WATER SCARCITY AND HOW SHOULD IT BE MANAGED?

Resource Economics
Khadija Khan Mehak Rafique Lahore School of Economics Tuesday, 18th June 2013.

Table of Content
Introduction .................................................................................................................................................. 2 Water scarcity and the Industries ................................................................................................................. 3 Government Policies and Institutions........................................................................................................... 6 Cost-Benefit Analysis .................................................................................................................................... 8 Climatic Effects............................................................................................................................................ 10 What we get out of it .................................................................................................................................. 12 How can it be linked to Pakistan ................................................................................................................. 14 Way Forward............................................................................................................................................... 16 References .................................................................................................................................................. 18

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Introduction
Water is an essential element to life, the human dignity and most importantly the ecosystems. Water is considered to be a unique resource unlike the finite resources such as coal or oil. The amount of fresh water present on earth accounts for 3% only, and 1% of that is used by human beings. Water is used for numerous purposes, and the use has increased over the course of years, such as irrigational purpose, hydropower, dams, industrial and urban development, infrastructure projects and so forth. This much success has been only possible after paying a cost for it- the water resources are drying up. The future of the water resources is alarming, and the reasons for the scarcity are many: the increasing population and its need for food and water is further tightening the situation, the increased standard of livings is causing a higher water per capita requirements, the rising economic growth in the developed countries need water for development (domestic, agricultural and industrial), the demand for water infrastructure development to meet the demand for water and energy needs (hydropower, dams etc), the climatic changes(variability the precipitation rates, snowfalls, and floods), and many other reasons make up the water scarcity issue. The United Nations expects that by the year 2025, 3 billion people in 52 countries will be affected by water scarcity and they will not have enough water to drink, for sanitation or for household use, and it is also projected that in 2025, the worlds water resources will need to be enhanced and manipulated by 22 percent to meet the needs of the society (Thomas, Bender. N, 2004, the Impact of Water Scarcity and Pollution on the Textile Industry: A Case Study from Turkey). Hence we begin by address the problem of water scarcity and how should it be managed over the years.

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Water scarcity and the Industries

Day by day the pressure is building up on the industries as to how to use and manage the worlds most precious resource-water. Water usage is divided between many sectors; agricultural, industrial and domestic, where industrial usage of water accounts for 22% for the world. There stands a challenge in the way of these business/industries to deal with the situation of exposure to water related risks. Water scarcity and managing the resource is a big hurdle for water and energy-related industries, the agro-based businesses, product manufacturing departments, chemical industries, financial and insurance industries and retail and distribution departments. The industries, specially the chemical industries and pharmaceuticals are trying their best to use less of water as required and pollute less in return as lack of clean water is a rising problem. Hence the industries now have started using less water and by the years 2005-06 the chemical industries in many states had reduced the water usage up to 8%. In the US, some of the chemical factories have reduced the hazardous emissions of chemicals into water which are dangerous for the aquatic life as well as the environment. Industries under the pressure of using less water have come up with useful strategies to use less water and store it for their use. They have started taking steps to store water, such as installing water cooling kits to avoid evaporation of water, sterilization to maintain water quality, waterharvesting methods where the excess of monsoon water is stored up and used in dry seasons. These steps have started showing their impacts over the years. Some companies try to reduce water consumption, some try to store water, and some try to recycle water and some re-use it. The question is that what sort of technologies and ideas the companies need to invest in for the maintenance and increased water supply. Desalination is of the techniques-creating water instead of depending on the existing supply. However recent studies in California where, to alleviate water shortages, there are plans to build around 20 desalination plants, the biggest of which would have a daily capacity of 400,000m3 shows that recycling and reuse may be a more sustainable option (Milmo. S, 2008, Thirsty Work). However everything comes with a price, and so does this technique, where it is costly to install this and is very energy-consuming. However to judge the success criteria it must be so

