- India is on track for a 50% shortfall in its water supply by 2030.
- There is also a big gap between the supply and demand of the finance necessary to rectify this problem.
- India continues to be worse off as compared to other countries in terms of access to safe water according to the UN-Water Index with over 120 million households in India still lacking access to safe water. The situation threatens to worsen further with India’s overall population expected to touch 1.6 billion by 2050.
- By 2030, India’s water demand is projected to be twice the available supply, implying severe water scarcity for hundreds of millions of people and an eventual 6 percent loss in the country's GDP. It is not surprising that the WWF’s Risk Filter analysis has projected a bleak scenario for India, with 30 Indian metros and Tier 1 categorised cities being qualified as ‘high risk’ and extremely ‘susceptible to water risk “in the next few decades”.
COVID-19 impact on Indian water economy- current concerns and why it matters!
- Handwashing, basic safety and health protocol under COVID-19, means daily use of 20-40 liters of water per person for handwashing at least 10 times a day, instead of the average five times. A five member family would need 100-200 litres of water per day only to wash hands. This would further generate around 200 litres of wastewater per day that would translate to a 20-25 percent increase in water demand and generation of wastewater from human settlements.
- The pandemic threatens to further put immense pressure on overstretched water utilities, Jal boards, Jal Nigams, public health engineering departments who have been taking considerable efforts to meet current water supply gaps.
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In a country where annually 600 million people experience water shortages, about 2,00,000 die due to inadequate water supplies and 163 million people lack access to clean water, the novel pandemic outbreak has highlighted the significance of water all the more.
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If India fails to supply adequate clean water necessary for human survival, vulnerability to COVID-19 and other illnesses will continue to be very high in the future. The ramification that limited access to safe water and sanitation can have on Indian society would be severely detrimental.
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It is time that they get empowered to become more resilient, innovative and efficient, when arriving at effective and economically viable strategies. At a time when the Indian Government plans to deliver the Smart Cities Mission to drive economic growth, improve quality of life of people through local development and smart technology, such a deployment is essential.
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India’s mission to lead the change in building a water smart and resilient India essentially needs understanding and discussion around the critical challenges and how smart water meters and digitalisation of water can lead the way, more so given the implications of the pandemic.
While the world is reeling from COVID-19 statistics, the numbers on basic commodities essential for human survival are equally staggering. Water is a prime example.
- Here are four ways to change the financing ecosystem so that we can avert this coming catastrophe.
- One-third of the world’s largest groundwater basins have been depleted. Water shortages affect 40% of the global population. Many large-population cities, mostly in emerging economies, are severely water-stressed. The World Economic Forum ranked water crises amongst the top-5 risks in terms of impact in its Global Risk Report 2020. In India, a water supply shortfall of up to 50% is expected by 2030, as per UNICEF. According to federal think tank NITI Aayog, 21 major Indian cities are in immediate danger of running out of groundwater. Three-quarters of Indian districts, home to 638 million people, are hotspots for water-related disasters.
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- Since humankind cannot exist without water, substantial efforts are needed to improve its access. However, this costs money. The global financing gap in water is already estimated at $114 billion for SDG targets 6.1 and 6.2 alone.
- Here are four ways how we are improving the financing ecosystem for water, focusing specially on India — a country home to 18% of global population but which ranks a dismal 120th on the Water Quality Index.
- Policy, reforms and governance. Instituting an independent water regulatory authority and mandating disclosures by water-intensive industries on water usage, treatment and recharging must be priorities for the government. Leveraging India’s priority-sector lending norms for banks or mandating a specific allocation for water in infrastructure debt funds — or in the development finance institution proposed in India’s recent budget — can attract dedicated capital. Reforms must encourage municipalities to issue financial instruments. Recent muni-bonds by the cities of Ghaziabad and Pimpri-Chinchwad are a good start. Regulations that scale up nature-based solutions, like porous pavements that absorb stormwater, can also help create resilience to climate shocks. Policies must replicate global use-cases like Chicago’s green-roof initiative or Singapore’s target to become a ‘city of gardens’ by integrating its canals. Indian textile manufacturer Arvind has constructed a wastewater treatment facility in its Gujarat apparel factory to save groundwater for local communities. Policy-makers must create incentives for more industrial units to implement and scale up these kinds of measures. Last, the development of usage-based billing (using smart metering) or tax-slab based tariffs for water may enable the generation of internal revenue.
