The Economics of Clean Water: A Guest Post

INSERT DESCRIPTIONDavid Zetland

David Zetland is the S.V. Ciriacy-Wantrup Postdoctoral Fellow in Natural Resource Economics and Political Economy at U.C. Berkeley. He writes about the economics of water on his blog aguanomics and has recently appeared on Forbes.com and Fox Business News, discussing America’s “water crisis.” He has agreed to guest blog here this week. This is his first of two posts.

Potability, Politics, and Pipes

By David Zetland

A Guest Post

In 2000, the United Nations declared an intention to reach eight Millennium Development Goals (MDG’s) — each with one or more targets — by 2015. The MDG’s are attracting a lot of money, but money can’t fix everything.

Since I’m a water guy, I’ll explain how money may not work by looking at Target 3 of MDG 7:

Halve the proportion of the population without sustainable access to safe drinking water and basic sanitation.

Let’s begin with some baseline figures: According to the U.N., 78 percent of the world’s population had access to improved drinking water sources in 1990. As of 2004 (most recent data), that share was 83 percent. (For sanitation, the figures are 49 percent in 1990 and 59 percent in 2004, but let’s ignore this sub-target for now. Let’s also ignore the 1990 baseline for a program that began in 2000.)

But wait, did you notice the discrepancy? The goal being measured and pursued (improved drinking water sources) is not the originally proclaimed goal (sustainable access to safe drinking water). This discrepancy is no accident. Rather, it reflects the difference between the ambitions of development activists (safe and sustainable) and the realities of development bureaucrats.

Since “safe” is hard to measure, bureaucrats use the presence of “improved drinking water supplies” as a proxy for water quality — and they quantify that by counting pipes, pumps, and faucets. Their treatment of sustainable is even worse: “Sustainable access is currently not measured for reasons of a lack of common understanding [of] what constitutes sustainable access and how to reliably measure it [on a] global scale.”

Oops.

As Peter Drucker once said: “what gets measured gets managed.”

We know that thousands of well-meaning people will be spending billions of dollars to install pipes, pumps, etc. Will those pipes deliver safe and sustainable water? We can’t be sure about that result — since it’s not being measured — but we can be sure that projects that deliver pipes will get funded, bureaucrats who deliver 100 percent pipe coverage will be lauded for helping the poor, and outsiders are likely to confuse 100 percent pipe coverage with 100 percent access to “safe and sustainable” drinking water.

Bureaucrats will declare victory, outsiders will applaud, projects will wrap up, money will disappear, and those unlucky enough to have pipes with unsafe and unsustainable water will be left to their own devices.

So has the international development community tried to avoid such an ineffective and wasteful outcome? No. Instead, it has pressed for enough money to install pipes everywhere. Perhaps the most famous proponent of this “solution” (besides Bono) is Jeffrey Sachs, who consistently calls for more money to be poured into MDG’s and international aid.

Is it possible, however, that money spent on pipes will help? Perhaps yes but probably not. Effective water management requires good institutions — i.e., a framework for the formation and enforcement of local rules and norms that will deliver safe and sustainable local supplies. After all, how useful is a well without a means of allocating its water or maintaining its flow? How safe are pipes when they carry water of unknown quality? How sustainable is supply from an overdrafted aquifer?

The trouble with Target 3 of Goal 7 (and other targets, you can be sure) is not just that it has been reinterpreted to meet the needs of bureaucrats (rather than the poor), but that its proponents think that money alone can deliver results.

Bottom Line: MDG warriors, by emphasizing money over institutions, are unlikely to deliver safe and sustainable water. Hopefully, we won’t have to wait until 2015 for them to learn that.


Rich

Drinking water requires the mindset of creating permanent organizations to function as utilities to operate and maintain any capital investments. Organization like Charity Water (as M Todd noted), Lifewater International, Bloodwater, Staff of Hope, and World Vision to name a few take this long view of partnering with local communities to take ownership of well and irrigation projects.

There are a stunning number of 10-15 year old wells that no longer produce potable water in Sub-Saharan Africa because no one was there to tend to the upkeep, only to make the initial investment.

Mr. Zetland has got it right. The right metrics drive the right behavior. Just throwing money at the problem (even in the form of plumbing) won't solve the problem.

M todd

Response to 4)

Drilling for clean water is not a mystery. In the west we do not consider tap water clean, but in reality it is safe and drinkable. My home has a well which was drilled 35 years ago, it is safe, it is pure water. The other 157 homes in our neighborhood are well water as well. Most rual homes are well water.

40 percent of the illness in the 3rd world can be traced back to poor drinking water. Most wells are safe, efficient, and do not require grand infrastructures. Where wells will not meet the needs of a large urban population, in rural areas it can mean the difference between life and death. Once you tap in the sub surface aquifer most of that water is safe.

Instead of thinking in terms of large water projects only a refocus on small local projects such as well drilling, can mean fresh safe drinking water for 10s of millions of people for a fraction of the cost. There are also new small distillation units that require less than 50 cents in energy per day and produce 5 gallons of water an hour. That is 120 gallons a day which would meet the drinking water needs of 100 to 200 people a day.

