Published by the government of Zimbabwe
Dezedede Zhira
17 November 2008
analysis
Harare — WATER is indispensable to economic and social development in many ways.
The fact is water is a finite resource; of the earth's surface, 70 percent is covered with oceans and these contain 97,5 percent of the total water supply available.
However, this is all salt water.
Only 2,5 percent of the water supply on earth is fresh. The air contains only 0,12 percent of the liquid fresh water on earth.
Without water, life on earth is impossible. In principle, a human being can survive on one litre of water a day (International Institute for Infrastructure, Hydraulic and Environmental Engineering Lecture Notes).
A number of challenges are faced when dealing with this sector not only in Zimbabwe, but also in the region and worldwide. Government must ensure that the water sector does not inhibit economic development now and in the future. This means that infrastructure must be adequate and provision of services must be efficient at all times.
Unfortunately, the resources needed to create and maintain the required infrastructure are not always adequate.
The situation is getting more difficult as Government strives to reduce the budget deficit to levels that are economically sustainable.
Recognising this, Government is encouraging private sector investment in water and wastewater infrastructure development.
With regard to improving efficiency, Government has already taken the decision to deregulate the economy and commercialise State enterprise so that they become more efficient and competitive. At the end of the day we hope there will be a change in the way we think and a change in the way we operate.
The concept of sustainability seems intrinsically relevant to water pricing, but the connection is not always made. A sustainable water future depends on appropriate price signals (that is, prices are based on marginal cost pricing principles), and achieving a balance, among other salient policy goals.
The role of water pricing policy is such that financially, water pricing is the main mechanism for cost recovery. Economically, it signals the scarcity value and opportunity cost of water and guiding allocation decisions within and across water sub-sectors.
The financial function requires water rates to cover the cost of supplying water to users.
But full cost recovery also requires water rates to reflect the long-term marginal cost (the cost of supplying an additional unit of water including the social cost of externalities).
The economic and allocative role of water pricing requires water rates to capture the scarcity value (or the marginal productivity/utility) and to equalise the opportunity costs (the value of water in its next best use) of the resource across uses.
As water moves from least productive to most productive uses, places, and time points for efficient allocation, there will be a convergence of the scarcity value, opportunity cost, and long-term marginal cost of the resource.
Unfortunately, such a convergence is rarely seen in practice. Unrealised opportunities still exist and water rates can be designed to capture at least a part of these opportunity costs. For this to take place, technology to store, transport, and deliver water is required, as are institutions to govern the development, allocation, and utilisation of the resource. But how can you tell between a good idea and a bad idea?
The only way is to try it out.
Creativity is extremely important and you have to do it to make it work.
Practical strategies for sustainability pricing include:
The policy debate has increasingly focused on the broader economic and allocative roles of water pricing. There is growing recognition that a realistic water pricing policy that ensures full cost recovery can be politically feasible only when it is designed to perform well in its economic and allocative role.
Sustainability, affordability, and viability are intrinsically related. If water costs are exorbitant and the water rate required to cover the costs of service is considered unaffordable to the customer, long-term viability is jeopardised.
The US Safe Drinking Water Act provides strong rationale for sustainable water pricing without dictating pricing policy. The law clearly points to the importance of building the capacity of water systems to comply with standards. Capacity is defined in terms of the financial, managerial and technical capability of a water system.
Water systems can draw on economic theory to guide pricing strategies. Sustainable pricing is grounded in marginal cost pricing theory, which stresses economic efficiency as a fundamental goal. Efficiency is a necessary but not sufficient element of sustainability. A sustainable price also is an affordable price.
A system that cannot provide service at an affordable price cannot be sustainable by its customer base over time. Sewage is flowing on our streets partly due to sewer lines that are half-filled with sand and debris and the use of high velocity cleaning machines and rubber cups will clear them and save people from disease outbreaks.
In Glen View 1, residents are served by an electric-powered school borehole in the area as they go for weeks without supplies from Harare Water.
In West African countries, water is delivered by lorries and some sold in plastic papers at very affordable prices. Does Harare Water have to supply every industrial activity with treated water?
There is need to address this from policy level and remove bottlenecks.
It is critical for engineers to develop visionary leadership, and play a role for the benefit of mankind through appropriate water pricing mechanisms through effective deployment of appropriate technologies.
I am assessing the marginal costing principle on this situation to make it more practical.
Can it be a head office where workers' committees are always loitering in corridors seven days a week, when do they work?
Harare Water requires situational leadership and an aggressive management approach to the prevailing situation. A business-as-usual approach must stop.
Lake Chivero is being polluted at an exponentially increasing rate while we watch.
James H. Collins, materials manager at Florence Factory of Litton Industries, used to quarrel regularly with plant manager Patrick A Shafer. "He was always coming down here because he was out of something" remembers Collins.
But now that a computerised inventory control and scheduling system has been installed at the plant, the two men joke about how boring life has become.
"We don't yell at each other anymore," says Collins with a grin. "My job has changed drastically. The computerised system has eliminated 95 percent of my emergencies. I know what we need and when. Now I spend my time planning, not reacting."
I was talking to the former Zimbabwe Institute of Engineers president about how the Harare water maintenance programme can be made enjoyable.
If guys from the maintenance section order a wrong component, an alarm will ring once the specification is loaded into the computer to place an order by stores.
The frequency at which the alarm rings for wrong orders being used will act as a performance indicator.
It is critical for engineers to develop visionary leadership, and play a role for the benefit of mankind through appropriate water pricing mechanisms through effective deployment of appropriate technologies.
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