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that the impact on water and energy is efficient. The reduced consumption of water by the industries should in return decrease the energy consumption and lower the costs. Leading water-using industries also include the textile industries which use water on a large basis. Textile industries in countries like turkey have also hit the water scarcity stage and our taking steps to deal with it. These textile industries at first tried to move out to locations where they could store their water requirements. They have tried to cope up with the shortage of water by building up their own waste water treatment plants and made sure that no polluted water is being discharged out of their factories. Turkey is facing the consequences of water scarcity and pollution as far as their textile industries are concerned, and this is not only turkeys problem, in fact this is a global concern. Turkish industries are importing such techniques that facilitate them in producing their goods where no water is used at all (Bender. N, 2004, The Impact of Water Scarcity and Pollution on the Textile Industry: A Case Study from Turkey). As far as the textile industries are concerned, they need fresh and clean water for the purpose of dying the fabric and to produce the fabric. On the other hand water thats available to these industries is highly polluted and thus needs to be treated. Hence the textile industries have switched on to less harmful chemical based dyes and technologies. An example is Ultrasonic where Ultrasonic waves are being researched in order to replace processes that require water or to decrease the amount of reagents in the effluent. The ultrasonic waves can produce effects on textiles that are similar to current physical and chemical techniques with the advantage of not using water. Instead of chemicals or machinery that requires water during processing, researchers are allowing the fast impulses of the ultrasonic waves to do the work (Bender. N, 2004, The Impact of Water Scarcity and Pollution on the Textile Industry: A Case Study from Turkey). Another type of water conservation strategy is the foam application where this application replaces water with air to apply the dye on the fabric. Sperretto Rimar washing system is another way of re-using water in the textile industries. Chemical formulas that are used to make dyes are also being altered with the help of enzymes that make them less dangerous. The case study done by Nathan Bender in his paper mentions that Turkey imports machines which help them use less water and chemical in order to produce their fabric. It also talks about the Neuenkirchen clarification system is a way of recycling the water that contains chemical waste products as an end product.
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Industries on the whole play a large role in polluting the water streams and create the problem of water shortage in those areas. A number of organizations have been established to cater to these problems where the industries dump tons of heavy metallic wastes, toxic chemicals and sludge. These organizations take up the responsibilities that the industries do not pollute the water and also focus on dams, sewer systems, desalinization, and water allocation. Not all manufacturing and other industries carry out the water treatments, the reason being that water purification and recycling and its re-use may not only include higher costs of installation or adopting these techniques, but also require training, expertise skills, and education.

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Government Policies and Institutions

Government policies and the institutions that are handling the supply side of water are one of the issues that most of the countries are facing related the water scarcity. Government or bureaucratic decisions favor the building of more dams which in turn cause environmental problems such as flooding the lands by the reservoirs of dams and also increase the charges on water use. Despite this governmental solution, every solution in supply side is with a pitfall. The major pitfalls that most of the developing countries are dealing with, facing water scarcity, to begin with that the increasing technology has raised the cost of new machinery and system along with the debts that one country has taken fail to raise the funds to proceed with the process to control the water scarcity in present and future as well. The other main issue related to government is subsidizing the water use, enabling the users to use as much as water they want to whether in agriculture purpose or so how, defy to encourage the conservation of water resource that is not taking into account the future generation that they would be worse off than the present generation. Government is foremost in increasing the water scarcity through public irrigation system, ground water and private irrigation, and lastly urban water systems. Public irrigation system has been an intense issue around the globe for ones facing water scarcity and there has also been not a clear understanding of how to control it. Issue that deals with public irrigation is that the remaining water, after given to water users (farmers, households, factories), is whether used or wasted. Price setting, without taking in to account the waste of water or the cost that actually is to supply the water discourages the conservation of the water and further failure to provide water for irrigation in present and future. It is evident that irrigation infrastructure is foremost to make irrigated area effective. These problems are compounded by the negative externalities imposed by upland deforestation (Alan Richards, 2002). Bureaucratic structure of responsibility plays a crucial role in public irrigation but so far they are the cause in the failure of this system. To begin with the reasons, they pay more attention towards the supply side and overlook the issues that this might lead to, decisions of allocation are segmented, prefer seniority, and centralized decision making. In conjunction with the public irrigation, the private irrigation has also been the other issue in water scarcity encouraged by the government. Governments of most developing countries has subsidized the power and promoted machinery use to get ground water by lowering the tariffs and abolished the bans on imported machinery.
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Encouraging the irrigation by tube well has serious consequences; one has to face in the future, is increased cost of capital and power and most importantly the reduction in availability of water tables. Population has increased in cities and the issue related to urban water system is water supply and sanitation service to such a huge population. Supply of water to massive population needs proper sanitation services, for this purpose cities have to get the water from underground or more distant sources which increases the cost of supplying it along with the cost of lower quality water treatment.

