities of water inthe spring, and no water at all in the winter. To supply such a farm with water, a surface water systemmay require a large storage capacity to collect water throughout the year and release it in a short periodof time. Other users have a continuous need for water, such as a power plant that requires water for cooling. To supply such a power plant with water, a surface water system only needs enough storagecapacity to fill in when average stream flow is below the power plant's need.

Nevertheless, over the long term the average rate of precipitation within a watershed is the upper boundfor average consumption of natural surface water from that watershed.

Natural surface water can be augmented by importing surface water from another watershed through acanal or pipeline. It can also be artificially augmented from any of the other sources listed here, however

in practice the quantities are negligible. H umans can also cause surface water to be "lost" (i.e. becomeunusable) through pollution.

Brazil is the country estimated to have the largest supply of fresh water in the world, followed by Russiaand Canada.

U nder River Flow

Throughout the course of the river, the total volume of water transported downstream will often be acombination of the visible free water flow together with a substantial contribution flowing through sub-surface rocks and gravels that underlie the river and its floodplain called the hyporheic zone. For many

rivers in large valleys, this unseen component of flow may greatly exceed the visible flow. The hyporheiczone often forms a dynamic interface between surface water and true ground-water receiving water fromthe ground water when aquifers are fully charged and contributing water to ground-water when groundwaters are depleted. This is especially significant in karst areas where pot-holes and underground riversare common.

Ground water

Sub-Surface water travel time


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Shipot, a common water source in Ukrainian villages

Sub-surface water, or groundwater, is fresh water located in the pore space of soil and rocks. It is alsowater that is flowing within aquifers below the water table. Sometimes it is useful to make a distinctionbetween sub-surface water that is closely associated with surface water and deep sub-surface water inan aquifer (sometimes called "fossil water").

Sub-surface water can be thought of in the same terms as surface water: inputs, outputs and storage.The critical difference is that due to its slow rate of turnover, sub-surface water storage is generally muchlarger compared to inputs than it is for surface water. This difference makes it easy for humans to usesub-surface water unsustainably for a long time without severe consequences. Nevertheless, over thelong term the average rate of seepage above a sub-surface water source is the upper bound for averageconsumption of water from that source.

The natural input to sub-surface water is seepage from surface water. The natural outputs from sub-surface water are springs and seepage to the oceans.

If the surface water source is also subject to substantial evaporation, a sub-surface water source maybecome saline. This situation can occur naturally under endorheic bodies of water, or artificially under irrigated farmland. In coastal areas, human use of a sub-surface water source may cause the direction of seepage to ocean to reverse which can also cause soil salinization. H umans can also cause sub-surfacewater to be "lost" (i.e. become unusable) through pollution. H umans can increase the input to a sub-surface water source by building reservoirs or detention ponds.

D esalination

Main article: Desalination

D esalination is an artificial process by which saline water (generally sea water) is converted to freshwater. The most common desalination processes are distillation and reverse osmosis. D esalination iscurrently expensive compared to most alternative sources of water, and only a very small fraction of total

human use is satisfied by desalination. It is only economically practical for high-valued uses (such ashousehold and industrial uses) in arid areas. The most extensive use is in the Persian Gulf.

Frozen water

An iceberg as seen from Newfoundland

Several schemes have been proposed to make use of icebergs as a water source, however to date thishas only been done for novelty purposes. Glacier runoff is considered to be surface water.

The H imalayas, which are often called "The Roof of the World", contain some of the most extensive andrough high altitude areas on Earth as well as the greatest area of glaciers and permafrost outside of thepoles. Ten of Asias largest rivers flow from there, and more than a billion peoples livelihoods depend onthem. To complicate matters, temperatures are rising more rapidly here than the global average. In Nepalthe temperature has risen with 0.6 degree over the last decade, whereas the global warming has been


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around 0.7 over the last hundred years.

U ses of fresh water

Uses of fresh water can be categorized as consumptive and non-consumptive (sometimes called"renewable"). A use of water is consumptive if that water is not immediately available for another use.Losses to sub-surface seepage and evaporation are considered consumptive, as is water incorporatedinto a product (such as farm produce). Water that can be treated and returned as surface water, such assewage, is generally considered non-consumptive if that water can be put to additional use.

Agricultural

A farm in Ontario

It is estimated that 69% of worldwide water use is for irrigation, with 15-35% of irrigation withdrawalsbeing unsustainable.

In some areas of the world irrigation is necessary to grow any crop at all, in other areas it permits moreprofitable crops to be grown or enhances crop yield. Various irrigation methods involve different trade-offs

between crop yield, water consumption and capital cost of equipment and structures. Irrigation methodssuch as furrow and overhead sprinkler irrigation are usually less expensive but are also typically lessefficient, because much of the water evaporates, runs off or drains below the root zone. Other irrigationmethods considered to be more efficient include drip or trickle irrigation, surge irrigation, and some typesof sprinkler systems where the sprinklers are operated near ground level. These types of systems, whilemore expensive, usually offer greater potential to minimize runoff, drainage and evaporation. Any systemthat is improperly managed can be wasteful, all methods have the potential for high efficiencies under suitable conditions, appropriate irrigation timing and management. One issue that is often insufficientlyconsidered is salinization of sub-surface water.

Aquaculture is a small but growing agricultural use of water. Freshwater commercial fisheries may also beconsidered as agricultural uses of water, but have generally been assigned a lower priority than irrigation(see Aral Sea and Pyramid Lake).

As global populations grow, and as demand for food increases in a world with a fixed water supply, thereare efforts underway to learn how to produce more food with less water, through improvements inirrigation methods and technologies, agricultural water management, crop types, and water monitoring.


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Industrial

A power plant in Poland

It is estimated that 22% of worldwide water use is industrial. Major industrial users include power plants,

which use water for cooling or as a power source (i.e. hydroelectric plants), ore and oil refineries, which

use water in chemical processes, and manufacturing plants, which use water as a solvent.

The portion of industrial water usage that is consumptive varies widely, but as a whole is lower than

agricultural use.

Water is used in power generation. H ydroelectricity is electricity obtained from hydropower. H ydroelectric

power comes from water driving a water turbine connected to a generator. H ydroelectricity is a low-cost,

non-polluting, renewable energy source. The energy is supplied by the sun. H eat from the sun evaporates

water, which condenses as rain in higher altitudes, from where it flows down.

Pressurized water is used in water blasting and water jet cutters. Also, very high pressure water guns are

used for precise cutting. It works very well, is relatively safe, and is not harmful to the environment. It is

also used in the cooling of machinery to prevent over-heating, or prevent saw blades from over-heating.

Water is also used in many industrial processes and machines, such as the steam turbine and heat

exchanger, in addition to its use as a chemical solvent. D ischarge of untreated water from industrial uses

is pollution. Pollution includes discharged solutes (chemical pollution) and discharged coolant water

(thermal pollution). Industry requires pure water for many applications and utilizes a variety of purification

techniques both in water supply and discharge.


