Our costly thirst for free water

The world is slowly waking up to the reality of a market price for all resources, even natural ones

Which companies, faced with a rise in demand for their product, say to customers "please don't buy it"? The answer, of course, is the water companies. As soon as the weather heats up, they tell us to use less water. When people really need to water their gardens, the companies tell them that they must not use hoses. They price water so that we have no incentive to use less of it, yet they try to make us feel guilty if we use too much. And at the same time, they waste up to one-third of their product by allowing it to leak from their pipes before it reaches our door.

I point this out not as a rant against the water industry, but rather to illustrate a shift in our attitudes to water, from when it was a public good, provided free at point of use by the state, to now, when it is a private product which we are increasingly expected to pay for in proportion to the amount we use.

When water was a state industry, we saw it as normal that we should be asked to economise in hot weather - remember the jokes about bathing with a friend, then using the water on the tomatoes? Because water was "free", if some of it leaked away before it reached us, that was no real concern. And if the water utility needed to flood another valley to meet our needs, then so be it.

Now a different set of attitudes has come to the fore. Not only has the water industry moved to the private sector, but increasingly as meters are introduced, we are paying for the product as we use it. So we expect a supply which meets our needs; and the water company, when faced with excess demand, is forced to make the rational decision as to whether it should use pricing to curb that demand, spend money on stopping leaks, or flood more valleys.

Our change in attitudes to water supplies is, however, a tiny reflection of a much greater change taking place elsewhere in the world - and a change which matters vastly more.

Britain does not really have a water problem. In West Yorkshire, drought is an inconvenience. In the Sahel, it is a catastrophe. A dry summer here means our lawns look scruffy and crop yields are down a bit. In many other parts of the world, people starve.

The big picture is told in the graphs. The bulk of the freshwater in the world is locked up in ice-caps. Almost all the rest is in the form of groundwater, not necessarily near where it is needed. Only a tiny proportion, one-third of 1 per cent, is in the easily available form of rivers or lakes. Demand is shooting up, as the other graph shows, particularly for agricultural use: roughly 70 per cent of the water we use is for irrigation. Since 1950, the amount of irrigated land has tripled and one-third of the world's food is now grown that way. Indeed, the "green revolution" of rising crop yields has largely been possible because of irrigation.

The world has to continue in this vein. Population is rising by about 90 million a year. The only way to feed these additional mouths will be to continue increasing the amount of irrigated land. But this raises a number of problems.

For a start, new irrigation projects mean building new dams, and there is only a limited number of suitable sites. In any case, building dams has serious environmental costs - silting, damaging the old flood plain of the river, displacement of peoples, loss of habitat for wildlife and so on. Groundwater can be used, where aquifers exist close to suitable agricultural land. But one has to be extremely careful not to allow the water table to drop too much, or, since ground-water often has a high mineral content, not to poison the soil.

Even if these disadvantages can be tackled, irrigation itself creates problems, most notably salination. Pakistan and Egypt, both of which irrigateabout 80 per cent of their farmland,are both suffering seriously.

So the need for careful water use in countries that rely on irrigation to feed themselves is much greater than in a temperate country like Britain. In a way, they need to experience the same sort of change in attitudes that we are going though, but for them, the stakes are much higher.

The change is happening. As reported this week, the World Bank is now seriously concerned about the threat to world food supply from shortage of water. Supply cannot keep up with the rising demand. According to the World Bank's Dr Stephen Lintner: "We need to treat water as a valuable resource that should be wisely used. Much of the scarcity is not to do with its unavailability; it's because it is badly managed."

Thus the World Bank is much more chary now about lending money for giant dams. It is much more interested in seeing that irrigation projects are efficiently managed and that cheap water does not just become another subsidy to relatively rich farmers.

Ultimately, you achieve efficient use of water by pricing it properly. If farmers have to pay the economic price, they will grow crops which require relatively light irrigation and they will make sure their irrigation water is not wasted.

Countries, too, need to think about the economics of drawing water from sources which they share with their neighbours. Rivers flow across national boundaries, so up-river states can draw off the water that would otherwise have flowed to other countries. Aquifers under one country can be drawn down by a neighbour. It is easy to identify a series of potential flash- points where conflict might begin. These include the diversion of water from the Sea of Galilee into Israel and drawing from the water table under the West Bank, the Gabcikovo dam on the Danube in Slovakia, threats to dam the upper Blue and White Niles, and the damming of the upper reaches of the Tigris and Euphrates by Turkey and the Euphrates by Syria. The World Bank is particularly concerned about the combination of scarcity, rapid population growth and political geography of the Jordan, Tigris and Euphrates basins.

If nations priced their water properly, everyone would see the financial implications of one country grabbing water which would otherwise have flowed downstream to its neighbour. It wouldn't solve the political conflict, but at least there would be a commercial basis for negotiation.

It is like oil. Indeed, Ismail Serageldin, a World Bank expert, made the link explicit this week: "Many of the wars this century were about oil, but wars of the next century will be over water."

Applying the market to water resources may seem brutal. In fact, for the environment, the greater brutalities have come from ignoring the market. The worst water-related environmental catastrophe on the planet has perhaps been the destruction of the Aral Sea, to fulfil the national plan for cotton production of the former Soviet Union. But if that can be explained (if not excused) by the ghastly planning mechanisms of communism, the US record on the depletion of the Rio Grande to provide cheap water for farmers (or simply golf courses) shows that even decent countries can do dreadful things when they think of water as free.

Seen in this context, our own water troubles become a sideshow. Nobody dies because of a hosepipe ban. There is no real cross-border political conflict here - though the Welsh have some reason to feel sore that their water is stolen by England. But our collective hand-wringing about the inadequacies of our water industry is a manifestation of a global woolly- mindedness: the belief that water is, or should be, free.