The public-sector and nongovernmental organizations have long dominated the debate on water policy, and this has worked to hide the value of water in many ways. We often do not even know the cost of providing it; the true number is buried under subsidies – that may be very obscure or even hidden – taxes, and the sunk costs of municipal and regional water and irrigation departments. This is nowhere more true than for water used in agriculture. But this is starting to change, as the new water context creates growing awareness to the value of water.
“Full cost recovery must be implemented for all those who today get massively subsidized municipal tap water (also to fill their swimming pools) and who can actually afford to pay. This is necessary to finance the huge amount of infrastructure required to reduce leakage losses in municipal water supplies—up to 70 percent—and to provide the financial means to extend them to those who do not have access.” -Peter Brabeck-Letmathe
Water is a very complex socio-economic issue, simply privatizing it without due consideration of this has already created many failures – the classical example being the water war in Cochabamba Bolivia. But within the past few decades water has gone from NGOs to social enterprises and within the last five years, a growing number of progressive private-sector companies have also started to offer their perspectives on how best to effectively manage water. As the value of water increases, we will likely see it move out of the domain of public or philanthropic organizations and more into the domain of the market. Even NGOs themselves are starting to support this view. Timeyin Uwejamomere of WaterAid, says that “to achieve universal access we have to move from the ‘charity approach’ … of giving people things, towards enabling people to invest for themselves. So investing in social enterprises specifically helps to ensure sustainability of services, because they know how to keep the books, how to maintain facilities and how to communicate with customers.” Oxfam likewise now talks in these terms. “We used to set up ‘in kind’ provision, whereby we provide aid assistance”, says one of their representatives. “Whereas now we are pushing more towards a ‘cash in markets’ approach – rather than moving commodities from Europe into Africa, say, we are working on developing local markets.”
In one of their publications McKinsey & Company reported that: Closing the gap between supply and demand by deploying water productivity improvements across regions and sectors around the world could cost, by our estimate, about $50 billion to $60 billion annually over the next two decades. Private-sector companies will account for about half of this spending, government for the rest. Many of these investments yield positive returns in just three years. Making a business out of improving water efficiency won’t be easy. Successful providers will have to migrate from selling equipment and components to selling solutions aimed at helping business customers reduce their water and energy use.