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H ousehold

D rinking water

It is estimated that 8% of worldwide water use is for household purposes. These include drinking water,bathing, cooking, sanitation, and gardening. Basic household water requirements have been estimated byPeter Gleick at around 50 liters per person per day, excluding water for gardens. D rinking water is water that is of sufficiently high quality so that it can be consumed or used without risk of immediate or longterm harm. Such water is commonly called potable water. In most developed countries, the water supplied to households, commerce and industry is all of drinking water standard even though only a verysmall proportion is actually consumed or used in food preparation.

Recreation

Whitewater rapids

Recreational water use is usually a very small but growing percentage of total water use. Recreationalwater use is mostly tied to reservoirs. If a reservoir is kept fuller than it would otherwise be for recreation,then the water retained could be categorized as recreational usage. Release of water from a fewreservoirs is also timed to enhance whitewater boating, which also could be considered a recreationalusage. Other examples are anglers, water skiers, nature enthusiasts and swimmers.


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Recreational usage is usually non-consumptive. Golf courses are often targeted as using excessiveamounts of water, especially in drier regions. It is, however, unclear whether recreational irrigation (whichwould include private gardens) has a noticeable effect on water resources. This is largely due to theunavailability of reliable data. Additionally, many golf courses utilize either primarily or exclusively treatedeffluent water, which has little impact on potable water availability.

Some governments, including the Californian Government, have labelled golf course usage asagricultural in order to deflect environmentalists' charges of wasting water. H owever, using the abovefigures as a basis, the actual statistical effect of this reassignment is close to zero. In Arizona, anorganized lobby has been established in the form of the Golf Industry Association, a group focused oneducating the public on how golf impacts the environment.

Recreational usage may reduce the availability of water for other users at specific times and places. For example, water retained in a reservoir to allow boating in the late summer is not available to farmersduring the spring planting season. Water released for whitewater rafting may not be available for hydroelectric generation during the time of peak electrical demand.

E nvironmental

Explicit environmental water use is also a very small but growing percentage of total water use.Environmental water usage includes artificial wetlands, artificial lakes intended to create wildlife habitat,fish ladders , and water releases from reservoirs timed to help fish spawn.

Like recreational usage, environmental usage is non-consumptive but may reduce the availability of water for other users at specific times and places. For example, water release from a reservoir to help fishspawn may not be available to farms upstream.

Water stress

Best estimate of the share of people in developing countries with access to drinking water 19702000.

Main articles: water crisis and water stress

The concept of water stress is relatively simple: According to the World Business Council for SustainableD evelopment, it applies to situations where there is not enough water for all uses, whether agricultural,industrial or domestic. D efining thresholds for stress in terms of available water per capita is morecomplex, however, entailing assumptions about water use and its efficiency. Nevertheless, it has beenproposed that when annual per capita renewable freshwater availability is less than 1,700 cubic meters,countries begin to experience periodic or regular water stress. Below 1,000 cubic meters, water scarcitybegins to hamper economic development and human health and well-being.

P opulation growth

In 2000, the world population was 6.2 billion. The UN estimates that by 2050 there will be an additional3.5 billion people with most of the growth in developing countries that already suffer water stress. Thus,water demand will increase unless there are corresponding increases in water conservation and recyclingof this vital resource.


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Ex pansion of business activity

Business activity ranging from industrialization to services such as tourism and entertainment continuesto expand rapidly. This expansion requires increased water services including both supply and sanitation,which can lead to more pressure on water resources and natural ecosystems.

Rapid urbanization

The trend towards urbanization is accelerating. Small private wells and septic tanks that work well in low-density communities are not feasible within high-density urban areas. Urbanization requires significantinvestment in water infrastructure in order to deliver water to individuals and to process theconcentrations of wastewater both from individuals and from business. These polluted andcontaminated waters must be treated or they pose unacceptable public health risks.

In 60% of European cities with more than 100,000 people, groundwater is being used at a faster rate thanit can be replenished. Even if some water remains available, it costs more and more to capture it.

Climate change

Climate change could have significant impacts on water resources around the world because of the closeconnections between the climate and hydrological cycle. Rising temperatures will increase evaporationand lead to increases in precipitation, though there will be regional variations in rainfall. Overall, the globalsupply of freshwater will increase. Both droughts and floods may become more frequent in differentregions at different times, and dramatic changes in snowfall and snow melt are expected in mountainousareas. H igher temperatures will also affect water quality in ways that are not well understood. Possibleimpacts include increased eutrophication. Climate change could also mean an increase in demand for farm irrigation, garden sprinklers, and perhaps even swimming pools

D epletion of aquifers

D ue to the expanding human population, competition for water is growing such that many of the worlds

major aquifers are becoming depleted. This is due both for direct human consumption as well asagricultural irrigation by groundwater. Millions of pumps of all sizes are currently extracting groundwater throughout the world. Irrigation in dry areas such as northern China and India is supplied by groundwater,and is being extracted at an unsustainable rate. Cities that have experienced aquifer drops between 10 to50 meters include Mexico City, Bangkok, Manila, Beijing, Madras and Shanghai.

P ollution and water protection

Main article: Water pollution

Polluted water


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Water pollution is one of the main concerns of the world today. The governments of many countries havestriven to find solutions to reduce this problem. Many pollutants threaten water supplies, but the mostwidespread, especially in underdeveloped countries, is the discharge of raw sewage into natural waters;this method of sewage disposal is the most common method in underdeveloped countries, but also isprevalent in quasi-developed countries such as China, India and Iran. Sewage, sludge, garbage, andeven toxic pollutants are all dumped into the water. Even if sewage is treated, problems still arise.Treated sewage forms sludge, which may be placed in landfills, spread out on land, incinerated or dumped at sea. In addition to sewage, nonpoint source pollution such as agricultural runoff is a significantsource of pollution in some parts of the world, along with urban stormwater runoff and chemical wastesdumped by industries and governments.

Water and conflict

The only known example of an actual inter-state conflict over water took place between 2500 and 2350BC between the Sumerian states of Lagash and Umma. Yet, despite the lack of evidence of internationalwars being fought over water alone, water has been the source of various conflicts throughout history.When water scarcity causes political tensions to arise, this is referred to as water stress. Water stress hasled most often to conflicts at local and regional levels. Using a purely quantitative methodology, ThomasH omer- D ixon successfully correlated water scarcity and scarcity of available arable lands to an increased

chance of violent conflict.

Water stress can also exacerbate conflicts and political tensions which are not directly caused by water.Gradual reductions over time in the quality and/or quantity of fresh water can add to the instability of aregion by depleting the health of a population, obstructing economic development, and exacerbatinglarger conflicts.

Conflicts and tensions over water are most likely to arise within national borders, in the downstream areasof distressed river basins. Areas such as the lower regions of China's Yellow River or the Chao PhrayaRiver in Thailand, for example, have already been experiencing water stress for several years.

