Question: Water pricing can be used for improving water use efficiency.

Prices, if accurately designed, give information to users, to make choices regarding water use. In practice water pricing schemes may be designed to meet many objectives, including political ones. Please review and summarize the water pricing scheme adopted for water supply utilities (public or private), irrigation water, water from direct abstraction and bottled water in your country. Please also discuss their (water pricing schemes) merits and demerits

Special Note: The prices are given in Sri Lankan rupees where 1 Sri Lankan rupee = 0.0077 US dollars

The governmental water supply is done by the National Water Supply and Drainage Board which is responsible of providing safe drinking water to the people in Sri Lanka. Its purpose is to supply standard quality water and a great level of service for the Sri Lankan people in their domestic, agricultural, irrigational and other work. The payments for the water bills can be paid for the designated banks, agency post offices, approved agents and also through internet. NWSDB cashier is open every weekday from 8 am to 3.30 pm as well for the public. The NWSDB has been taken to the government under the Ministry of water supply and management after the year 2007. 80% of the Sri Lankas population has access to the safe drinking water and out of them 30% has access through the pipe network by the NWSDB, Sri Lanka.

In general there are several water pricing methods for each water purposes such as bottled water, domestic, irrigation and direct abstractions. The following are the water pricing methods which are used by the authorities from different regions, Declining block rates- this is a method which is beneficial mainly for more water consumes customers. In this method, the price will decline with the consumption of water. So the last units used will have fewer amounts to be paid. Increasing block rate- This method is good in order to conserve water in the country. By this method the more you use, higher will be the amount to be paid. The last units will cost more than the first few. Factories/ agricultural purpose users will have to limit their water consumption under this method. Seasonal block rate- This is a method which will vary with the season. Seasons which will create a water scarcity will cause in an increasing block rate method and if season changes, the rates will be changed accordingly. So the rates will change depending on the season without a fix price rate. Uniform rates- This method will decide the price according to the volume consumed and it has a fix value per volume.

 Flat rates- This is almost like you consume water for free where the rate will remain same no matter how much the users consume. The objective of this report is to find the pricing method used by the Sri Lankan water supply systems. There has been a particular water supply tariff from 15th March 2009 to 30th September 2012 which is the day I am writing this report. The following shows the pricing schemes provided by the authorities of Sri Lankan government. The water supply pricing schemes vary with domestic, industrial, commercial, public garden taps, bowser supply and bulk supply. The prices for each water consumed by the people who are under privileges depending on samurdhi special service by the governmental organizations have been assigned to a separate domestic water pricing rates as follows, No of units(m3) 0-5 6-10 11-15 16-20 21-25 26-30 31-40 41-50 51-75 Above 75 Usage charge (Rs/unit) 1.25 1.5 3 30 50 75 90 105 110 120 Service charge (per month) 50 50 50 80 100 200 400 650 1,000 1,600

For the people who are not receivers of samurdhi benefits are having the following price method, No of units(m3) 0-5 6-10 11-15 16-20 21-25 26-30 31-40 41-50 51-75 Above 75 Usage charge (Rs/unit) 3 7 15 30 50 75 90 105 110 120 Service charge (per month) 50 65 75 80 100 200 400 650 1,000 1,600

The first few rates used by the non-samurdhi recipients have to pay around twice the amount than the samurdhi recipients. But after some unit level they both face the same amount level. Also there is a special discount of Rs.20 for the people whose monthly water consumption rate is between 0-15. The above shows a price increase in the per unit rate consumed and also in the service charges. This means there is an increasing block rate system method is used in water supply of domestic purposes. Anyway people who use much less water and who also befit by the samurdhi allocation have to spend a less amount for the first few amounts of water though both follow the same water pricing method.

The water pricing schemes for the tap water use and public garden taps are as follows, No of units(m3) 0-25 26-50 51-100 101-200 201-500 Usage charge (Rs/unit) 10 10 10 10 10 Service charge (per month) 250 500 1,000 1,600 2,500

This pricing method is a flat rate method where how much you consumed; the charge is fixed to Rs.10.

The water prices for governmental places such as schools, religious places and charity places are as follows, No of units(m3) 0-5 6-10 11-15 16-20 21-25 26-30 31-40 41-50 51-75 Above 75 Usage charge (Rs/unit) 6 6 6 6 6 6 6 16 16 16 Service charge (per month) 50 65 70 80 100 200 400 650 1,000 1,600

The above is using an increased block rate method. But for some amount of units, the price seems to be at a flat rate of Rs.6 in the beginning and then it increases by extra amount of Rs.10.

The tariffs for the commercial purposes have been assigned as below, No of units(m3) 0-25 26-50 51-75 76-100 101-200 201-500 501-1000 1001-2000 2001-4000 4001-10,000 10,001-20,000 Over 20,001 Usage charge (Rs/unit) 65 65 65 65 65 65 65 65 65 65 65 65 Service charge (per month) 250 500 1,000 1,000 1,000 2,500 4,000 7,500 12,500 25,000 50,000 100,000

Here it is also using the flat rate pricing method of Rs.65 which is quite high in amount, but nomatter how much you use, the amount is fixed. For the bowser supplied water, the charge will be Rs.65 per unit amount which means a uniform rate method is used where the amount we use will decide the price of water we use in same block amount of Rs.65 (in this case).

