Strategic Strategic challenges in challenges in India’s water India’s water managementmanagementPresented to Green Business Council, Federation of Indian Chambers of Commerce and Industry, Hyderabad, 17 June 2004.

Strategic Strategic Challenges in Challenges in India’s Water India’s Water ManagementManagement

Christopher ScottChristopher Scott International Water Management InstituteInternational Water Management Institute

www.iwmi.orgwww.iwmi.org

Absolute Water Scarcity: Absolute Water Scarcity: India’s India’s Upcoming ChallengeUpcoming Challenge

3/4 th of India, Pakistan, West Asia, North Africa and North China will be in the throes of absolute water scarcity over the coming 25 years

Low rainfall/capita is the crux; 80% of it falls in less than 100 hours; storing it for 8 months in a climate of high mean temperatures, high windspeeds and low stream density is the challenge.

Western & Peninsular India and North Western & Peninsular India and North China Plains have Low Precipitation and China Plains have Low Precipitation and

Dense PopulationDense Population

Krishna Basin NDVI Krishna Basin NDVI (AVHRR)(AVHRR)

May-2001

Jul-2001

Mar-2001

Jan-2001

Nov-2000

Sep-2001

0

100

200

300

400

500

600

700

May

-00

Jul-0

0

Sep-0

0

Nov-0

0

Jan-

01

Mar

-01

May

-01

Jul-0

1

Sep-0

1

Rain (mm)

ETp (mm)

Drivers of India’s Water Future Drivers of India’s Water Future 20252025 Population Growth Urbanization Economic Growth Agrarian growth and food production Technology-trade factors

Plus..New approaches, mindsets,

Institutions and policies

2002: 707 functioning wells/64 km2002: 707 functioning wells/64 km22 (11/km (11/km22 = = 300m spacing). Shift from valley bottoms to 300m spacing). Shift from valley bottoms to watershed-wide distribution.watershed-wide distribution.

20020022

NGRI

19919955

19819855

Well Density IncreasingWell Density Increasing

Per Capita Real Income

0

200

400

600

800

1000

1200

1980

-81

1984

-85

1985

-86

1986

-87

1987

-88

1988

-89

1989

-90

1990

-91

1993

-94

1995

-96

1996

-97

1997

-98 (P

)

1998

-99 (Q

)

1999

-00 (A

)

Rs.

Northern StateSouthern State

2 Indias: Differential 2 Indias: Differential DevelopmentDevelopment

2 Indias: Water2 Indias: WaterEndowmentsEndowments

Repast of the Water Repast of the Water SectorSector India has been a ‘hydraulic

society’ for millennia Indus civilization Tank-based empires British era Modern India, since Independence:

Over Rs. 1,00,000 crore invested in dams and canals Rs. 24,000 crore per annum in power supply to

agriculture

““Tanks” in IndiaTanks” in India

Runoff Capture Runoff Capture (Harvesting)(Harvesting)

Lower Krishna River Lower Krishna River Gauge FlowGauge Flow

0

10

20

30

40

50

1894 1904 1914 1924 1934 1944 1954 1964 1974 1984 1994

hour

ly d

isch

arge

[x10

00 m

3 s-

1]

0

5

10

15

20

25

30

35

rese

rvoir sto

rag

e [M

m3

]

A river basin’s hydrology shapes its challenge. In Rhine and Omonagawa, rainfall always exceeds ET; in Murray-Darling, it never does; in Chad, Fuyag and Sabarmati, it does for a few months.

Potential ET Rain fall

Global Groundwater UseGlobal Groundwater Use

Country/ Region

Annual groundwater

use (km3)

No. of GW

structures (million)

Extraction/ structure (m3/ year)

% of population

dependent on groundwater

India 150 19 7,900 55-60 PakistanPunjab 45 0.5 90,000 60-65 China 75 3.5 21,500 22-25 Iran 45 0.5 58,000 12-18 Mexico 29 0.1 300,000 5-6 USA 100 0.2 500,000 <1-2

GroundwaterUse in India Has more to do With populationDensity than the Availability of theresource

NO COUNTRY IN THE WORLD PUMPS AS MUCH GROUNDWATER AS WE DO...WE ALREADY HAVE 21 M WELLS AND ADD 1 M/YEAR.

Sources of Irrigation Growth in India: 1951-1998-2025

y = 5193.2e0.0381x

R2 = 0.9857

y = 19486e0.0219x

R2 = 0.9949

0

20000

40000

60000

80000

100000

120000

'000

hec

tare

s of

Net

Irrig

ated

Are

a

Canals tanks groundwater

Other Sources Total Net Irrigated Area Expon. (groundwater)

Expon. (Total Net Irrigated Area)

At current rate, Groundwater use willEase out all otherSources of water..This indicates theFailure of publicSystems ..It will also redefineIndia’s water challenge

Groundwater BustGroundwater Bustelec. Consumption/acre '000 units Karnataka

0

1

2

3

4

5

6

7

8

9

10

elec. Consumption/acre '000 units

Groundwater Depletion: The Groundwater Depletion: The ‘wild-card’ of India’s Water Future‘wild-card’ of India’s Water Future