The problem with these programs is they do not require large infrastructures that require large budgets. Contractors and politicians get excited about billion dollar projects because it means millions in profits. That is why individuals like myself are focusing on helping private and small charities who are focusing on small manageable solutions that work. It may not be the total answer, but it is one that is getting results quickly and efficiently.

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Daniel

The article makes sense. If the right metrics are put in place, lo and behold local govt's will look for the right local talent to solve the problem. Right now, any locals with knowledge on how to meet the water quality standards, are shouted down, or fired for not meeting the "pipes" goals, and getting in the way of "development".

It really is common sense, go to a local market in a developing country, go to the village, and they will tell you what metrics to measure, i.e. potable, clean water for x no of the population.

The science behind measuring clean water is really easy, and in quite a number of developing countries is readily available.

Posted by "Local" Water talent.

R.C.

Interesting topic. I liked your point about how institutions redefine their goals to fit the results that they are capable of creating (e.g. "we can build pipelines, so let's just make more pipelines the goal." A few questions/comments for you:

1. Why can't water quality be measured as well?

2. Won't your suggestion -- implementing a local framework of rules and norms for clean water -- require money?

3. Although water pipes alone do not equal clean water, are they not necessary for providing clean water to cities? Do you believe that water pipes are only part of the solution (and incorrectly being used as a barameter of success), or that they are entirely irrelevant?

Thanks.

mitchald

Zetland complains that agencies are not using terminology and goals that are accurate and focused on the true problems. His idea of a reachable goal that outside agencies can achieve is "a framework for the formation and enforcement of local rules and norms that will deliver safe and sustainable local supplies."

How would it be possible, without colonization, for outside agencies to reach this goal? Should the UN have a peacekeeper force that goes around the world enforcing local rules and norms? Which local rules and norms should be enforced? Many local norms say that rich people should have what they want and poor people should be quiet. Is this what Zetland wants enforced?

This article on a very important topic was a waste of space.

JJE

Hi Stephen,

Great points. Thanks for the piece. How about taking on the elephant in the room domestically -- which is that all the toxics that we create and literally pour down the drain, we expect to be removed. But, tests for the the materials we put in our drains are not used in water treatment. So, is the water really safe? Or just "safe" given our current and limited methods of measuring it? This is similar to what you're talking about above. The desirable outcome is not measurable, so we substitute the nearest most readily accessible data as a proxy, which in the public's mind is the same.

I think eventually we are going to have to grapple with addressing toxics on the front end. That is, some toxic materials literally can't be manufactured unless they can be verifiably removed in water treatment facilities. Do we really want to just run a massive experiment in low-dose exposures to toxics on all Americans? Seems like that's what we're doing. Love to hear your thoughts on this.

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steve pesce

I can't help but think that an article like this should reference Ralph Nader who has fought this battle (along with higher fuel standards and workplace conditions) for 50 years.

M. Garcia

Monitoring and evaluating is key. But it will be a big investment and can't be haphazard. To be useful measures must be logistically practical and be applicable to a plethora of water solutions.

Different types of measures will be needed on different scales. For example, locally, a cluster of villages may want inventories of materials needed regularly (such as CL and spare parts) so they can manage supplies. Regionally, locations of wells, springs, sanitation facilities, and sampling points along with types of treatment used can help manage water and health. An organization such as the UN might better served with broad data such as the improved water and sanitation access along with health data, and river/aquifer levels.

As a side note: evaluation (determining if the correct choices were made in improving water and sanitation) should also be considered as part of monitoring.

Jamie F.

The point that building pipes is not enough is harder for some people to latch on to than you might expect. Mr. Bono and Mr. Sachs, etc.

Maybe it would be helpful to contrast supply of other services like internet access (fungible, infinite supply) to the supply of water.

HildaCMS

Water is by far one of the most vital substances for life and it was getting scarcer every day. Many places on Earth do not have access to any kind of water, much less clean, usable water. Considering this I do not think that the UN is completely off track. Although many more places now have pipes and wells, which offer them water, the water is not necessarily clean or disease-free. But I believe that it is a start. You have to walk before you can run. People need access to water before they can actually have clean water. Now many more people have access to any kind of water, let it be clean or dirty, but they do have access, meaning they are one step closer to having water they can actually use. In time, the water can be purified and what not, but the systems and pipes are definitely a start. The UN now has to concentrate on raising the standards of the water and cleaning it for the people.

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JGunn

The comment about drilling more wells does not address the problem of water quality or sustainability.

I'm no expert in water, but I do have a lot of experience with monitoring and evaluation of projects in developing countries, and am also dismayed at the sloppy adoption of "measurable indicators" that are convenient for the bureaucrats but miss the mark in all other respects. The bureaucrats and donors are lazy and want to tick boxes rather than figure out whether we are really making progress toward meaningful goals. What to do? Sound monitoring and evaluation isn't cheap or easy.

sarahCMS

Providing safe water for people is very important, since without it, then people will start to become sick, and having to spend their time and moeny in hospitals; not a very efficient situation. As this article explains, having lots of money it's not the solution. This money needs to be used wisely in order to make an efficient job. As this states,"effective water management requires good institutions". Probably more money should be spent in educationg people who can build these effective institutions.