Additionally, certain arid countries which rely heavily on water for irrigation, such as China, India, Iran,and Pakistan, are particularly at risk of water-related conflicts. Political tensions, civil protest, and violencemay also occur in reaction to water privatization. The Bolivian Water Wars of 2000 are a case in point.

World water supply and distribution

Food and water are two basic human needs. H owever, global coverage figures from 2002 indicate that, of every 10 people:

y roughly 5 have a connection to a piped water supply at home (in their dwelling, plot or yard);y 3 make use of some other sort of improved water supply, such as a protected well or public

standpipe;y 2 are unserved;y In addition, 4 out of every 10 people live without improved sanitation.

At Earth Summit 2002 governments approved a Plan of Action to:

y H alve by 2015 the proportion of people unable to reach or afford safe drinking water. The GlobalWater Supply and Sanitation Assessment 2000 Report (GWSSAR) defines "Reasonable access"to water as at least 20 liters per person per day from a source within one kilometer of the usershome.

y H alve the proportion of people without access to basic sanitation. The GWSSR defines "Basicsanitation" as private or shared but not public disposal systems that separate waste from humancontact.


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As the picture shows, in 2025, water shortages will be more prevalent among poorer countries whereresources are limited and population growth is rapid, such as the Middle East, Africa, and parts of Asia.By 2025, large urban and peri-urban areas will require new infrastructure to provide safe water andadequate sanitation. This suggests growing conflicts with agricultural water users, who currently consumethe majority of the water used by humans.

Generally speaking the more developed countries of North America, Europe and Russia will not see aserious threat to water supply by the year 2025, not only because of their relative wealth, but moreimportantly their populations will be better aligned with available water resources. North Africa, the MiddleEast, South Africa and northern China will face very severe water shortages due to physical scarcity anda condition of overpopulation relative to their carrying capacity with respect to water supply. Most of South

America, Sub-Saharan Africa, Southern China and India will face water supply shortages by 2025; for these latter regions the causes of scarcity will be economic constraints to developing safe drinking water,as well as excessive population growth.

1.6 billion people have gained access to a safe water source since 1990. [2] The proportion of people indeveloping countries with access to safe water is calculated to have improved from 30 percent in 1970 to71 percent in 1990, 79 percent in 2000 and 84 percent in 2004. This trend is projected to continue.

E conomic considerations

Water supply and sanitation require a huge amount of capital investment in infrastructure such as pipenetworks, pumping stations and water treatment works. It is estimated that Organisation for Economic Co-operation and D evelopment (OEC D ) nations need to invest at least US D 200 billion per year to replaceaging water infrastructure to guarantee supply, reduce leakage rates and protect water quality.

International attention has focused upon the needs of the developing countries. To meet the MillenniumD evelopment Goals targets of halving the proportion of the population lacking access to safe drinkingwater and basic sanitation by 2015, current annual investment on the order of US D 10 to US D 15 billionwould need to be roughly doubled. This does not include investments required for the maintenance of existing infrastructure.

Once infrastructure is in place, operating water supply and sanitation systems entails significant ongoingcosts to cover personnel, energy, chemicals, maintenance and other expenses. The sources of money tomeet these capital and operational costs are essentially either user fees, public funds or somecombination of the two.

But this is where the economics of water management start to become extremely complex as theyintersect with social and broader economic policy. Such policy questions are beyond the scope of thisarticle, which has concentrated on basic information about water availability and water use. They are,nevertheless, highly relevant to understanding how critical water issues will affect business and industryin terms of both risks and opportunities.

Business response

The World Business Council for Sustainable D evelopment in its H 2OScenarios engaged in a scenariobuilding process to:

y Clarify and enhance understanding by business of the key issues and drivers of change related towater.

y Promote mutual understanding between the business community and non-business stakeholderson water management issues.


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y Support effective business action as part of the solution to sustainable water management. Itconcludes that:

y Business cannot survive in a society that thirsts.y One does not have to be in the water business to have a water crisis.y Business is part of the solution, and its potential is driven by its engagement.y Growing water issues and complexity will drive up costs.

S ee also

Wa ter port al

y Ecological sanitationy D eficit irrigationy Optimum water content for tillagey Peak water y Shared vision planningy Tap water y Virtual water y

Water cycley Water distribution on Earthy Water lawy University of WisconsinMilwaukee School of Freshwater Sciences

U rban Water S upply and D istribution

Introduction Affordable, abundant and clean water is essential for human well-being. There are clear linkagesbetween access to potable water and health, nutrition levels and subsequently education

achievement, labor productivity and economic growth. H owever, for the urban poor reliable access toclean and affordable water often is unavailable. As many as 500 million urban residents haveinappropriate access to water services or experience water scarcity. [USAI D /PA D CO, 2001]. TheWorld Bank reports that "some 25% of the urban population of Latin America and at least 50% of theurban population of Africa are not connected to official utility networks and rely on alternative sourcesfor their water supply." (World Bank Water Sanitation Website) For middle-class residents regular water supply is one of the most valued urban services. Often, even these families face de factorationing. In many cities demand for water, at current tariff levels, greatly outstrips supply, resulting in


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water management strategies that deliver water to households only for a few hours each day or for certain days of the week. Given the pressures of urban population growth, especially of low-incomefamilies that construct dwellings at the urban fringe far removed from main trunk lines, providingadequate supplies of safe water will remain one of the biggest urban challenges in coming decades.

Key Issues

D ata There are some real challenges to be faced in collecting sound data on access to water in cities.While the data we have clearly outlines a need for expanded service delivery, it tends to mask severalchallenges. First, the data tends to measure "access" by number of stand-pipes and/or taps per square kilometer or some other defined area. This measure is then used in a uniform fashion tocompare access in urban and rural environments. Unfortunately, we do not have good data onvolume of use (number of people drawing water from a particular source), frequency of servicedelivery (how often does water run from a particular tap), and water quality. These are key issues inurban areas where hundreds and even thousands of people may be packed into a square kilometer,

dependent on two or three public taps that only run once a day or even every other day. Servicequality and coverage can have a profound effect on the health and well-being of the urban poor whomay be spending long hours waiting in line (at all hours of the day and night) to get water of questionable quality that they may be forced to store in less than sanitary conditions. D onors andgovernments must find new ways to measure "access" if we are to truly understand the plight of theurban poor.