Water-Energy Nexus in Water-Energy Nexus in IndiaIndia 30% of India’s power used to

pump groundwater Power utilities bankrupt ($ 5

billion annual operating deficits) Booming groundwater economy Rationed power supply with

pricing a powerful power sector remedy plus an indirect tool for GW regulation

Twin East-West Energy Twin East-West Energy and Water Divides in Indiaand Water Divides in India

Demand Elasticity, Power Demand Elasticity, Power & Water& Water

ElectricElectricity ity tarifftariff

Andhra PradeshAndhra Pradesh Tamil NaduTamil Nadu

/kwh/kwh RiceRice SugarcaSugarcanene

RiceRice SugarcaSugarcanene

Rs. Rs. 0.500.50($0.01)($0.01)

- 0.3187- 0.3187 - 0.2572- 0.2572 - 0.3396- 0.3396 - - 0.29840.2984

Rs. Rs. 0.750.75($0.015($0.015))

- 0.4085- 0.4085 - 0.3564- 0.3564 - 0.4414- 0.4414 - - 0.38790.3879

Rs. Rs. 1.001.00($0.02)($0.02)

- 0.5967 - 0.5967 - 0.4768- 0.4768 - 0.6388 - 0.6388 - - 0.49250.4925

Price/Unit

Opportunity Cost/Unit

Quantity of Water & Power

P’n

Supplyw,n = MCn

Demandw,n = MVPw

P’w

Qo

expands social welfare

Supply’w1,n = MC’n

Q1

Innovation that reduces metering cost to zero

Flatrate produces

benefits for buyers

The same effect is produced by charging flatrate & restricting power use to Q1

Water, Energy DemandWater, Energy Demand

Price/Unit

Opportunity Cost/Unit

Quantity of Water & Power

P’n

Supplyw,n = MCn

Demandw,n = MVPw

P’w

Qo

Supply’w1,n = MC’n

Q1

Raising FR to cover that loss will not help QMax

Degenerate flatrate:

In absence of rationing, farmers expand water use to QMaxThis reduces total welfare.

WASTE

Flat Rate with RationingFlat Rate with Rationing

Ag. Power Tariffs in 2 Ag. Power Tariffs in 2 Indian StatesIndian States

StateState Pump Capacity Pump Capacity (horsepower)(horsepower)

Drought Drought Prone Prone

DistrictsDistricts

OthersOthers

Andhra Andhra PradeshPradesh

(equivalent (equivalent tariff recovery tariff recovery = Rs. = Rs. 0.18/kWh = 0.18/kWh =

$ 0.004/kWh)$ 0.004/kWh)

Up to 3 HP Up to 3 HP Rs. Rs. 225/hp/yr225/hp/yr

($ 4.69)($ 4.69)

Rs. 275/hp/yrRs. 275/hp/yr

($ 5.73)($ 5.73)

3-5 HP 3-5 HP Rs. Rs. 375/hp/yr 375/hp/yr

($ 7.81)($ 7.81)

Rs. 425/hp/yrRs. 425/hp/yr

($ 8.85)($ 8.85)

5-10 HP 5-10 HP Rs. Rs. 475/hp/yr475/hp/yr

($ 9.90)($ 9.90)

Rs. 525/hp/yrRs. 525/hp/yr

($ 10.94)($ 10.94)

10 and above 10 and above Rs. Rs. 525/hp/yr525/hp/yr

($ 10.94)($ 10.94)

Rs. 625/hp/yrRs. 625/hp/yr

($ 13.02)($ 13.02)

Tamil NaduTamil Nadu Free electricityFree electricity

UrbanizationUrbanization By 2050, over half of India’s projected

1.5 billion population will live in cities … close to 1 billion urban residents… … growing wastewater volumes… Sticker shock: 73% of urban

wastewater in India is untreated, requiring US$ 65 billion or ten times greater than what the govt. proposes to invest (Infrastructure Development Finance Corp., 2003).

India: Key Water Sector India: Key Water Sector ChallengesChallenges Meeting water demand of

agriculture, domestic, industrial and environmental sector

Infrastructure creation and management

Water quality issues Groundwater depletion

Agrarian Societies

Industrial Societies

Post-industrial societies

Self-provision Public systems Public/Market Provision

‘Informal sector’ Public Utility Water Industry

heavily subsidized Cost recovery price Economic price

Free and plentiful Free and scarce Priced & plentiful

Household capital dominates

Govt capital dominates

Corporate capital dominates

No recycling Recycling without treatment

Treatment and recycling

Hydraulic Infrastructure

Resource Service provision

Challenges StrategiesChallenges StrategiesFood Security Improve water productivity in

agric. Better dry land farmingVirtual water trade-internal and globalGM and other technology?

Rural Poverty Off-farm livelihoods Crop/drop > crop+jobs+cash/drop Growth of the non-farm economy

Urban water supply and sanitation + water pollution

Quantum jump in investment Much improved planning and mgmt Institutional reform-public/private partnership Pricing strategies

Groundwater depletion and/or quality deterioration

Coping (salinity, fluoride, arsenic, nitrates) Imports of water: River-linking Project Groundwater demand management Decentralized rainwater harvesting and recharge

Challenges StrategiesChallenges Strategies

Thank you.Thank you.