The paper presented by Feisal Khan, assistant professor of economics, at the Woodrow Wilson International Centre for Scholars all-day conference on the water problem in Pakistan was discussed in Dawn (Pakistan’s largest circulation English language daily). The article’s author, Shahid Javed Burki, chaired one of four sessions at the conference, the one in which Khan presented on what Burki calls “the continuing debate in the country about the capacity of the people to pay for water.” Burki is a former Regional Vice President for Latin America at the World Bank and former Pakistani Finance Minister.
He writes: “Feisal Khan in his presentation provided some interesting data on how the government’s inability to charge the farmers the real price of water meant a progressive deterioration in the quality of the irrigation system that took hundreds of years to build. He provided data that showed that the amount of money the government collected by levying a water charge (abiana) had progressively declined.
The decline was precipitous in the 1970s when Islamabad, Punjab and Sindh were governed by popularly elected governments. At the same time corruption had increased and, according to him, top jobs in the departments of irrigation were being sold to the highest bidders for large sums of money. He knew of some fieldwork according to which corruption cost the farmer Rs30,000 per year while the abiana had declined to only Rs160 per hectare.”
Burki goes on to say, “What this shows is that the poor farmer is willing to pay but what he pays goes into the pockets of the corrupt officials rather than to the government exchequer.”
Khan joined the HWS faculty in 2000 after earning his B.A. and M.A. from Stanford University and his Ph.D. from Southern California.
The full article follows.
Taking politics out of water
Shahid Javed Burki • December 2, 2008
THE Woodrow Wilson International Centre for Scholars in Washington has taken considerable interest in policymaking in Pakistan. The centre serves as a living memorial to President Woodrow Wilson who served the US when it was consolidating its position as an emerging global power.
Rather than erect a concrete structure on the Mall as the Americans had been doing for their beloved presidents, the US Congress decided to set up a public-policy institution in his memory.
Lee Hamilton, a former and influential Congressman presides over the institution. He was one of the two authors of the Iraq Study Group (James Baker, secretary of state under President George H.W. Bush was the other). Under Hamilton’s leadership Pakistan is among the centre’s focus countries.
Over the last several months the centre has organised a series of workshops on some of the more important economic and social issues Pakistan needs to resolve if it is to make progress. To date conferences have been held on education, trade and energy. The seminar proceedings are published as short books by the centre. They have become instant ‘best-sellers’ (the books are distributed free of charge) in the policy community that constitutes the think tanks in Washington and Boston and the university towns in between as well as on the West Coast.
The most recent workshop of the Pakistani series was held on Nov 20 and the subject for discussion was water – how the availability of this precious resource was now under strain; how small changes in personal behaviour and big actions by the government could ease the growing constraint on supply; why misguided policies adopted by the state in the past had misallocated water to users that did not benefit society or the economy; how important it was to recognise that the way water was collected, stored and used affected women’s economic and social lives; and how pervasive corruption among the officials responsible for managing water supply and apportioning its use among different users was hurting the poor in the countryside and in towns and cities.
The key note at the workshop was given by Karachi’s Simi Kamal. It was a wide-ranging presentation in which all issues that were of concern to the speakers and the attendees were well articulated. Two things impressed me with the way Ms Kamal handled her assignment. She was of the view that Pakistani society was now handling the issue of water in many small ways. This was generating new ideas about efficient use and conservation.
For instance, it was becoming popular to capture Karachi’s humidity as water, thus compensating for the city’s lack of rain. These approaches were forcing governments at different levels – at the level of the districts, the provinces and the federation – to incorporate some of these ideas into public policy. Grass-roots organisations had entered the area where action was stymied by provincial politics.
The quarrel over claims to water on the part of the provinces figured prominently in many of the presentations. Water politics had prevented the adoption of efficient policies for conserving and using water, a subject to which I will return near the end of this article.
I chaired one of the four sessions at the conference. Three speakers presented papers. They discussed the way water was being used in the countryside; how water-sparing technologies such as drip irrigation could optimise the use of this scarce resource in the sector of agriculture; and how the lives of women were being affected in the country’s mountainous areas by forest degradation and climate change.
The discussion at the workshop raised two issues in which economics could play a role to clarify one problem and possibly solve the other. I will begin with the continuing debate in the country about the capacity of the people to pay for water.
Feisal Khan in his presentation provided some interesting data on how the government’s inability to charge the farmers the real price of water meant a progressive deterioration in the quality of the irrigation system that took hundreds of years to build. He provided data that showed that the amount of money the government collected by levying a water charge (abiana) had progressively declined.
The decline was precipitous in the 1970s when Islamabad, Punjab and Sindh were governed by popularly elected governments. At the same time corruption had increased and, according to him, top jobs in the departments of irrigation were being sold to the highest bidders for large sums of money. He knew of some fieldwork according to which corruption cost the farmer Rs30,000 per year while the abiana had declined to only Rs160 per hectare.
What this shows is that the poor farmer is willing to pay but what he pays goes into the pockets of the corrupt officials rather than to the government exchequer. Since the rich are politically well-connected, it would be hard to collect money from them. In other words, corruption works as a regressive tax, by burdening the poor while generally sparing the rich. There is one other economic consequence of the impact of corruption. Since the corrupt officials work and live in towns and cities, water-sector corruption results in transferring incomes from the rural to the urban areas.
The other issue where economics could come to the rescue of the state is in contributing to the solution of the inter-provincial rivalry concerning water rights and the distribution of water. I would suggest that the federal government determine the total value of water that flows through the river system. This amount should be apportioned among the provinces on the basis of their current use. This would establish a benchmark. Deviations from these will need to be compensated.
The provinces should pay for withdrawing additional water from the system. Trading should be allowed among the provinces. If there are departures from the current use, those who add to their use should pay those who would lose since the amount of water in the system is essentially finite.
For instance, putting a value on water will result in a different kind of discourse among the provinces. Sindh may wish to pay a considerable amount of money to re-establish fishing in the Indus delta and to regenerate the mangrove forests. Punjab would begin to see that the cultivation of sugarcane does not make economic and financial sense for the province. Punjab may want to sell some of its water rights to Sindh reflecting the value the two provinces would put on its use.