Ex panding Water S upply to U nserviced Neighborhood

According to United Nations and W H O standards, minimally acceptable water access consists of having a source of abundant, safe drinking water within 200 meters. This standard implies that

standpipes and outside water connections can be part of the solution, especially in high-density low-income areas where the realistic alternative is expensive and unsafe water delivered by truck or nowater supply at all. A majority of developing countries, however, have been unwilling to incorporatesuch reduced standards in their urban planning. The result has been a publicly endorsed "right" toinside-the-house public water supply, which many residents in fact do not receive, leading tofrustration, resentment and illegal connections. Public authorities face the policy challenge of defininga standard of water service that meets critical health objectives, is financially sustainable within theresources available to families and the public water supplier, and yet is acceptable to the community.Public participation in water supply decisions is part of the solution. Once households recognize howtheir costs of water supply will differ with varying types of service, community members often canagree on the preferred type of service for their neighborhood. Such an approach requires that thecosts of supplying and distributing water are accurately reflected in user tariffs, and that communities

Can choose among different combinations of tariff and service level.Access to S afe Water S ources

In many parts of the world, cities dump untreated human wastes, along with industrial and agriculturalwastes, into the same rivers or lakes, from which other cities (or other neighborhoods of the samecity) extract their water supply. Preserving sources of safe water supply, in the face of rapid urban


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growth, requires advance planning -often on a regional basis - plus enforcement of watershedprotection measures and application of urban growth restrictions. Industries with toxic effluents, or high-density residential developments with untreated wastes, need to be steered away from water sources or areas that will need to be drawn upon as water sources in the future. Economic incentivesor regulations can be set up to accomplish this. (See the UEM brief )

Water S ystem E fficiency and Cost Recovery

;/D ealing with aging distribution systems imposes high economic costs for resource-strapped urbanwater and sanitation service (WSS) providers. It is not rare for 40% or more of all water that enters thedistribution system to be unaccounted for through theft, illegal hook-ups, abuses of the right to freewater, and, most importantly, leakage, either through public mains or household connections. Someurban water systems in Eastern Europe have found as much as 90% of consumer meters are non-functioning, making it impossible to establish efficient pricing systems. Pumping stations andtreatment works may fail because individual pieces of machinery are no longer manufactured or because specialized chemicals cannot be imported due to lack of foreign exchange. A quick diagnosisof the present water supply and distribution system often can turn up small investment opportunitiesthat have high economic paybacks, merely by nudging the system toward practical operability andcost recovery. Savings can be plowed back into investment in system expansion or modernization.

Institutional E fficiency and Benchmarks

Greater involvement of the private sector in water supply and distribution, through innovativeapproaches like public-private partnerships, may improve the institutional efficiency of WSS providers.WSS providers with a profit incentive are more likely to stress efficiency in water delivery. At the sametime, the public partners in these partnerships may stress greater accountability to consumers and to

municipal government. The result can be better focused cost-recovery strategies, along with billingand collection procedures that are both more accurate and better accepted by the community.Improved efficiency and better rates of cost recovery can generate benefits at all levels. The urbanpoor receive customer-oriented service. WSS providers can stand on their own feet financially,without becoming a drain on the general municipal budget. The city's political leadership can reap thepolitical capital of better water access. Of course, private-sector participation in urban water supplycan be abused. To be fully successful it requires a regulatory framework that rewards the WSSprovider for meeting important public benchmarks, such as defined coverage ratios for the urbanpopulation, reductions in leakage and unaccounted-for water, and continued attainment of water quality standards. This in turn requires active monitoring of outputs by municipalities or their agents,often community NGOs.

Land Insecurity

The urban poor often live in informal settlements treated as illegal by municipal governments andWSS providers. (See the Slum Upgrading brief) The lack of legal recognition of these settlements andthe corresponding lack of tenure rights of inhabitants can be a major hurdle to securing access to


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improved water sources. Solutions may require innovative alternatives on the part of municipalgovernments, WSS agencies, as well as residents of the informal settlements. Public authorities cangrant de facto recognition to informal communities, extending basic water services to them, wellbefore the time-consuming procedures of legal formalization have been completed. Improved accessto alternative water sources, such as community taps or water kiosks operated by communitymicroentrepreneurs, can be provided without waiting for resolution of land ownership claims. Sitesand services projects can economize on the costs of water supply, by locating land for self-helpdevelopment near existing water distribution systems, as long as the sites serve other communityobjectives, such as reasonable access to work.

T ariff S tructure

Cost recovery in the urban water sector varies widely across developing countries. Some countriesmanage to recover all Operating & Maintenance costs, plus a significant portion of capital costs.Others average less than 30-40% recovery of O&M costs alone. Well-designed tariff schedules servemultiple purposes. They can allow the water supplier to be self-financing, thereby encouraging the

extension of water service to new users. They can help curb demand. Some of the apparent shortfallof urban water supply is a function of providing water for free or at highly subsidized tariffs, whichresults in excessive water "demand" that is reduced with realistic pricing. Tariffs also can be used toencourage system efficiency. Leaks, for example, can be brought under control by making the partyresponsible for repairs bear the costs of lost water. Unfortunately, in designing tariff structures for water consumption, the goals of economic efficiency, cost recovery and financial self-sufficiency for the supplying institution, and equity for consumers of different income levels often come into conflict.There is no universally preferred tariff structure. There are, however, clearly bad tariff systems.Charging all households a uniform monthly amount for water usage, without metering consumption or differentiating by the level of service, though still often found in urban areas, violates most of theobjectives of a pricing system. Other elements of tariff design will vary with the most important policyobjectives. Where low coverage rates are the primary problem, importance needs to be assigned tofull cost recovery, in order that capital market funds, either in the form of private sector investment or private sector lending to WSS institutions, can be attracted. (See, for example OEC D /D AC "Shapingthe Urban Environment in the 21st Century, and SANICON's "Finance and Economics," "Policies andStrategies," and "Institutional D evelopment"; and the Capital Finance Brief )

Customer Orientation & P ublic P articipation

The participation of all stakeholders in water supply, distribution, and tariff decisions is critical, butoften overlooked in the water sector. Planning to protect water resources will require publiccooperation and development of alternative sites for economic activity. Providing some communitieswith lower levels of water service, like community standpipes, can succeed only if residents are part of the service decision in the first place and are able to enjoy substantial cost savings by accepting thelower service standards. Financial shortfalls of WSS institutions often are due to poor collection ratesand illegal connections-community issues that can only be resolved by engaging the community indecisions about how illegal usage should be monitored and how past-due water bills should becollected. Municipalities can play an important role in establishing incentives for WSS providers,particularly those in the private sector to be more customer-service oriented, responsive andaccountable to customers. Private sector involvement in water supply may facilitate this customer


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orientation. (See USAI D 's Urban Water Supply and Sanitation Guide)

D ecentralization and D evolution

In recent years, many developing countries have transferred responsibility for water supply anddistribution to municipal governments. Some necessary conditions for such transfers to work havebecome apparent. Local governments must have tariff-setting authority, not be constrained bynational price controls. Local government or local water authorities must have access to capitalmarkets in order to finance system expansion. This generally will require some type of intergovernmental support for local borrowing at the outset. Local authorities will need the planningsupport of higher-level governments, so as to protect regional water sources. They may needassistance in capacity building to levy and collect water tariffs, and assistance in selecting appropriatetechnologies. Central and regional governments cannot expect to walk away from the urban water sector simply because responsibility for service delivery has been assigned to lower levels of government. Often, devolution of service responsibilities in the water sector has been accompanied

by greater use of private enterprises either as system managers, with water assets continuing to beheld by public authorities, or in other variants. D ecentralization provides an opportunity not merely tore-allocate service responsibilities but to re-think how public and private institutions working in consortcan best meet the challenge of efficiently providing water to today's residents while establishing thecapacity for water investments to keep pace with urban growth in the future.