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Cost-Benefit Analysis
The value of environmental goods or services can be determined by its direct, indirect, non-use, option and existence values along with the understanding of the cost and benefits of conservation. Discounting has been an intensive issue and a reason of scarce resource which in this particular case is water. Discounting is a reason of deviation from sustainable development by compromising future generation. As with the growing economy, the demand for water has increased and the cost has also increased for the provision of clean water. Industries have polluted the nearby water by its waste which has further raised the cost of their treatment. The other issue regarding the dirty water is adverse effect on aquifer due to fertilizers and pesticides and by unnecessary pumping, leading to scarcity of water. Diminution of aquifer jeopardizes the ecological system. The core issue is the inability to understand the cost and benefit analysis of such problems to reach to a sustainable or acceptable policy that benefit the current and future generation as well with the reduced cost of executing it. One has to take in to account the economic value of use and non-use benefits that will be generated by this plan and weighing these benefits against the costs of implementing this plan, using different discount rates (Ekin Birol, 2009). Ekin barol and its co authors has highlighted the cost benefit analysis framework by explaining it through the experiments that were conducted in 2008. The proposed idea to control the scarcity and poor quality of water is to fill the aquifer with the treated waste water in Limassol and close by places. The benefiters are farmers, deriving option and use value, other public close the Limassol city, deriving indirect and non-use values. In particular article, two experiments were carried out, given different attributes, taking in to account the economic value that benefiters have accrued through that experiment. The first experiment related to farmers has attributes of quality and quantity of water and it is specified in the experiment that highly treated waste water is the only mean to maintain the current quality of water otherwise the water quality will be poorer than before, deteriorating the crops. The other attributes are employment and monetary. Employment level will effected, if the plan to replenish the aquifer with treated waste water not taken seriously and the low quality water will destroy the crops leading to decline in the employed farmers by large proportion. Monetary attribute tells that the price of water paid by the farmers could remain same or increase by some percentage depending on the m3 of water extraction. Second Experiment is related to residents given almost the same attributes. The
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employment attribute is the same as in the farmer experiment except the fact it takes in to account the economic benefit public gets from social, economic and ecological factors. The water attribute is to capture the impacts of economics factors on residents as to know the diversification of local crops. The ecological attribute is the one which has not been mentioned in farmer choice experiment but has been mentioned in resident experiment to know the effect of scarce water on the region. Survey conducted by sampling the farmers and residents, asked for their view on implementation of their plan to refill the aquifer by treated waste water firstly by reminding them of the whole situation of the existing aquifers and damages that has been occurred due to dirty. Condition logit model was followed to get the results. The result of the CLM reveals that all attributes included in the definition of the aquifer management plan are highly significant determinants of aquifer management plan choice (Birol, Koundouri, kountouris, 2009). The results are in the favor of alternatives to maintain the current condition evident from positive coefficients on quality, quantity and employment. Whereas in the case of prices favoring those plans with lower prices of water apparent from the negative coefficient. The whole scenario highlights one important point that farmers and residents utmost need is the better water quality and quantity and there is also large economic benefit from it. Willingness to pay and compensating surplus are the two keys to ensure the replenishment of aquifer maintains the water quality and quantity at the current level. The article in the end discusses about the cost benefit analysis that is mostly analyzed by the net present value but it does not take in to account the future generation which is quite problematic as future is difficult to predict so it considered uncertain. The second foremost step in cost benefit analysis is to know the fixed and variable cost to incur in aquifer replenishing plan. The last step that should be followed in this analysis is to analyze that whether the plan implementation will be Pareto improvement as this is related to cost-benefit improvement. This cost benefit analysis is helpful in a sense as it takes in to account the cost and benefits that one group has to accrue in conjunction with sustainability.

