Water is scarce. So why is it underpriced?

A drinking fountain in Rome. Image: Getty.

In the summer of 2017, for the first time in 2,000 years, Rome shut off its public water fountains. 

Since the first aqueduct transported water to public fountains at the ancient city’s cattle market, there has always been water to supply Rome’s fountains. Through centuries of wars, conflicts, revolutions and other human and natural catastrophes, the tradition of free fountain water in Rome has continued uninterrupted, until the devastating 2017 drought.  With farmers in the surrounding countryside facing over one million euros in agricultural damages, city authorities decided to stop the flow of water to Rome’s 2,800 public fountains.

The tradeoff that Rome faced – water for its fountains versus averting a catastrophic drought for farmers – is likely to occur again, as agricultural, municipal and industrial uses of water arise and climate change makes dwindling supplies even more variable. 

But this dilemma isn’t limited to Rome. For the entire globe, the era of plentiful water appears to be over.

Every year, water shortages affect more than one-third of the world’s population – around 2.5 billion people.  By 2030, water scarcity may displace as many as 700 million people worldwide. By 2050, more than half of the global population – and about half of global grain production – will be at risk due to water stress.

If water is valuable and scarce, why is it so poorly managed?

The problem is that our policies and institutions for managing water were developed when the resource was abundant, not scarce.  We continue to exploit freshwater as if it were limitless.

To find a way beyond this impasse, we must put an end to policies that underprice water and allow it to be used as if it was a plentiful resource. There are two approaches that could make a significant difference.


First we must allow markets for trading water to flourish.  Throughout the world, the predominant use of water is for irrigated agriculture, around 80% of all water withdrawals.  Yet, the fastest growing demands for water are for urban residential, commercial and industrial use. Because people in cities have less water, they are willing to pay much more for it than what it costs farmers to water their crops or pastures.

Through water markets, farmers could sell any excess water to other users, allowing both parties to gain. Urban users are able to pay lower prices and increase consumption. Farmers would have another revenue source, and because their water is now more valuable, they will squander less and conserve more.

Already, many regions and localities are experimenting with various water trading schemes.  In some places, farmers sell all or part of their water rights; in others, they lease their water over one or multiple years. 

One promising development is water “banks”.  Like regular banks, farmers deposit their excess water, including “savings” from conservation, and can subsequently draw down these deposits during future droughts.  Alternatively, farmers can sell or lease some or all of their water deposits to other users. Environmental and recreational groups also pay to keep the deposits in rivers, lakes and streams, thus preserving valuable habitats.

Second, we must stop subsidizing water and sanitation services for residential, commercial and industrial users. Current prices charged rarely cover the full costs of these services.  Governments typically pay for most if not all of the investment costs, and often subsidize the operating costs.  Any environmental damages are usually settled through costly litigation.

Ending the underpricing of water and sanitation services could improve cost recovery and lead to greater conservation by users.  A fixed service charge could pay for the costs of operating and maintaining the water system.  A two-tier block rate charge for households would increase water conservation while protecting low-households from the burden of water pricing. 

Since poorer households use less water, typically less than 20 cubic meters of water per month, the price for this first “block” of water could be kept very low.  However, for monthly water use that exceeds 20 cubic meters, the price would be set much higher.

Finally, some of the revenues earned by local utilities and governments could finance the adoption of water-saving technologies and domestic appliances by households through discounts and rebates.  Additional programs could be targeted to low-income families, who would otherwise find it difficult to pay for new appliances or repair faulty plumbing.

Creating water markets and ending the underpricing of services are just two of many ways in which we can manage the rising scarcity of water to meet new and growing demands.  Otherwise, we may find tradeoffs like that in Rome an increasingly frequent occurrence.

Edward Barbier is a professor in the Department of Economics, Colorado State University, and the author of The Water Paradox, out now from Yale Books.

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.