Appropriate T echnology

Low-cost technologies are now available for water supply, supported in many cases by institutionalexperience that has made their implementation acceptable to users and entire communities. Suchinnovations include community/group water taps, private-sector community water kiosks, methods for combining public water supply in towns with rainwater collection by homeowners, as well ascomplementary sanitary technologies that save on water usage. Often, the primary obstacle toimplementation is cultural resistance to new habits. Experience with successful introductions of technological innovations in similar cultures may be at least as useful as information on thetechnologies themselves. (See the World Bank Water & Sanitation site, USAI D 's D evelopmentClearinghouse and the Water Engineering and D evelopment Centre)


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Water supply

Four girls carrying water in India.

Challenges . None of the 35 Indian cities with a population of more than one million distribute water for more than a few hours per day, despite generally sufficient infrastructure. Owing to inadequatepressure people struggle to collect water even when it is available. According to the World Bank, none

have performance indicators that compare with average international standards. A 2007 study by the Asian D evelopment Bank showed that in 20 cities the average duration of supply was only 4.3 hoursper day. No city had continuous supply. The longest duration of supply was 12 hours per day inChandigarh, and the lowest was 0.3 hours per day in Rajkot. In D elhi residents receive water only afew hours per day because of inadequate management of the distribution system. This results incontaminated water and forces households to complement a deficient public water service atprohibitive 'coping' costs; the poor suffer most from this situation. For example, according to a 1996survey households in D elhi spent an average of 2,182 Rupees (US$ 60 at the 1996 exchange rate)per year in time and money to cope with poor service levels. This is more than three times as muchas the 2001 water bill of about US$18 per year of a D elhi household that uses 20 cubic meters per month.

Achievements . Jamshedpur, a city in Jharkhand with 573,000 inhabitants, is said to be one of the

few cities in India with continuous water supply. Its water system is being operated by the privatecompany Jamshedpur Utilities & Services Company (Jusco), a subsidiary of Tata Steel. NaviMumbai(formerly known as "New Bombay"), a planned city with more than 1m inhabitants, hasachieved continuous supply for about half its population as of January 2009. Badlapur, another city inthe Mumbai Conurbation with a population of 140,000, has achieved continuous supply in 3 out of 10operating zones, covering 30% of its population. Thiruvananthapuram, the capital of Kerala state witha population of 745,000 in 2001, is probably the largest Indian city that enjoys continuous water supply.

S anitation

Most Indians depend on on-site sanitation facilities. Recently, access to on-site sanitation haveincreased in both rural and urban areas. In rural areas, total sanitation has been successful (seebelow). In urban areas, a good practice is the Slum Sanitation Program in Mumbai that has providedaccess to sanitation for a quarter million slum dwellers. Sewerage, where available, is often in a badstate. In D elhi the sewerage network has lacked maintenance over the years and overflow of rawsewage in open drains is common, due to blockage, settlements and inadequate pumping capacities.The capacity of the 17 existing wastewater treatment plants in D elhi is adequate to cater a dailyproduction of waste water of less than 50% of the drinking water produced. Of the 2.5 Billion people inthe world that defecate openly, some 665 million live in India. This is of greater concern as 88% of deaths from diarrhea occur because of unsafe water, inadequate sanitation and poor hygiene.


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E nvironment

Millions depend on the polluted Ganges river.

Environment of India

As of 2003, it was estimated that only 27% of India's wastewater was being treated, with the

remainder flowing into rivers, canals, groundwater or the sea., For example, the sacred Ganges river is infested with diseases and in some places "the Ganges becomes black and septic. Corpses, of semi-cremated adults or enshrouded babies, drift slowly by.". NewsWeek describes D elhi's sacredYamuna River as "a putrid ribbon of black sludge" where fecal bacteria is 10,000 over safety limitsdespite a 15-year program to address the problem. Cholera epidemics are not unknown.

H ealth impact

The lack of adequate sanitation and safe water has significant negative health impacts. It wasestimated in 2002 by the World H ealth Organisation that around 700,000 Indians die each year fromdiarrhoea. The dismal working conditions of sewer workers are another concern. A survey of theworking conditions of sewage workers in D elhi showed that most of them suffer from chronicdiseases, respiratory problems, skin disorders, allergies, headaches and eye infections.

Water supply and water resources

D epleting ground water table and deteriorating ground water quality are threatening the sustainabilityof both urban and rural water supply in many parts of India. The supply of cities that depend onsurface water is threatened by pollution, increasing water scarcity and conflicts among users. For example, Bangalore depends to a large extent on water pumped since 1974 from the Kaveri river,whose waters are disputed between the states of Karnataka and Tamil Nadu. As in other Indian cities,the response to water scarcity is to transfer more water over large distances at high costs. In the caseof Bangalore, the Rs 3,384 crore (US$690m) Kaveri Stage IV project, Phase II, includes the supply of 500,000 cubic meter of water per day over a distance of 100 km, thus increasing the city's supply bytwo thirds.

Responsibility for water supply and sanitation

Water supply and sanitation is a State responsibility under the Indian Constitution. States may givethe responsibility to the Panchayati Raj Institutions (PRI) in rural areas or municipalities in urbanareas, called Urban Local Bodies (ULB). At present, states generally plan, design and execute water supply schemes (and often operate them) through their State D epartments (of Public H ealthEngineering or Rural D evelopment Engineering) or State Water Boards.


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H ighly centralized decision-making and approvals at the state level, which are characteristic of theIndian civil service, affect the management of water supply and sanitation services. For example,according to the World Bank in the state of Punjab the process of approving designs is centralizedwith even minor technical approvals reaching the office of chief engineers. A majority of decisions aremade in a very centralized manner at the headquarters. In 1993 the Indian constitution and relevantstate legislations were amended in order to decentralize certain responsibilities, including water

supply and sanitation, to municipalities. Since the assignment of responsibilities to municipalities is astate responsibility, different states have followed different approaches. According to a PlanningCommission report of 2003 there is a trend to decentralize capital investment to engineeringdepartments at the district level and operation and maintenance to district and gram panchayat levels.

P olicy and regulation

The responsibility for water supply and sanitation at the central and state level is shared by variousMinistries. At the central level, The Ministry of Rural D evelopment is responsible for rural water supplythrough its D epartment of D rinking Water Supply ( DD WS) and the Ministry of H ousing and UrbanPoverty Alleviation is responsible for urban water supply. H owever, except for the National CapitalTerritory of D elhi and other Union Territories, the central Ministries only have an advisory capacityand a very limited role in funding. Sector policy thus is a prerogative of state governments.

