Economic Analysis of Consumptive Applications of Water

Drinking, Domestic, Industrial and Irrigation water are the four main consumptive applications of water in Sri Lanka. World Health Organization [WHO] of United Nations reports thousand cubic metre of water per annum is the minimum water requirement of each human. As far as water resources are concerned, Sri Lanka is identified a rich country in the world with an average annual rainfall exceeding 1700 mm and annual run off of some sixty thousand million cubic metre [MCM] of water into the sea. Sri Lanka needs only 20,000 MCM of water to meet the water requirement of entire population. Water has an economic value depending on the quality, availability, storage facility and the require­ ments. On the other hand excess water also causes some harmful effects to the human life resulting negative economic impact.


Introduction
Drinking, Domestic, Industrial and Irrigation water are the four main consumptive applications of water in Sri Lanka. World Health Organization [WHO] of United Nations reports thousand cubic metre of water per annum is the minimum water requirement of each human. As far as water resources are concerned, Sri Lanka is identified a rich country in the world with an average annual rainfall exceeding 1700 mm and annual run off of some sixty thousand million cubic metre [MCM] of water into the sea. Sri Lanka needs only 20,000 MCM of water to meet the water requirement of entire population. Water has an economic value depending on the quality, availability, storage facility and the require ments. On the other hand excess water also causes some harmful effects to the human life resulting negative economic impact.
Sri Lanka has a well developed reservoir system with a storage capacity over 5,000 MCM, especially in the dry zone. Those reservoir systems are capable of absorbing part of the flash floods and gradually release the water as per the human requirements. However, Sri Lanka faces severe scarcity of water particularly during the dry season. This can be attributed to the ineffective water management practices taking place everywhere in the country. Most of the people in the country are unaware of the fact that water has an economic price subjected to drastic changes. Proper economic analysis of different applica tions of water may also reveal shortcomings in the present water management system.

Methodology
This research was carried out by interviewing 100 persons representing more than 500 people belonging to different economic classes living in various part of the island. This paper is based on the information given by them.

Drinking w ater [potable water]
Only a little quantity of potable water is required for drinking. National Water Supply & Drainage Board [NWS&DB] and other related organizations had worked out that per capita drinking water requirement is five liters per day. However, recent research carried out by using 100 office workers revealed that aver age person drinks 2.5 to 3.5 liters of water per day. Under the hot and dry weather conditions this may be increased to 3.5 to 4.5 liters per day. According to this annual per capita drink ing water requirement is 1.0-1.5 Cubic meters.

Domestic w ater requirem ent
NWS&DB has already worked out the per capita domestic water requirement per day [pcdwrpd] as follows.     Table 02 By considering positive and negative variations it can be shown that annual domestic water requirement is about 75 m3 per annumn.

Industrial water requirem ent
Sri Lanka is an agricultural country and there fore Industrial water requirement is compara tively small. Rubber manufacturing and paddy processing are the main industries in the rural areas which consume a fairly large quantity of water. However, there are large numbers of water consuming industries in the urban areas. Twenty five cubic meters of water per person per anumn is assumed to be the industrial water requirement. Domestic water and indus trial water satisfy same quality standards and therefore they have a same price structure.

Irrigation w ater requirem ent
Domestic and industrial annual per capita water requirement is less than 100 m3. There fore the balance 900 m volume is required 3for food production. Highly populated urban areas mainly depend on the imported or trans ported food items require less water while the food production zones require huge volume of irrigation water. As far as Sri Lanka is concerned nearly ninety five percent of the irrigation water is used for paddy cultivation. Other field crops such as sugar cane, banana and maize need less water compared to paddy. Therefore per capita irrigation requirement can be measured in terms of paddy cultivation. Per capita Irrigation requirement is directly propor tional to the irrigation duty and inversely proportional to the harvest per unit area. Following specimen calculation shows the Irrigation requirement under the normal circumstances. The three dimensional bar chart describes the variation of per capita irrigation water requirement with irrigation duty and harvest per unit area.   Expenditure incurred on drinking water by different economic classes is given in table no 5. Normally 0.5% to 2% of monthly income is sufficient for purchasing drinking water.

Domestic water supply
NWS&DB which supply twenty five percent of the domestic water requirement has already fixeda price structure for domestic water.

Community water Supply
During the last two decades a large number of community water supply schemes were devel oped. This is the cheapest domestic water supply system in Sri Lanka. However, most of the gravity flow type water supply schemes experienced severe shortage of water during the dry season. This problem may be overcome by using supplementary ground water source and pump system.

Gravity flow community water supply
• Cost analysis pertaining to a typical gravity flow type community water supply project is given below. Government contribution is not counted.

4.2.1.2Community well and pump storage system
Two meter diameter 6 m deep well serving twenty houses are consid ered for the analysis.

National Water supply and Drainage Board Supply
The second cheapest and most reliable treated water supply service is provided by NWS&DB which has introduced a tariff system to save more water so that more people will be able to enjoy the benefits of pipe born water. Average family needs 25 units of water and cost estimate is given below

Shallow well and pump system
Shallow wells can not be constructed in the urban areas mainly due to the ground water contamination. It can be shown that NWS&DB supply is cheaper than this system. Typial estimate is given below.