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Climatic Effects
We know that changes in the water quality and quantity because of the changes in climate in return can cause problem of food availability, utilization and specially water management. Changes in the climate can cause a number of difficulties when it comes to manage the water resources for the purpose of infrastructure and management practices. The indicator used to formulate the water necessary to survive is the water resources per capita by watershed. In a short period, we can think of the water resources to vary because of the patterns of monsoon cycles. On the long run however, it can be judged from the severity and intensity of the floods, droughts and other hydrological calamities.

The general trend is such that the water resources are affected by the climatic changes. The regions which are facing the problem of water scarcity are facing adverse climatic changes. In the regions like tropical, high latitude, and equatorial, they are facing an increase in the temperature, and the evaporation rate has also gone up gradually over the years and it is projected that it will increase up to 17-18% in the year 2025. These changes not only reflect the variations in the levels of precipitations, but also the increase in the evaporation rate, where larger parts of the world where water shortage is a problem, they face an overall reduction in the level of runoff and annual precipitation. (Arnel. Nigel W., 1999, climate change and global water resources).

It can be said after reviewing the climatic situations in various regions that the increase in the evaporation is because of many reasons like increase in the temperature, the increased vapor pressure, and higher wind speeds. In northern snowcapped areas, the overall increase in temperature means that there will be less amount of precipitation in the form of snowfall. Hence the water resources in these snowcapped regions are in the form of snow fall. Across large parts of North America, northern China and Eastern Europe, snow cover by the end of winter has been considerably reduced by the 2050s and this has implications for the timing of stream flow through the year as indicated in the next section. In northern Asia, however, extra winter precipitation leads to an increase in March snow cover (Arnel. Nigel W., 1999, climate change and global water resources).
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According to the paper presented by Schaake and Kaczmarek (1979), they conducted a study on the climate, the climatic change and water supply. They discussed the issue of the water scarcity which might or might not had been the result because of the changes in the climate, whereas they also assessed the possible changes that climate brings to the water resources (J. Nemec, J. Schaake, 1982, sensitivity of water resource to climatic variations).