Carl Hultberg

I remember reading a statistic that claimed a large percentage of the world’s water problems could be solved with the money spent on alcohol consumption in Europe over a short period of time. Any memories of this?

How about a world tax on alcoholic beverages, the proceeds of which would go to water development projects in underdeveloped areas? I bet most folks would gladly drink to that.

M Todd

Of course the easier and more direct solution is to start drilling wells for local groups. The UN and the government will waste much of the resources because they think in large dollar projects that are susceptible to corruption.

Here is a simple solution that works. My wife became aware of charitywater.org who decided to do something about the fresh water problem in the third world. Drill wells. One well on the average will supply about 500 people. The cost ranges from 4K to 12K to drill depending on the local and depth.

To date they have drilled over 250 wells with the money to drill 300 more. The organization was started by a NY club promoter who visited Africa as part of a hospital ship. All the money collected goes to drilling wells. The cost of administration is covered by a private individual.

It only proves that you do not have a big budget, or thousands of people to do big things. Most donations are 20 dollars, but together thousands of people make a difference, without waiting for the UN to do something.

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Noggy

An implication of this post is that naive do-gooders such as Bono and Sachs think that investment in hardware is sufficient, and haven't considered the importance developing social and political institutions. While the point about the difficulty of measuring outcomes is valid, the hostile caricature of the work of Bono - and especially Sachs - is unwarranted.

Lee

Water is one of the essential requirements to sustain life and a very basic one at that. It is something that is taken for granted in developed countries but a fundamental issue in most developing countries. My experience is in agriculture but I have seen the impact of water quality in rural areas which suffer from malaria, dysentery and other water-related diseases. This leads to a chain reaction of disease, low productivity and economic stagnation. The issues are local and need to be addressed locally not mandated from a centralized authority.

The other problem related to this issue is water use for irrigation. Once irrigation is available, farmers switch to cash crops which means less biodiversity and dependence on trade for food supply. It is myopic and short-sighted to emphasize only one aspect of the issue and not see the interrelationship of health, economic development and sustainability. The problem will not get any attention until it reaches a critical point and remedial measures takes priority over preventative ones which in most cases are more cost-prohibitive and ineffective.

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David Zetland

@JJE -- see this post on my blog: http://aguanomics.com/2008/09/dont-drink-water.html

Quality issues are indeed a major problem and information is at their center.

@ RC -- water quality *can* be measured, but it takes more time and money. Implementing a local framework may take time and money but it will save a lot more time and money. Yes -- pipes are PART of the solution -- like you need to know how to drive before a car is useful.

@michald -- I am not a fan of international agencies and their good idea. Local norms should be enforced by (surprise!) locals.

@Cyril -- my opinion the movie: http://aguanomics.com/2008/08/flow-movie.html

@George -- I'd favor rainwater capture over letting it go to downriver rights holders because rainwater -- used locally -- is cleaner and requires no energy or pipes for delivery.

S. Banerji

I think the basic point being made in this article is that "outcome" of a water project ie. providing sustainable access to safe potable water for all residents in an area -is often mistakenly conflated or confused with the "Output" of a project which could be laying water pipes to each home. There are huge barriers in translating project "outputs" into effective "outcomes".

Accessing sustainable sources of raw water supply is a big one. Wells can be contaminated, run dry, suffer from arsenic contamination or cause the land surface to sink because of excessive extraction of raw water as in Bangkok. Water projects usually serve urban areas and local governments/ municipalities or utilities manage these facilities. Efficient management of water and waste water facilities is a difficult job. Unaccounted for Water (UFW) can run as high as 80% of production in developing countries which comprises both physical losses and unbilled water. In a middle income country like Turkey, the average UFW is 50%. So building pipes alone is the easy part , running the business efficiently to achieve the desired 'outcome' of bringing safe, affordable and sustainable access to water to both rich and poor is difficult. Water supply is also a monopoly unlike the Internet or TV which further complicates the business.

By the way , the same problem exists in other networked utilities. In the electricity sector, many generation facilities in developing countries produce less than 50% rated output. Yet, many developing country governments with the backing of international development banks have financed more new generating plants rather than investing in improving the efficiency of existing ones and the T&D system. There are powerful incentives working behind such investment decisions. You can guess what these are!

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Tom K

The biggest problem is the word "aquifer." Seriously, ask anyone where water comes from. 99.99% haven't the slightest idea. The idea that you can run out of water in an area that's not already a desert is so far off the radar of even semi-educated people, it's like trying to explain astrophysics to a house cat.

BillTeachesInDC

What gets measured gets managed.

A great and profound thought. I'd love to see Freakonomics reports that continue to harp on this theme: in my own field, NCLB reforms are plagued by the hobgoblin of measuring the wrong things.

The thought is a concise summary of the mortgage meltdown, of Moneyball, and of why I fight with my boss.