Deep well and pump system
Actual work cost incurred for the construction of a deep well is given below. In both applications it can be shown that unit price of the water may be cut down by nearly fifty percent, if two houses can share one well. Depth of the well = 12m Diameter of well = 1,2m Pumping head = 20 m

Bowser water supply
The bowser supply is the easiest method of short term domestic supply if there is a road network available to serve the people. The bowser supply is very popular in the Middle East countries.
[Water is extracted from deep aquifers and transported by consumer owned large bowsers] The long term bowser supply is 5-10 times expensive than pipe supply. Tire rich people or the, government has to bear up the cost.

Rain water harvesting [RWH]
Rain water satisfy best quality standard water if it is collected in the pure form. Nearly thirty percent of the domestic requirements can be met with collected rain water. There for RWH ease pressure on NWS&DB supply in urban areas and economic unrest in the rural areas. A primitive RWH system may be constructed at negligible cost and 20-50 units of rain water may be collected annually.
As far as urban areas are concerned ground water infiltration is very low and surface run off is very high.On the other hand ground water pollution is also high. Therefore necessary legislations have now passed byparliament by making provisions for theessential RWH.

Fixing a price for Irrigation water
Most of the large scale irrigation schemes may be treated as multipurpose projects. Irrigation as well as hydropower, water supply, flood control, navigation recreation and aquatic resources are the main benefits that could be derived from a large scale reservoir project.
Negative economic impacts such as environ mental degradation and desturbing the ecological are also caused balance by the large multipurpose water resources development projects.

Mahaweli Multipurpose project
As far as Mahaweli multipurpose water resources development project is concerned, cost benefit analysis can't be carried out by isolating irrigation component. Mahaweli hydropower system has so far been able to generate massive energy of some 37,500 GWh worth 600 billion rupees. Accelerated Mahaweli project mainly focused on hydropower development and nearly two third of the benefits should be in the form of hydropower while the balance one third may be in the form of irrigation benefits. Based on this simple assumption unit price of irrigation water can be calculated as follows.
Official web site of the Mahaweli Authority reveals that present worth of the total project cost in 2006 is 89.9 billion rupees. However, present worth of the project is more than Rs 750 billion Sri Lankan rupees mainly due to the high inflation rates prevailed in the country.

Uda W alawe Project
Uda Walawe Multipurpose reservoir was built in 1969 mainly for irrigation. Uda Walawe reservoir has 3 Numbers of 2 MW hydroelectric turbines in order to harness the available energy in the irrigation water. Under the most unfavorable circumstances Uda Walawe power station had been able to gener ate 585 GWh worth 9360 Million Rupees. Project cost benefit analysis is given below.

Alternative price structure based on potential energy of water
Comparatively low prices of water have been resulted mainly due to the very low oil prices prevailed in the world during the last few decades. During the last eight years oil prices increased nearly by six hundred percent. Electric ity prices have increased by approxim ately 300% Largest non consumptive application of water is hydropower and therefore economic analysis may be carried out by considering a unit of water stored in medium level Victoria and Samanalawewa reservoirs. As far as water resources planning is concerned, market price of irrigation water may be taken as six rupees per unit.
Farmers estimate on paddy cultivation is given below.

Conclusion
Ground water contamination has become a serious problem in urban areas. Direct waste water disposal is not permitted indeveloped countries like the United Kingdom. Clean water act should be passed without further delay so that poor people of the country will enjoy the benefits of quality drinking water at cheap prices.
Drinking water that confirms with WHO standard may be priced at 5 cents per litre to 25 Rupees per litre. This variation has to be mini mized, [The standard deviation of prices of drinking and domestic water is higher than the average prices and this has resulted a negative skewness in the price distribution.] People living in Anuradhapura, Polonnaruwaand few other districts have experienced chronic renal failure mainly due to the bad quality of drinking water. Bottled water indus try may be developed so that low income people in the affected areas will be able to buy potable water at a reasonable price.
Many man months are lost due to the short term water born diseases suchas cholera. Disinfection methods like Ultra violet radiation and Ozonization may be used for purifying potable water.
Price of domestic water also varies from 6 to 600 rupees per unit. Most of the privileged rich people can enjoy reliable domestic supply at a reasonable price mainly due to the water service provided by NWS&DB. Therefore, additional cost incurred on domestic water has to be born by the poor people in the village.
During severe droughts, which is common natural disaster in Sri Lanka, government normally supply free water for the affected people. Short term bowser supply is an expen sive method and this situation may be controlled by having large number of decen tralized medium scale water supply projects comprising of large storage tanks. Rain water harvesting may be popularized among the high income groups.
Most of Sri Lankan dislike the term "Irrigatioir water taxation". Economic decline in the coun try can be partly attributed to this myopic notion of the people. All the same, the govern ment had already made a massive investment on irrigation projects. It can be shown that irrigation water may be priced at 2 Rupees per unit to 12 Rupees depending on the availability of water and various other factors.
However, agricultural crop cultivation is not a profitable industry in Sri Lanka. Therefore poor farming community cannot bear up the actual cost incurred on irrigation water. Equitable distribution of water among the farmers has become a serious problem and this has resulted active discrimination among the farming communities. This problem may be overcome by introducing a reasonable tax system on irrigation water so that excess consumer may bear up the additional cost incurred while starving people may also enjoy the benefits of irrigation water.
As far as the Mahaweli project is concerned project cost has already been recovered in terms of hydropower and returns during the next twenty years will definitely contribute to boost the economy. Effective watershed management as well as effective watermanagement is also a sine qua non for sustainable development.