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What we get out of it

Most of the developing countries are facing the problem of water scarcity and has not taken proper measures to control the scarcity. Government role in exacerbating this issue is that they perceive that building of dams can increase the provision of the water to their citizens and demands can be fulfilled to some extent with it. But this perception of the government and related institutions is strongly needed to be changed as the increasing the supply and subsidy on water has only encourages the users to consume water more and more. The article that has been reviewed for the issue also made it very easy to understand by dividing the water supply division in to three sections, that is public, private irrigation system and urban water system. these sections highlight only one major issue that government only motivates consumer to use as much water as they want and no strict measures are taken to control. As in public irrigation the price that has been set for farmers ignore the cost of the water they wasted and in private irrigation reduce tariffs and reducing bans on imported machinery to get water from ground water. Eliminating bans on imports and encouraging the use of hydro power is only increasing the consumption of water and energy. With growing population the cost of supplying the water has increased which made the sanitation services poor. Cost benefit framework has been the important tool in analyzing the cost and benefit accrued to the different groups. The step that one has to follow of calculating NPV is problematic in sense that it does not predict the future. Increasing discount rates will make the future generation worse off so keeping lower discount rate is better strategy to not increase the cost for future generation. Discounting leads to Pareto improvement that one has to be compensated to benefit the other person, which is not efficient and efficiency cannot be achieved in real world. Cost benefit analysis helps to evaluate that which policy is appropriate. If cost to implement the plan is greater than the benefit it is giving, then should not be opted. A proper survey should be done to know the Willingness to pay so that to be able to analyze the cost benefit. A perfect econometric model should be used to get a better result without errors in it. It is evident that the developed countries like the US, Canada, China, Turkey and many others have already taken steps to deal with water scarcity since a long time ago. The industries in the developed nations, have tried to stabilize conditions for the production and manufacturing
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departments with the help of technology and their knowledge. A higher cost of conserving water is one of the major drawbacks for the developing nations and the third world countires for not taking any steps to conserve water. They are not provided with enough incentives to carry to take any steps to save water. Moreover Climatic changes as a result of deteriorating environment have played its role in further alleviating the problem of water shortage. The temperature has started to increase in a number of regions mainly because of global warming and hence this causes flooding and in some areas higher evaporation leading to droughts or lower precipitation rates, or even a decrease in the snowfall in the northern areas. The main problems lies in the fact that temperature of the world is increasing overall and the consequences have to be faced-less precipitation, more of evaporation, and increased melt down of the glaciers and snowcaps.

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How can it be linked to Pakistan

Pakistan has been blessed with water resources through Himalayan and Karakoram. Pakistan is an agricultural country and it is considered as the backbone of our country. The consumption of water is highly needed in agriculture sector for cultivation and other purposes beside this our industries work by hydropower and for this purpose dams are built. Water is the essential need for the living and survival of an economy, precisely. Pakistan is quite behind the other developing counties in the race of development and overcoming the issues regarding the water scarcity. As been said that Pakistan has various water resources such as rivers, rain, lakes, glaciers, surface water and ground water. Historical background of Pakistan related to water resource has not been good as after the independence had only two three dams which has increased in number till now but are not as efficient as they should be. The storage loss due to dams has increased through the years. Government perceives that large quantity of dams will overcome the problem in supply side which in turn has adversely effected the nearby environment. The demand for water is increasing rapidly, while the opportunities for further development of water resources are diminishing (Ayaz Ahmed, 2008). The increasing demand of water is mainly due to increasing population growth which has made it more difficult for the government to fulfill the need of every citizen. Cultivation of land has to be increased so as to produce more food with the increasing demand of the increasing population. Expansion in irrigation has led to other serious problem that is salinic, soak up all the mineral salts from the earth, which has polluted majority of the water tables and poor sanitation services with the rising sewage overflowing towards the rural community, Balochistan and KPK are the provinces which are highly affected by the salinic. Salt water intrusion has increased the proportion of dirty water. Sewage and dirty drinking water problem is highly evident in Karachi as no construction or maintenance has been done on broken water pipes and the underground dirt has polluted the water in the pipes. The other issue regarding the polluted water is linked to industries. In Pakistan industries are located at distant places from the very edge of the developed cities but near to rural areas, dumping the waste directly or indirectly in to lakes thus polluting it with toxic chemicals. Industries that are polluting the water heavily by toxicants are sugarcane, tanner, cement and fertilizers. No precautionary measure has been taken seriously so far as it is obvious from the fact that Pakistan has only three waste water treatment plants.Managing the Indus river
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basin the light of climate changes, water supply is falling behind agricultural and urban demand particularly in Karachi where population growth exceeds the physical institutional capacity of the public water system (Omar, 2004). Politics always had a negative impact, as in instead of solving the situation; worsen the situation more than before. Corruption has constantly been the major factor in worsening the situation of allocation of water resource or any other resource between different cities along with rural and urban, which has been evident from the disputes between Sindh and Punjab. In Punjab rural areas the water supply is through the piped water or hand pump and large percentage of people in Sindh, Balochistan and KPK, as compared to Punjab, depends on dug well, river or canal. It has been predicted by the economists that Pakistan will face the water scarcity issue in the near future as the population is increasing and the availability of water resource is diminishing. The climatic changes have also adverse effects on the water availability as the green house gases which trap the solar radiations and increase the temperature of the earth. Due to increase in temperature the climatic changes in the form of rain fall, ice extent, and sea level rise has taken place. Climate change will add to the susceptibility of the agricultural zones to natural catastrophes such as storms, floods and droughts in addition, to exposing the country to socioeconomic losses. Global warming is also one of the reasons in water scarcity, quite apparent from the level of scarcity in KPK, Balochistan, Sindh, where the sources of water has depleted, Stream flow reduced and drying up of wells especially in Quetta. Pakistan has been unable to form a better strategic plan to overcome these issues or problems related to water. Every year the situation worsens more than before and government is highly ignorant to even strategize to control these issues.

