tackling water scarcity - the critical role of economic incentives
TRANSCRIPT
Action Group SPADISSmart Water Prices and Drought Insurance to cope with scarcity and droughts
Tackling water scarcity – the critical role of economic incentives
Carlos M. Gó[email protected]
What drives water scarcity?
It never rains please everyone
Nature is the usual suspect!!
Yet Nature is not the one to be blamed
Where are investment incentives for agricultural
development higher?
Here? Or there?
Soria
Guada
lajara Avil
a
Zamora
Teruel
León
Burgos
Ciudad
Real
Córdob
aSe
villa
Jaén
Málaga
Granad
a
Huesca
Alava
Castel
lón
Alicante
Valenc
iaCád
iz
Almeri
a0
5,000
10,000
Financial Returns: Rainfed vs Irrigated AgricultureSource: Ministerio de Medio Ambiente (2008) Los Usos del Agua en la Economía Española. Informe
Integrado de los Usos del Agua.
Euro
s Per
Yea
r per
hec
tare
Water is different …………………. and makes the
difference
http://www.wri.org/our-work/project/aqueduct
Irrigated agriculture & water stress
Scarcity is after all an incentive driven problem...
[like fishing where there is no fish]
When water is scarce, incentives for investment are high....
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Hyd
ropo
wer
Cap
paci
ty (
From
wat
er a
vaila
bilit
y) G
Wh
Hyd
ropo
wer
Cap
acity
(Fr
om In
stal
led
Infr
astr
uctu
res)
GW
19401.3 GW
201517.8 GW
75 years of hydropower
development in Spain1940
1.3 GW
201517.8 GW
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Producible Potencia Instalada Hidroel. A 31 de dic
Hyd
ropo
wer
Cap
paci
ty (
From
wat
er
avai
labi
lity)
GW
h
Hyd
ropo
wer
Cap
acity
(Fr
om In
stal
led
Infr
astr
uctu
res)
GW
194034,620 GWh
201518,430GWh
…. But incentives for water conservation and policy coordination are missing
When water is scarce: INCENTIVES push to go
further with supply measures
When water is scarce: Public interventions are more successful in
increasing water demand than supply
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50
100
150
200
250
300
Mill
ion
cubi
c m
etre
s
When water is scarce incentives are high to
find new and “non-conventional” water
sources
Euro cents/cubic metres
275 million cubic metres already available at a cost between 0.5 and 1.2 €/m3 in the Segura River Basin
The Inverse supply Curve of Reused and desalinated Water in the Segura River Basin.
Source: EPI Water Project
Nevertheless, when water is scarce……..
going further in depleting groundwater may seem more
appealing
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100
200
300
400
500
600
Renew-able GW ...
Eurocents/m3
Volu
me
(hm
3)
Around 275 million cubic meters of non-renewable
water are pumped out from groundwater sources at a cost between 0.2 and 1 €/m3 in the Segura River
Basin
When water is scarce,aquifer depletion can go ahead while abundant and available sources of water may remain
unused
Water scarcity is after all a governance failure
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0.2
0.4
0.6
0.8
1
1.2
1.4
Million of Cubic Meters
€/m3
The supply curve of the Segura River Basin (SE Spain) – In a “normal” hydrological year
When water is scarce……….We must look after the water portfolio
Transferred water
politically costly and uncertain
Freshwaterfinancially
cheap when available
GroundwaterReliable now
but Increasingly scarce
Desalinated water
abundant but financially expensiveReused water
Not abundant but reliable
And rewire incentives for the long term
Give water security a price
To restore incentives for innovation along the water cycle
And build water security:Now: making long term investments affordable.
Tomorrow: recovering natural capitalIn the long term: targeting the best water
portfolio
Source: EPI Water project
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60
80
100
120
140
Water demand, non-renewable groundwaterDesalinated water supply, total costsDesalinated water supply, only variable costs
Volume (hm3)
Euro
cent
s/m
3
Desalinated water supply
An overprice of 5-10 eurocents on drinking water would be enough to guarantee full water security for non agricultural uses and to make desalinated water
affordable on a regular basis for irrigation
Non-renewable groundwater demand
Source: EPI Water project
Mother Nature knows
best But not about everything
Aquifers are not good as income security
providers…. Banks may do better
WTP for income insurance, selected agricultural districts in the TRB and SRB
When water is scarce people is willing to pay for income Security
Source: EPI Water project
Not and easy task... ...but a feasible one
Institutional inertia Technology lock inPolitical will..Coordination………
Better not to wait until the next drought to promote change
Future
“The definition of insanity is
doing something
over and over again and
expecting a different result”
Albert Einstein?
Ben Franklin?
Mark Twain?
Future
Thanks for your attention