- Developing innovative financing structures. Since it is tough to ensure cash flows towards development sector projects (like water), innovative financing structures to mitigate risks become necessary. Blended finance structures that combine public and philanthropic capital with private investments using credit enhancement instruments can be useful. For example, The Philippines’ Water Revolving Fund blends aid and public funds with commercial finance to offer a lower cost of capital to water service-providers. WaterEquity’s WCIF3 fund uses a blended approach through low-interest loans and first-loss guarantee. Pooled funds — such as the Kenya Pooled Water Fund, which pools domestic pension and institutional money — fit into this category. Solar energy projects in Kenya and Rwanda have demonstrated the power of the pay-as-you-go (PAYG) model to tackle the issue of relative unaffordability — and this model can be extended to water. In irrigation, India’s Claro Energy offers a PAYG service using e-rickshaws fitted with solar panels, which then power water pumps. The hybrid annuity model (HAM) is an instrument that reduces the pressure of upfront payment in long-gestation projects like water. This is relevant for projects that entail operating revenue. The yieldco approach disaggregates low cashflow-yielding activities from high cashflow ones, reducing perceived risks for investors. Pension funds, often signatories of the UN’s Principles for Responsible Investment (PRI) network, are looking at emerging economy infrastructure. Extending this to water infrastructure in India would attract patient capital. Lastly, combining corporate social responsiblity funds with outcome-based financing would help achieve measurable outcomes. And instruments like blue bonds, which are mainly focused on marine conservation, must be extended to water projects. Given the challenges of water as an investment avenue, most solutions will require innovative structuring
- Investor action. This includes improving investor engagement as well as the disclosure of water risks to facilitate investor confidence. A deeper understanding of the sector would augment investor interest; Ceres’ Investor Water Toolkit helps investors to identify, evaluate and manage water risks in investment decision-making. PRI and WWF have together developed a Water Stewardship Framework which includes practices for facilitating investor dialogue with companies. The usage of such toolkits and frameworks must be encouraged in water-risk nations such as India.
- Community-based models. This includes water-tech solutions managed by communities. Small-scale water ATMs — which can be located in villages, stations and slums — provide access to low-cost clean drinking water in places where last-mile connectivity is a logistical challenge or where packaged drinking water is unaffordable. Water.org’s WaterCredit combines microfinance for local communities with loans for water solutions. Community-based peer-to-peer (P2P) trading models can spur rainwater harvesting by creating an incentive for collection. Bangladesh’s SolShare has demonstrated this P2P model with solar home systems. Of course, education and creating awareness are a prerequisite for creating buy-in from communities.
The five ways in which digital water infrastructure can drive the water sector transformation in India includes:
- By early leakage detection and prevention: Smart water meters enable the utilities to detect leakages earlier than usual and monitor usage to aid enforcement efforts. Leakage, apparent losses and rising non revenue water (NRW) has been a major concern for Indian utilities. Under these conditions, it would be possible to detect such leaks early, skip unnecessary costs on repair/replacement and generate more savings by deploying smart water meters.
- Accurate meter readings and no maintenance hassles: Unaffected by trapped air, sand or particles within the water, which ensures accurate readings from the beginning until the end of its service life, and subsequently preventing unplanned maintenance costs, smart water meters are the best when it comes to long term investment.
- Increased customer service and satisfaction: Trials in the industry have shown that consumers receiving regular, accurate billing do not call their suppliers as often to question or dispute bills. This has a direct cost saving for utilities and improves customer satisfaction. The high accuracy of the smart water meters improves the accountability of non-revenue water due to no pipe rupture or undetected leakages which in turn helps to generate error-free and correct billing.
- Reduces Non-Revenue Water (NRW): Adopting smart water infrastructure and management would mean smart real-time monitoring, metering at various levels and automation that will overall ensure a reduction in systems losses and renewed sentiments for water recycle and reuse, to improve efficiency and reduce water stress. Through the use of smart meters, utilities can exercise better control over water consumption patterns even at individual households. All of these together will be able to address the prevalent NRW challenge effectively.
- Provides a wealth of data: The data collected helps water utilities to manage distribution networks more efficiently to conserve water, to provide accurate billing to customers and to inform them about leaks, fraud or unusual usage patterns well in advance. It can also help to arrive at strategic decisions, improvise on business models and services to better the water supply, water conservation efforts and overall customer experience.
Government Initiatives for efficient water management and improving water infrastructure
- The Government has introduced a series of initiatives to create awareness about water conservation, including the Jal Jeevan Mission, under the Ministry of Jal Shakti, which aims to promote water conservation in 256 of India’s most water-stressed districts.
- The ‘Jal Shakti’ ministry aims to provide piped water supply to every household by 2024 as well as fight India's water woes. By 2050, the water requirement in a high use scenario in India is likely to be 1,180 billion cubic metrics (BCM), whereas the present-day availability is 695 BCM. The total availability of water in the country is lower than this projected demand, at 1,137 BCM, according to NITI Aayog’s report.
- To combat the situation, support from Government to facilitate policies at central and state level that encourage deployment of smart water solutions for judicious use of water is needed. India needs to derive key insights from successful global smart water management use examples and implement best practices in Indian cities.
- With Pune poised to become the first city in India to deploy smart static water meters aligned to the country’s Smart City Mission, India has already raised the bar in adopting smarter technology to save the water economy. Going forward, India needs more cities to understand, adopt and retrieve the benefit of digital water infrastructure.
Digital Water infrastructure for a smarter world
- Although India’s digital water journey has gained considerable momentum over the last few decades, critical water challenges like climate change, increasing urbanisation, ageing infrastructure is yet to be addressed to holistically accelerate this momentum.
What is SFO doing to address the global water challenge?
- At the end, given water’s role as an existential resource in a world whose population is growing, it is urgent to drive stakeholder action towards water financing. The silver lining is scalable interventions are possible. Scaling up, and replicating such interventions in other places, can go a long way towards improving the worrying water statistics we are currently facing.
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