S ervice provision

U rban areas . Institutional arrangements for water supply and sanitation in Indian cities vary greatly.Typically, a state-level agency is in charge of planning and investment, while the local government(Urban Local Bodies) is in charge of operation and maintenance. Some of the largest cities havecreated municipal water and sanitation utilities that are legally and financially separated from the localgovernment. H owever, these utilities remain weak in terms of financial capacity. In spite of decentralization, ULBs remain dependent on capital subsidies from state governments. Tariffs arealso set by state governments, which often even subsidize operating costs. Furthermore, when noseparate utility exists there is no separation of accounts for different activities within a municipality.Some states and cities have non-typical institutional arrangements. For example, in Rajasthan thesector is more centralized and the state government is also in charge of operation and maintenance,while in Mumbai the sector is more decentralized and local government is also in charge of planningand investment.

P rivate sector participation. The private sector plays a limited, albeit recently increasing role inoperating and maintaining urban water systems on behalf of ULBs. For example, the Jamshedpur Utilities & Services Company (Jusco), a subsidiary of Tata Steel, has a lease contract for Jamshedpur(Jharkhand), a management contract in H aldia(West Bengal), another contract inMysore(Karnataka) and since 2007 a contract for the reduction of non-revenue water in parts of Bhopal (Madhya Pradhesh). The French water company Veolia won a management contract in threecities in Karnataka in 2005. In 2002 a consortium including Thames Water won a pilot contractcovering 40,000 households to reduce non-revenue water in parts of Bangalore, funded by the JapanBank for International Cooperation. The contract was scaled up in 2004.

Rural areas . There are about a 100,000 rural water supply systems in India. At least in some statesresponsibility for service provision is in the process of being partially transferred from State Water Boards and district governments to Panchayati Raj Institutions (PRI) at the block or village level (therewere about 604 districts and 256,000 villages in India in 2002, according to Subdivisions of India.Blocks are an intermediate level between districts and villages). Where this transfer has beeninitiated, it seems to be more advanced for single-village water schemes than for more complex multi-village water schemes. D espite their professed role Panchayati Raj Institutions currently play only alimited role in provision of rural water supply and sanitation. There has been limited success inimplementing decentralization, partly due to low priority by some state governments. Rural sanitation


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is typically provided by households themselves in the form of latrines.

Innovative approaches

A number of innovative approaches to improve water supply and sanitation have been tested in India,in particular in the early 2000s. These include community-led total sanitation, demand-drivenapproaches in rural water supply, public-private partnerships to improve the continuity of urban water supply in Karnataka, and the use of micro-credit to women in order to improve access to water.

Community-led total sanitation

In 1999 a demand-driven and people-centered sanitation program was initiated under the name TotalSanitation Campaign (TSC) or Community-led total sanitation. It evolved from the limitedachievements of the first structured programme for rural sanitation in India, the Central RuralSanitation Programme, which had minimal community participation. Community-led total sanitation isnot focused on building infrastructure, but on preventing open defecation through peer pressure andshame. In Maharashtra where the program started more than 2000 Gram Panchayats have achieved"open defecation free" status. Villages that achieve this status receive monetary rewards and high

publicity under a program called Nirmal Gram Puraskar.

D emand-driven approaches in rural water supply

Most rural water supply schemes in India use a centralized, supply-driven approach, i.e. agovernment institution designs a project and has it built with little community consultation and nocapacity building for the community, often requiring no water fees to be paid for its subsequentoperation. Since 2002 the Government of India has rolled out at the national level a program tochange the way in which water and sanitation services are supported in rural areas. The program,called Swajaldhara , decentralizes service delivery responsibility to rural local governments and user groups. Under the new approach communities are being consulted and trained, and users agree up-front to pay a tariff that is set at a level sufficiently high to cover operation and maintenance costs. Italso includes measures to promote sanitation and to improve hygiene behavior. The national program

follows a pilot program launched in 1999.

According to a 2008 World Bank study in 10 Indian states, Swajaldhara results in lower capital costs,lower administrative costs and better service quality compared to the supply-driven approach. Inparticular, the study found that the average full cost of supply-driven schemes is 38 Rupees/m3 (US$0.9/m3), while it is only 26 Rupees/m3 (US$ 0.6/m3) for demand-driven schemes. These costsinclude capital, operation and maintenance costs, administrative costs and coping costs incurred byusers of malfunctioning systems. Coping costs include traveling long distances to obtain water,standing in long queues, storing water and repairing failed systems. Among the surveyed systemsthat were built using supply-driven approach system breakdowns were common, the quantity andquality of water supply were less than foreseen in designs, and 30% of households did not get dailysupply in summer. The poor functioning of one system sometimes leads to the construction of another system, so that about 30% of households surveyed were served by several systems. Currently only

about 10% of rural water schemes built in India use a demand-driven approach. Since water usershave to pay lower or no tariffs under the supply-driven approach, this discourages them to opt for ademand-driven approach, even if the likelihood of the systems operating on a sustainable basis ishigher under a demand-driven approach.

Achieving continuous water supply with the help of a private operator in Karnataka

In the cities of H ubli, Belgaum and Gulbarga in the state of Karnataka, the private operator Veoliaincreased water supply from once every 215 days for 12 hours, to 24 hours per day for 180,000


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people (12% of the population of the 3 cities) within 2 years (20062008). This was achieved bycarefully selecting and ring-fencing demonstration zones (one in each city), renovating the distributionnetwork, installing meters, introducing a well-functioning commercial system, and effective grass-rootssocial intermediation by an NGO, all without increasing the amount of bulk water supplied. Theproject, known by its acronym as KUWASIP (Karnataka Urban Water Sector Improvement Project),was supported by a US$39.5m loan from the World Bank. It constitutes a milestone for India, where

no large city so far has achieved continuous water supply. The project is expected to be scaled-up tocover the entire area of the three cities.

M icro-credit for water connections in T amil Nadu

In Tiruchirapalli in Tamil Nadu, the NGO Gramalaya, established in 1987, and women self-helpgroups promote access to water supply and sanitation by the poor through micro-credit. Among thebenefits are that women can spend more time with their children, earn additional income, and sellsurplus water to neighbors. This money contributes to her repayment of the WaterCredit loan. Theinitiative is supported by the US-based non-profit Water Partners International.

E fficiency

There are only limited data on the operating efficiency of utilities in India, and even fewer data on theefficiency of investments.

Concerning operating efficiency, a study of 20 cities by the Jawaharlal Nehru National Urban RenewalMission with the support of the Asian D evelopment Bank showed an average level of non-revenuewater (NRW) of 32%. H owever, 5 out of the 20 cities did not provide any data. For those that provideddata there probably is a large margin of error, since only 25% of connections are metered, whichmakes it very difficult to estimate non-revenue water. Also, three utilities show NRW levels of lessthan 20%, two of which have practically no metering, which indiates that the numbers are not reliableand actual values are likely to be higher. In D elhi, which was not included in the A D B study, non-revenue water stood at 53% and there were about 20 employees per 1000 connections. Furthermore,only 70% of revenue billed was actually collected.

