Two decades ago, my good friend and former editor, Swaminathan Aiyar and I decided to buy agricultural land in a semi-arid part of Haryana just north of Gurgaon. However, as that would have meant postponing marriage, I decided instead in favour of the moveable asset.
It turned out to be a pretty good decision because Swami has tried everything, including a diviner, to find water there. In the process, he has spent a minor fortune but to no avail.
So I have often wondered why, given the importance of water, even perfectly rational people choose locations where water is so utterly scarce. It seems to me that there can be only two possible answers.
More From This Section
Either such people are not rational which, given their numbers, is highly unlikely. Or, if they are rational, they are willing to pay a high price for water in some way or other because there is some other trade-off which compensates for the shortage of water.
Despite all the fuss that is being made now, there are two basic points about water meant for personal use. They are really quite simple: either you live near it or, if that's not possible, you try and get it to where you live.
Both options involve a cost. As long as the price being paid reflects the scarcity of water, there is a rough balance between demand and supply. Thus, those who have to walk 20 kilometres a day to get their daily supply, manage with pitcherfuls.
The fact that in this day and age such a huge effort has to be expended on fetching water does seem inhuman. But that does not reduce the validity of the economic argument, namely, that those who pay more, consume less. The converse is also true, as can be seen from the prodigious amounts wasted in washing cars in urban areas.
If it is thought desirable that people should get clean and safe water at their doorsteps, if not their kitchens and bathrooms, someone has to make the investment which will allow this to happen. In urban areas, it is the municipalities that do so. But, increasingly, because they are so inefficient, they fail to charge for the supply.
In rural areas, no one makes this investment which, strictly speaking, means that the price of water should be zero. And in the purely pecuniary sense, it is. But a great deal of physical effort and time is expended in fetching it.
The same service provided by non-family labour would put a money price on it. But it would be so high that the overall effect would be the same, that is, to limit consumption.
There are, of course, ways of reducing the cost of water in places which are very far from its source. The most effective is storage of rain water, an activity that goes back a few thousand years.
But a problem arises when it doesn't rain enough or, even when it does, people give up storing water. According to the noted environmentalist, Anil Agarwal, the current shortage of drinking water -- how this qualifies as a drought even before the monsoons arrive is a mystery which Star TV must solve -- is on account of the latter.
But why would anyone who lives in a water-deficient area choose to do that? People are not stupid, certainly not where water is concerned. So why have they given up the traditional methods of storing rainwater? Or, the view from the Presidential helicopter notwithstanding, have they really?
I suspect not. If the population has grown, if it doesn't rain for two successive years, and if no alternative arrangements have been made, the shortage will, at some point, become absolute. In a rough way, this corresponds to the notion of peak demand.
The economic policy issue then, surely, is to decide whether it is possible to cater to this peak demand and, if so, what price should be charged for the water during the off-peak season.
In the last one week I have looked through a large volume of water-related literature. I have been utterly astonished to find that, except for some research findings published by the World Bank and one by an economist at IGIDR in Mumbai, there has been no systematic economic analysis of water supply.
What exists, instead, is a huge outpouring of demand projections carried out without a price context which makes the projections completely unusable, techno-economic surveys which replicate older ones, water-related politics at the state level, and cosmic laments by do-gooders who conjure up crazy schemes.
True, that it is the duty of governments to ensure that water must reach the people instead of the other way round. But there is simply no way how the issue of costs and price can be avoided.
Even if you choose to ignore costs because of the social aspects of water, the price issue would still remain. And, if too little is charged as in the case of electricity, rail fares, local phone charges, urban transport etc, the shortages will not go away. In fact, they would become worse.
In that sense, water is just another economic problem. The sooner it is approached that way, the sooner it will be resolved.