Future of Water

26th October, 2018

The Pakistan At Hundred initiative hosted a panel discussion on the future of Pakistan’s water capacity on October 26, 2018. The session was moderated by Dr. Agha Ali Akram, Assistant Professor of Economics at LUMS. The panel comprised of Dr. Pervaiz Amir, Senior Economist at Asianics Agro Dev, Stephen Davies, Senior Research Fellow at International Food Policy Research Institute, and Dr. Zehra Waheed, Assistant Professor of Business at LUMS.

The talk was organized by starting at a macro, inter-sectoral level by debating whether the current water split between different sectors is efficient. The consensus was that the existing allocation of 90% of water supply to the agricultural sector is extremely inefficient, especially considering that majority of it goes to wheat, rice, sugarcane, and cotton- all crops which can easily be imported. By 2047, this allocation would have to be reduced by at least 10% to provide sufficient levels of water to other sectors like households, industries, services, and managing freshwater sources through environmental flows. Even in the case of energy, Pakistan allocates less than 1% of its water supply to it while worldwide the figure is around 30%.

Another issue which was raised was whether the pricing of water is an appropriate mechanism for regulating water demand, and whether a future where the urban consumer pays for increased access to water is foreseeable. The neoclassical theory of price equaling marginal cost cannot hold in this case, as the price of drinking water is infinite. When it comes to pricing, two features are important- that the good should be measurable, and it should be possible to exclude people from it. These become difficult when the good at stake is water, a resource fundamental to the existence of human life. It is, however, possible to start the process of pricing at a macro level. Since water is a provincial subject as per the 18th amendment, a province like Baluchistan could potentially charge for the water technically allocated to it which is instead diverted to other provinces like Punjab. Another possible mechanism for pricing is to bifurcate the market and look into differential pricing. Since the same quality of water is not needed for drinking water versus other domestic and industrial uses, the water market can be segregated with drinking water provided at a highly subsidized rate and the remaining priced higher to regulate demand and excess usage.

The discussion also touched upon the importance of engaging, at a policy level, on what constitutes consumer behavior and how to inculcate environmental responsibility into everyday life. It concluded by emphasizing the need for institutionally assessing the scarcity of water and investing in a more organized means of water-sharing as the most feasible pathway for water sustainability.