Concerning labor productivity, the 20 utilities in the sample had on average 7.4 employees per 1,000connections, which is much higher than the estimated level for an efficient utility. A survey of a larger sample of Indian utilities showed an average ratio of 10.9 employees per 1,000 connections.

T ariffs, cost recovery and subsidies

Water and sewer tariffs in India are low in both urban and rural areas. In urban areas they were set atthe equivalent of about US$0.10 per cubic meter in 2007 and recovered about 60% of operating andmaintenance costs, with large differences between cities. Some cities such as Kolkata do not billresidential users at all. In rural areas the level of cost recovery often is even lower than in urban areasand was estaimated at only 20% in rural Punjab. Subsidies were estimated at US$1.1 billion per year in the mid-1990s, accounting to 4% of all government subsidies in India. 70% of those benefiting fromthe subsidies are not poor.

U rban areas

M etering. Water metering is the precondition for billing water users on the basis of volumeconsumed. According to a 1999 survey of 300 cities about 62% of urban water customers inmetropolitan areas and 50% in smaller cities are metered (average 55%). H owever, meters often donot work so that many "metered" customers are charged flat rates. Bangalore and Pune are among


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the few Indian cities that meter all their customers. Many other cities have no metering at all or meter only commercial customers. Users of standposts receive water free of charge. A 2007 study of 20cities by the Jawaharlal Nehru National Urban Renewal Mission with the support of the AsianD evelopment Bank (A D B) showed that only 25% of customers of these utilities were metered. Mostother customers paid a flat tariff independent of consumption. Some utilities, such as the one servingKolkata, actually do not bill residential users at all.

T ariff levels . According to the same A D B study the average tariff for all customers - includingindustrial, commercial and public customers - is 4.9 Rupees per cubic meter (US$ 0.10). According toa 2007 global water tariff survey by the OEC D the residential water tariff for a consumption of 15 m3was equivalent to US$ 0.15 per m3 in Bangalore, US$ 0.12 per m3 in Calcutta, US$ 0.11 per m3 inNew D elhi and US$ 0.09 per m3 in Mumbai. Only Bangalore had a sewer tariff of US$ 0.02 per m3.The other three cities did not charge for sewerage, although the better-off tend to be the ones withaccess to sewers.

T ariff structure. The tariff for customers that are effectively metered is typically a uniform linear tariff,although some cities apply increasing-block tariffs.

Affordability. Urban water tariffs were highly affordable according to data from the year 2000. Afamily of five living on the poverty line which uses 20 cubic meter of water per month would spendless than 1.2% of its budget on its water bill if it had a water meter. If it did not have a water meter andwas charged a flat rate, it would pay 2.0% of its budget. This percentage lies below the often usedaffordability threshold of 5%. H owever, at that time the average metered tariff was estimated at onlyUS$0.03 per m3, or less than three times what it was estimated to be in 2007. Apparently no moreup-to-date estimates on the share of the average water bill in the budget of the poor are available.

Cost recovery. According to a 2007 study of 20 cities the average rate of cost recovery for operatingand maintenance costs of utilities in these cities was 60%. Seven of the 20 utilities generated a cashsurplus to partially finance investments. Chennai generated the highest relative surplus. The lowestcost recovery ratio was found in Indore in Madhya Pradesh, which recovered less than 20% of itsoperating and maintenance costs.

D elhi e x ample . In D elhi revenues were just sufficient to cover about 60% of operating costs of thecitys utility in 2004; maintenance has, as a result, been minimal. In the past, the D elhi utility has reliedheavily on government financial support for recurrent and capital expenditures in the magnitude of Rupees 3 billion/year (US$65 million/year) and Rupees 7 billion/year (US$155 million/year)respectively. As financial support for both capital and recurrent expenditures has been passed on asloans by the Government of the National Capital Territory of D elhi, the utilitys balance sheet is loadedwith a huge debt totaling about Rupees 50 billion (US$1.1 billion) that it is unlikely to be able toservice. Accounts receivable represent more than 12 months of billing, part of it being nonrecoverable. The average tariff was estimated at US$ 0.074/m3 in 2001, compared to productioncosts of US$ 0.085/m3, the latter probably being a very conservative estimate that does not take intoaccount capital costs.

Challenges faced in attempting to increase tariffs. Even if users are willing to pay more for better services, political interests often prevent tariffs from being increased even to a small extent. Anexample is the city of Jabalpur where the central government and the state government financed a Rs130 million water supply project from 2000-2004 to be operated by the Jabalpur MunicipalCorporation, an entity that collected only less than half of its operational costs in revenues evenbefore this major investment. Even so the municipal corporation initially refused to increase tariffs.Only following pressure from the state government it reluctantly agreed to increase commercial tariffs,but not residential tariffs.


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Rural areas

Cost recovery in rural areas is low and a majority of the rural water systems are defunct for lack of maintenance. Some state governments subsidize rural water systems, but funds are scarce andinsufficient. In rural areas in Punjab, operation and maintenance cost recovery is only about 20%. Onone hand, expenditures are high due to high salary levels, high power tariff and a high number of operating staff. On the other hand, revenue is paid only by the 10% of the households who haveprivate connections. Those drawing water from public stand posts do not pay any water charges at all,although the official tariff for public stand post users is Rupees 15/month per household.

S ubsidies and targeting of subsidies

There are no accurate recent estimates of the level of subsidies for water and sanitation in India. Ithas been estimated that transfers to the water sector in India amounted to 5.470.8 crore (US$ 1.1billion) per year in the mid-1990s, accounting for 4% of all government subsidies in India. About 98%of this subsidy is said to come from State rather than Central budgets. This figure may only cover recurrent cost subsidies and not investment subsidies, which are even higher (see below). There islittle targeting of subsidies. According to the World Bank, 70% of those benefiting from subsidies for public water supply are not poor, while 40% of the poor are excluded because they do not haveaccess to public water services.

Investment and financing

Investment in urban water supply and sanitation has increased during the first decade of the 21stcentury, not least thanks to increased central government grants made available under JawaharlalNehru National Urban Renewal Mission alongside with loans from the H ousing and UrbanD evelopment Corporation.

Investment

The 11th Five-year plan (20072012) foresees investments of 127,025 crore Rupees (equivalent to1,270bn Rupees or US$31.75bn at an exchange rate of 40 Rupees per US$, equivalent to aboutUS$5 per capita and year) for urban water supply and sanitation, including urban (stormwater)drainage and solid waste management.