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Way Forward
Water scarcity is increasing at an alarming rate and we need to conserve this precious liquid. There are many ways that the water can be conserved to meet future needs, to save money, and most importantly to preserve the environment.

There are many solutions provided by many environmentalists to deal with the shortage. Cloud Seeding is one of the most recent scientific inventions. This technique stimulates ice crystals to form precipitation-an attempt to induce rainfall. This type of a technique works against the harsh climatic conditions that deprive the lands with water resources. However this is an uncertain method to induce rainfall and there arent many evidences to support. Nevertheless it is relatively inexpensive (Frederick K.D. 1995, Americas water supply: status and prospects for the future, Vol.1)

Another method is Desalination, which is becoming a great concern for many engineers, and governments. This method converts the sea water to fresh water for the commonly known uses of water. However less attention is paid to the desalinization of water in the subterranean and surface brackish water. Desalination has in fact resulted in cost reductions, greater efficiencies, and nearly half of the worlds water is desalinated by the Middle East countries and 15% by North America (Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic variability, 2007)

Another interesting way to conserve water is to remove the water-consuming invasive plant species namely, cheat grass, camelthorn, Ravenna grass, Russian olive, and tamarisk, or salt cedar America (Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic variability, 2007). These species are able to survive in any sort of habitat and are imposing danger to water parks and many other resources.

Agricultural water conservation can bring about remarkable results such as employing different cropping patterns, and different salinity control programs and so forth.

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Urban Water conservation is also under attention. These programs include water conserving technologies (e.g., lower-flow plumbing fixtures and more efficient irrigation systems), market incentives, regulatory policies, new landscaping techniques and the use of drought-tolerant (xerophytes) plants, and public education announcements encouraging urban water conservation (Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic variability, 2007).

By far Recycling is one of the latest methods that the people can implement to conserve water, and it is not only efficient but also conserves the ecology.

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References
Ahmed, Ayaz., Iftikhar, Henna., Chaudhary, G.M. ( 2007). Water Resources and conservation Strategy of Pakistan.The Pakistan Development Review, Vol. 46, No. 4. Arnell. N.W. 1999, climate change and global water resources Birol, Ekin., koundouri, Phoebe., Kountouris, Yiannis. (2009). Assessing the economic viability of alternative water resources in water scarce region: the roles of economic valuation, costbenefit analysis and discounting. Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic variability, 2007, The National Academies Press Frederick K.D. 1995, Americas water supply: status and prospects for the future, Vol.1.retrieved from http://www.gcrio.org J.Nemec, J. Schaake, 1982, Sensitivity of water resource systems to climatic variations, Hydrological sciences-Journal L .Bender. N. 2004, The impact of water scarcity and pollution on the textile industry: A case study from Turkey, Llyods, Global Water Scarcity; Risks and challenges for Business. Milmo. S, September 2008, Thirsty Work, Chemistry World, p66-68 Richards, Alan. (2002). Coping with water scarcity: the governance challenge Tisdell. C. 2007, Economics, Ecology and the Environment; Economic change and environmental issues: Policy reforms and Concerns in Australian Agriculture.

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