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Cutright, Elizabeth

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Tuesday, April 10, 2012 11:14 AM

Emerging Demands

By: Cutright, Elizabeth Comments

In this era of prolonged drought, extreme weather, and political unrest, there’s been one bright spot on the world stage—the expanding ranks of the middle class in the developing world. In fact, just last week former Japanese Prime Minister Fukuda Yasuo declared that, by 2020, Asia’s middle class will reach two billion.

As Javier Santiso, Director, OECD Development Center, writes in the preface to the 2010 OECD paper, titled The Emerging Middle Class in Developing Countries, “Over the last twenty years, economic and political power has been shifting towards emerging economies. A number of developing countries have become centres of strong growth, raising their shares of global income significantly, which has made them major players in regional and global affairs. Furthermore, flows of trade, aid, and investment between emerging and developing countries have all intensified.”

It’s anticipated that this rising tide of middle class consumers will most likely spur economic growth, not only in Asia, but also throughout the world. In fact, Reuters reports that, by 2030, “middle class Asians are expected to become the next global consumers and assume the traditional role of the US and European middle classes.”

As the world economy continues to struggle, it makes sense that any uptick in consumer spending would be seen as a positive development. But with progress comes increasing demand on natural resources, including water. Case in point: India.

As reported this week in the Wall Street Journal, India’s population growth, industrial expansion, and emergence as an economic powerhouse is seriously straining the country’s natural resources, especially water. Although India has the second-largest population in the world, it only has access to 4% of the world’s renewable water resources. And while earlier this year the Ministry of Water Resources drafted a national water policy, many experts fear the policies delineated in the report do not go far enough.

In the report’s preamble, the Ministry of Water Resources acknowledges that “Low public consciousness about the overall scarcity and economic value of water results in its wastage and inefficient use. In addition, there are inequitious [sic] distribution and lack of a unified perspective in planning, management, and use of water resources.”

The report also states “the objective of the National Water Policy is to take cognizance of the existing situation and to propose a framework for creation of an overarching system of laws and institutions and for a plan of action with a unified national perspective.”

Sunil Sinha, head and senior economist at Crisil Ltd, sees the report as a step in the right direction. Sinha sees a shift occurring in the Indian government’s perception of water resource management.

“Whenever the issue of water has been discussed in the Indian context, most of the discussion was on augmenting the water resources,” Sinha is quoted as saying in the Wall Street Journal. “The conversation always is that the supply doesn’t meet the demand, and how do we increase the supply. One good thing about this policy is that it’s recognizing that water is not an unlimited resource.”

But not everyone is optimistic. “It is not the absence of money, expertise, or water because of which [Indians] have such a poor service,” says Professor Asit Biswas, president of the Third World Center for Water Management in Mexico, in the same Wall Street Journal article. “It is simply bad planning and management. India may be an emerging economic power, but its urban water and wastewater management is akin to that of a banana republic.”

Biswas goes on to outline three immediate changes that he feels need to take place in order to insure that India will have enough water to meet demand, both now and in the future:

            * Replace career bureaucrats who head water utilities with professional, technically knowledgeable managers, who can spend at least six years running the utility so that they have enough time to develop and implement a plan.

            * Price all water, and have special tariffs for the poor who shouldn’t pay more than 2% of their household income (“free water is a sure recipe for a third-grade delivery service,” he says).

            * Remove the excess fat from Indian utilities so that they can turn around to become financially viable.

So, what do you think? What lesson can we learn by watching water resource management evolve in the developing world? In what ways do our current water resource management challenges mimic those being experienced—or anticipated by—India and its brethren? And are we also guilty of lacking the political will to implement the changes needed on a local and national level?

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