For governmental institutions and industrial purposes, the water prices are as below, No of units(m3) 0-25 26-50 51-75 76-100 101-200 201-500 501-1000 1001-2000 2001-4000 4001-10,000 10,001-20,000 Over 20,001 Usage charge (Rs/unit) 53 53 53 53 53 53 53 53 53 53 53 53 Service charge (per month) 250 500 1,000 1,000 1,000 2,500 4,000 7,500 12,500 25,000 50,000 100,000

Here also a flat rate method of pricing water is used which is Rs.53.

The water supply for the rural water supply in bulk amounts are priced as follows, No of units(m3) 0-25 26-50 51-75 76-100 101-200 201-500 501-1000 1001-2000 2001-4000 4001-10,000 10,001-20,000 Over 20,001 Usage charge (Rs/unit) 16 16 16 16 16 16 16 16 16 16 16 16 Service charge (per month) 250 500 1,000 1,000 1,000 2,500 4,000 7,500 12,500 25,000 50,000 100,000

It is also as same as the previous pricing method, which is the flat rate method. There are many bottle water suppliers in Sri Lanka such as Aqua fresh, Aquafina, resource etc. Sizes are in 500ml, 1l, 1.5l, 5l and 19l. They seem to have a uniform rate of which Rs.6-25/liter. Thus the price of each size will vary with its volume contained. Also the price changes from company to company. Sri Lanka is largely dependent on its irrigation processes. It runs into the ancient times where number of reservoirs and dams were built to collect water and conserve them for the befit of the farmers and household activities. These ancient tanks/reservoirs survive in many numbers yet providing sufficient water for the irrigation and agricultural purposes. Traditionally water has been supplied for the farmers free and thus their volunteered labor contribution for canal maintenance is been taken.

However the water prices has been changed from the 1st of October 2012 which is due tomorrow from the day I am writing this report for all the people in the country who consume water by the National Water supply and Drainage Board Sri Lanka. None of the pricing methods used before has been changed. But the divisions of water pricing have been changed and sub-divided. These sections and their pricing methods has been summarized as follows, Domestic - Samurdhi recipients, Non-Samurdhi tenement garden, people other than samurdhi recipients and tenement gardens. (Increase block rate method) Public stand posts and garden taps (Flat rate method- Rs.10/unit) Schools and religious institutions (Increase block rate method) Commercial (Flat rate method- Rs.75/unit) Governmental hospitals (Flat rate method- Rs.53/unit) Industries- Small and medium scale enterprises, large scale enterprises and governmental institutions (Flat rate method- Rs.56/unit and Rs.58/unit) Export processing zones of the board of investments (Flat rate methodRs.61/unit) Shipping (Flat rate method- Rs.480/unit) Bulk supply (Flat rate method- Rs.18/unit)

The increase block rate method has been used only in domestic purposes and Schools and religious institutional places. The following shows their rates of prices in each sub section, Samurdhi recepients:

Non-Samurdhi tenement garden:

People other than samurdhi recipients and tenement gardens:

Schools and religious institutions:

Note: Here one unit means 1m3

If we discuss the merits and demerits of these pricing methods adopted by the NWSDS, there are merits and demerits in consumers perspective and the governments perspective as well. Increasing Block rate: Consumers perspective Merits Demerits Good in case where People who use large less amounts of water amount of water has consumption. to pay large amount of money with the use of water amount Penalizes poor families with large households and shared connections Governments perspective Merits Demerits Helps for the cost Tariff design is recovery of water complex supply systems

Conserve water

Difficulty in deciding without a properly placed water meters

Flat rate method: Consumers perspective Merits Demerits Reward consumers as The quality of the it is almost like free in supply may go down use though a fixed as the provider price is taken benefits less. Misuse of water Governments perspective Merits Demerits Easy to make the Cannot conserve customer understand water the rate method Cannot make a revenue/cost recovery in most cases

Also there is a uniform rate method used for the bottled water in Sri Lanka which takes a certain price according to the water volume consumed. This is an acceptable and a reasonable way of pricing water for the consumers, as well as the government/companies as the price will depend on how much water we use. It can conserve water as well as it can give a profit for the producers wherever more amount of water is used.

References
The official website of the National Water Supply and Drainage Board of Sri Lanka http://www.waterboard.lk The Gazette of the Democratic Socialist Republic of Sri Lanka- No.1776/13 Tuesday, September 18,2012. The Gazette of the Democratic Socialist Republic of Sri Lanka- No.1588/26 Friday, February 13,2009 The research report of Assessment of Participatory Management of Irrigation Schemes in Sri Lanka: Partial Reforms, Partial Benefits by M. Samad and Douglas Vermillion, International Water Management Institute. The official website of Mahaweli Authority Sri Lanka- http://www.mahaweli.gov.lk/ Chapter 24 of The Social and Environmental Effects of Large Dams: Volume 1. Overview. Wadebridge Ecological Centre, Worthyvale Manor Camelford, Cornwall PL32 9TT, UK, 1984. By Edward Goldsmith and Nicholas Hildyard. Advantages & Disadvantages of a Flat-Rate Pricing Model by Gregory Hamel, Demand Media - http://smallbusiness.chron.com/advantages-disadvantages-flatrate-pricing-model36756.html Boland, J.J.; Whittington, D. (2000): Water Tariff Design in Developing Countries: Disadvantages of Increasing Block Tariffs and Advantages of Uniform Price with Rebate Designs. Ottawa, ON, Canada: IDRC Research Paper.