Development of a water pricing model for domestic water uses in Dhaka city using IWRM framework

Abstract

Groundwater is the principal water source in the megacity, Dhaka for all kinds of uses. It is supplied at Uniform Volumetric Charge which is comparatively lower than most other Asian cities, and this promotes higher water uses. Only the domestic abstraction in the city is about 2.0 Mm3 of groundwater every day which has resulted in a drawdown of up to 80m with an annual decrease of 3.07m. Thus, the groundwater has become almost a free-access common pool resource due to its lower price, which in turn has led to a severe decline in this valuable environmental resource. On the other hand, while the rich enjoy tapped water in their houses, majority of the slum-dwellers rely on private vendors. The slum dwellers pay about 7-14 times higher price than the formal housing, and the total spending on water is about 12-15% of their monthly income. As a result, the slum people use 7.5-10 times less water in comparison with a middle-class household consumer in the Dhaka city and the insufficient water use leads to several inconsistencies in their livelihoods. The main burden of less consumption is generally imposed on women due to their responsibility to maintain the family. Thus, the total process does not follow the three principles (economic efficiency, environmental sustainability, and social equity) of Integrated Water Resource Management (IWRM). In this context, the study was taken to develop an efficient water pricing model based on IWRM framework for domestic water uses in this megacity as a long-term solution to the problems associated with the current water pricing system.

The broad objective of the study has been dissected in three steps: estimating domestic water usage for both formal and informal settlements, evaluating the current water pricing system based on the factors of water pricing as well as its impacts on livelihood and finally, developing a water pricing model integrating IWRM principles. Several field survey tools including questionnaire survey (sample size n=100), focus group discussions (n=4), key informant interview (n=5), in-depth interview (n=4), and pair-wise ranking (n=1) covered the collection of both the qualitative and quantitative data. The necessary secondary information for calculating the cost of externalities of groundwater exploitation has been collected from Dhaka Water Supply and Sewerage Authority (DWASA), Bangladesh Water Development Board (BWDB), Bangladesh Power Development Board (BPDB) and Department of Environment (DOE).

The findings reveal that the slum dwellers pay more than 17% higher price for buying the same amount of water (1000 liters) than the DWASA set price for domestic use. The price burden not only generates numerous endurances into the life of slum dwellers, but also stirs up the gender issue more threateningly. Less water consumption (11 times), water-shortage related disease sufferings (66%), and unhealthy sanitation (82%) are some notable evidences of price burden found in this study. It also validates that the slum women are in most vulnerable position due to this inequity prevailed in the Tejgaon area. Considering the improper water price practice, a new water pricing model is developed following an increasing block tariff strategy with the consumption limit of the first block as 50 lpcd. The suggested unit price of water considers that the consumption in the first block covers the unit extraction cost (BDT 15.18), while the volumetric rate in the second pricing block (BDT 25.37) includes the cost of resource degradation externalities for the high consumption. The study considered four externalities relevant for the study area including two economic (increased energy consumption for the lifting of water in the wells, and damage cost for the dryness of the wells), and two environmental (carbon footprint of water and health externalities) and evaluated in monetary terms.

The price of the first and second block water is estimated to be about 5% and 75% higher than the existing price. Hence, DWASA can earn an additional revenue of BDT 9 billion to BDT 136 billion in a year from the first and second block water users in the Tejgaon residential area. In addition, domestic water use can be reduced up to 27% from the existing use which in turn can reduce the electricity use as well as greenhouse gas emission. Finally, on the equity perspective, the water bill can be reduced by about 67% if it is maintained in the first block which can contribute to cross-subsidy system. The proposed increasing block tariff model fulfills multiple objectives, such as groundwater conservation, cost recovery of water supply and deduction of price burden of water for the low-income people, and thus satisfies the three core principles of IWRM. Finally, the study offers a sort of methodology for pricing of water that may convey an appropriate conservation signal to the consumers which will be useful to the policy and decision-makers in devising an efficient water use plan for the present and future.