Fixing the leaky tap
It is imperative for policymakers and practitioners to prioritise equitable water pricing to move towards a ‘water-just society’, where there is clean and affordable water for everyone, everywhere
If you are reading this article, chances are you can avail water at the turn of a tap in your home. That would make you among the privileged 7.1 percent of the national population with such facilities, according to calculations in the World Bank WASH Poverty Diagnostic (2018).
Household piped water in Bangladesh is mostly an urban phenomenon, and within urban areas, it is largely enjoyed by the relatively affluent.
What about the urban poor? In some areas, under Dhaka WASA coverage, slum dwellers fetch water from community water points on foot. In many others, the poor have no options other than using unsafe surface water or purchasing water at high prices from vendors.
The availability of household piped water is thus a massive luxury that many of us remain unaware of.
Today is World Water Day, a day dedicated to raising awareness of the global water crisis. This year's theme is valuing water, and it aptly provides us an opportunity to reflect on whether our current water management practices are in line with this agenda.
Dripping taps are a common sight in many households. In upscale areas, many people wash their cars using hoses which are kept running even when not in use. This is a small glimpse into the profligate consumption of water in our communities, and points to the huge disparity in consumption between the relatively affluent and the poor.
A BIGD study estimates that per capita water consumption among the relatively affluent in Dhaka is a whopping 310 litres per day, compared to 85 litres for households in low-income communities. The high usage among the affluent not only exceeds WHO standards but also exceeds that of many developed countries.
There can be many factors behind this high usage, but it mostly boils down to improper valuation of water. Users in Dhaka currently pay Tk 14 for 1,000 litres. This heavily subsidised rate, well below the market value of water, is problematic for several reasons.
The subsidy is meant to alleviate the burden on the poor who have to pay a larger share of their income to access water. Instead, the benefits are largely enjoyed by the affluent which leads to another problem.
The water tariff per 1,000 litres is fixed, regardless of whether one uses 1,000 litres or 5,000 litres. By charging both high and low usage at the same rate, there is no incentive for high users to conserve water and often leads to wastage and unproductive use, as illustrated by the study above.
Beyond the existing inequitable tariff structure, there are major shortcomings in the billing processes of water utilities that further lead to wastage. Residential connections under WASAs are served by one meter for an entire building, which usually constitutes multiple apartments and households. The water bill is typically shared equally among the multiple apartments. This practice again disincentivises use as the cost of consuming excess water is not fully borne by an individual user, but rather shared by all households in the building.
Outside the major cities, basic piped water is partially available in 151 out of 330 municipalities. For these municipalities, the major billing issue is the use of metering altogether as many municipalities have no metering in place.
Water connections are charged at a flat rate based on the diameter of the pipe. Although water is supplied for a limited number of hours daily, the practice of charging a flat rate may also lead to wastage.
The lack of metering thus prevents households and commercial establishments from being billed for actual usage. However, regardless of whether a municipality has metered or non-metered water supply, users generally enjoy low tariffs, sometimes as low as Tk 100 for households in some municipalities, which again disincentives prudent usage.
Moreover, given that municipal water supply is only available in selected areas, there are cases where users sell this cheap water at exorbitant rates to those who do not enjoy piped water.
Considering the existing inequalities mentioned above, one potential solution is to move towards a progressive tariff system, similar to electricity tariffs in Bangladesh.
Under such a system, there are multiple slabs or blocks with each having a different rate – the idea is to increase the price per unit of volume as the volume used increases. Thus, the largest consumers of water pay higher rates for the volume of water consumed beyond a certain threshold.
A typical progressive tariff structure begins with a social or lifeline block with a low rate to account for the essential minimum consumption for the average household. It then moves on to higher blocks with higher rates.
However, there are many variations of such progressive tariff structures. Some differentiate among consumer categories, such as income levels. Progressive water tariffs have been used in both developed and developing countries to not only ensure cost recovery of utilities but also to enable equitable and wider access.
However, it is worth noting that progressive tariff structures have their fair share of challenges. Although such systems aim to enable poor households to enjoy affordable water and rich households to conserve, some research studies suggest these objectives are not met in some cases and may result in price distortion.
It is possible that the lowest tariff-block does not benefit the poor exclusively, and the minimum consumption charges might still be too high for the poorest customers. It could also be the case that a poor household with a relatively large number of members end up paying more than an affluent household with few members.
Before establishing a progressive system, these issues need to be sorted so that the key objectives, which include equitable water pricing, can be ensured.
It is encouraging to note that Dhaka WASA is exploring plans to set up a progressive tariff structure. Under the planned system, there will be an area-based billing system in which users in relatively affluent areas will pay a higher rate.
While it is a good start, the plan should be designed such that poor households falling under the affluent areas do not pay the higher rate as it would undermine the very essence of progressive tariffs. Nonetheless, with appropriate fine-tuning to fit the context, it is possible to devise a good practice in water billing, something that can serve as an important reference for other cities and municipalities in the country.
Although we have mainly touched upon those under the coverage of water utilities, it is worth noting that households in low income communities without formal access within Dhaka pay 7 to 14 times more than those with formal access.
The problem is more pronounced in the climate-prone southwest coastal belt where users may pay almost 40 times more than Dhaka residents. It is therefore imperative for policymakers and practitioners to prioritise equitable water pricing to move towards a 'water-just society', where there is clean and affordable water for everyone, everywhere.
Hasin Jahan is Country Director, WaterAid Bangladesh. Zarif Rasul is Strategic Support Officer, WaterAid Bangladesh.