Financing

55% of the investments foreseen under the 11th Plan are to be financed by the central government,28% by state governments, 8% by "institutional financing" such as H UD CO, 8% by external agenciesand 1.5% by the private sector. Local governments are not expected to contribute to the investments.The volume of investments is expected to double to reach 0.7% of G D P. Also, it implies a shift infinancing from state governments to the central government. D uring the 9th Plan only 24% of investments were financed by the central government and 76% by state governments. Centralgovernment financing was heavily focused on water supply in rural areas.

Institutions

State Financing Corporations (SFC) play an important role in making recommendations regarding theallocation of state tax revenues between states and municipalities, criteria for grants, and measures toimprove the financial position of municipalities. According to the Planning Commission, SFCs are insome cases not sufficiently transparent and/or competent, have high transactions costs, and their


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recommendations are sometimes not being implemented. An important source of financing are loansfrom H ousing and Urban D evelopment Corporation Ltd ( H UD CO), a Central government financialundertaking. H UD CO loans to municipal corporations need to be guaranteed by state governments.H UD CO also on-lends loans from foreign aid, including Japanese aid, to states. The JawaharlalNehru National Urban Renewal Mission initiated in 2005 also plays an increasingly important role infinancing urban water supply and sanitation through central government grants.

The current system of financing water supply and sanitation is fragmented through a number of different national and state programs. This results in simultaneous implementation with different andconflicting rules in neighboring areas. In rural areas different programs undermine each other,adversely affecting demand driven approaches requiring cost sharing by users.

Ex ternal cooperation

In absolute terms India receives almost twice as much development assistance for water, sanitationand water resources management as any other country, according to data from the Organisation for Economic Co-operation and D evelopment. India accounts for 13 per cent of commitments in globalwater aid for 2006-07, receiving an annual average of about $830m (620m), more than double theamount provided to China. India's biggest water and sanitation donor is Japan, which provided$635m, followed by the World Bank with $130m. The annual average for 2004-06, however, wasabout half as much at $448m, of which Japan provided $293m and the World Bank $87m. The AsianD evelopment Bank and Germany are other important external partners in water supply and sanitation.

In 2003 the Indian government decided it would only accept bilateral aid from five countries (theUnited Kingdom, the United States, Russia, Germany and Japan). A further 22 bilateral donors wereasked to channel aid through nongovernmental organisations, United Nations agencies or multilateralinstitutions such as the European Union, the Asian D evelopment Bank or the World Bank.

Asian D evelopment Bank

India has increased its loans from the Asian D evelopment Bank (A D B) since 2005 after the

introduction of new financing modalities, such as the multitranche financing facility (MFF) whichfeatures a framework agreement with the national government under which financing is provided inflexible tranches for subprojects that meet established selection criteria. In 2008 four MFFs for urbandevelopment investment programs were under way in North Karnataka (US$862 million), Jammu andKashmir (US$1,260 million), Rajasthan (US$450 million), and Uttarakhand (US$1,589 million).Included in these MFFs are major investments for the development of urban water supply andsanitation services.

Germany

Germany supports access to water and sanitation in India through financial cooperation by KfWdevelopment bank and technical cooperation by GTZ. Since the early 1990s both institutions havesupported watershed management in rural Maharashtra, using a participatory approach first piloted bythe Social Center in Ahmednagar and that constituted a fundamental break with the previous top-down, technical approach to watershed management that had yielded little results. The involvement of women in decision-making is an essential part of the project. While the benefits are mostly in terms of increased agricultural production, the project also increases availability of water resources for ruralwater supply. In addition, GTZ actively supports the introduction of ecological sanitation concepts inIndia, including community toilets and decentralized wastewater systems for schools as well as smalland medium enterprises. Many of these systems produce biogas from wastewater, provide fertilizer and irrigation water.


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J apan

As India's largest donor in the sector the Japan International Cooperation Agency (JICA) finances amultitude of projects with a focus on capital-intensive urban water supply and sanitation projects,often involving follow-up projects in the same locations.

Current projects. Projects approved between 2006 and 2009 include the Guwahati Water SupplyProject (Phases I and II) in Assam, the Kerala Water Supply Project (Phased II and III), theH ogenakkal Water Supply and Fluorosis Mitigation Project (Phases I and II) in Tamil Nadu, the GoaWater Supply and Sewerage Project, the Agra Water Supply Project, the Amritsar Sewerage Projectin Punjab, the Orissa Integrated Sanitation Improvement Project, and the Bangalore Water Supplyand Sewerage Project (Phase II).

E valuation of past projects . An ex-post evaluation of one large program, the Urban Water Supplyand Sanitation Improvement Program, showed that "some 60%-70% of the goals were achieved" andthat "results were moderate". The program was implemented by the H ousing and Urban D evelopmentCorporation, Ltd. ( H UD CO) from 1996 to 2003 in 26 cities. The evaluation says that "stategovernment plans were not based on sufficient demand research, including the research for residentswillingness to pay for services", so that demand for connections was overestimated. Also fees (water tariffs) were rarely increased despite recommendations to increase them. The evaluation concludesthat " H UD CO was not able to make significant contributions to the effectiveness, sustainability, or overall quality of individual projects. One of the reasons that not much attention was given to thisproblem is probably that there was little risk of default on the loans thanks to state governmentguarantees."

World Bank

Current projects . The World Bank finances a number of projects in urban and rural areas that arefully or partly dedicated to water supply and sanitation. In urban areas the World Bank supports the

Andhra Pradesh Municipal D evelopment Project (approved in 2009, $300m loan), the KarnatakaMunicipal Reform Project (approved in 2006, $216m loan), the Third Tamil Nadu Urban D evelopment

Project (approved in 2005, $300m loan) and the Karnataka Urban Water Sector Improvement Project(approved in 2004, $39.5m loan). In rural areas it supports the Andhra Pradesh Rural Water Supplyand Sanitation (US$ 150m loan, approved in 2009), the Second Karnataka Rural Water Supply andSanitation Project (approved in 2001, $151.6m loan), the Uttaranchal Rural Water Supply andSanitation Project (approved in 2006, $120m loan) and the Punjab Rural Water Supply and SanitationProject (approved in 2006, $154m loan).

E valuation of past projects . A study by the World Bank's independent evaluation departmentevaluated the impact of the World Bank-supported interventions in the provision of urban water supplyand wastewater services in Bombay (Mumbai) between 1973 and 1990. It concluded that water supply and sewerage planning, construction and operations in Bombay posed daunting challenges tothose who planned and implemented the investment program. At the outset, there was a hugebacklog of unmet demand because of underinvestment. Population and economic growth accelerated

in the following decades and the proportion of the poor increased as did the slums which theyoccupied. The intended impacts of the program have not been realized. Shortcomings include that"water is not safe to drink; water service, especially to the poor, is difficult to access and is provided atinconvenient hours of the day; industrial water needs are not fully met; sanitary facilities are too few innumber and often unusable; and urban drains, creeks and coastal waters are polluted with sanitaryand industrial wastes."

at ecolology lalitha

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