Arshad Mahmood Awan
Pakistan, a country grappling with a growing scarcity of water, is faced with the critical challenge of effectively managing its water resources. Without significant reforms, Pakistan is at risk of exacerbating its status as a water-stressed nation.
Over the years, the country’s per capita annual water availability has plummeted by over 30 percent, dropping from 1,500 cubic meters in 2009 to a mere 1,017 cubic meters in 2021. Disturbingly, the World Resources Institute projects that by 2050, Pakistan will rank among the most water-stressed countries globally.
A primary contributor to this inefficient water use is the outdated water pricing mechanisms, particularly within the agriculture sector, which encourages wasteful practices.
The agriculture sector in Pakistan stands as the country’s largest water consumer, utilizing over 90 percent of available resources. At the heart of this excessive irrigation lies the Abiana system, a water charge imposed on farmers where prices do not accurately reflect the economic value of the resource. Consequently, water is often perceived as a low-cost or even free resource, leading to its overuse and depletion.
Despite a revision of rates in 2019, they remain inadequately low, failing to capture the true value of water. Moreover, revenue collection through the Abiana system is remarkably low.
For instance, the Sindh and Punjab provinces report that less than 60 percent of the assessed revenue is actually collected, barely covering 10 percent of the maintenance costs for water channels.
The current water management in Pakistan is fundamentally flawed, with the poorly structured and inadequately enforced Abiana system failing to encourage conservation or the adoption of water-saving technologies, despite substantial subsidies for initiatives like drip irrigation.
The existing Abiana system operates on a flat-rate basis, charging Rs. 275 per acre for the Rabi season and Rs. 385 per acre for the Kharif season, rather than utilizing metered charges based on actual water consumption. This approach fails to reflect the true value of water and does not account for the actual amount of water provided to each farmer, leading to inefficient consumption.
The absence of economic water pricing means that there is no financial penalty for excessive water usage, allowing unsustainable practices to continue unchecked. Farmers often resort to water-intensive cropping patterns and inefficient irrigation methods, further straining the country’s water resources and contributing to long-term environmental degradation.
Addressing this issue requires a fundamental restructuring of Pakistan’s water pricing system to establish a mechanism that accurately reflects the true value of water and incentivizes efficient use. This could involve revising the Abiana charges to account for actual water consumption, thereby promoting conservation and discouraging excessive usage.
A comprehensive economic valuation of water resources in Pakistan reveals the significant fiscal impact of the current inefficiencies. According to the Economic Survey of Pakistan (2023-24), the potential revenue from the updated Abiana rate, if properly taxed and enforced, could be up to Rs. 32.66 billion. However, actual receipts in Punjab during the last fiscal year were only about Rs. 1.49 billion, indicating a substantial gap between the estimated potential revenue and actual receipts.
The economic value of total surface water in Pakistan is estimated to range from Rs. 904 billion to Rs. 1186 billion, highlighting the significant economic value of Pakistan’s water resources. A comparison between the total potential revenue of the current Abiana system and the overall economic value of surface water reveals a significant gap, estimated to be between Rs. 871 billion and Rs. 1153 billion. This underscores the fiscal impact of missing economic water pricing and the substantial losses for the government.
In light of these findings, it is evident that Pakistan stands at a critical juncture in its water management journey, requiring comprehensive reform of the water pricing system to align water usage with its true value. By recognizing the true value of water and implementing necessary reforms, the country can overcome its inefficiencies and build a sustainable future.
Restructuring Abiana charges and implementing economic pricing mechanisms could create financial incentives for conservation and efficient water use, with the potential to redirect lost revenue towards critical infrastructure projects, research and development of water-saving technologies, and public awareness campaigns to promote sustainable water usage.
The economic implications extend beyond the immediate financial losses, affecting food security, agricultural productivity, and environmental sustainability. The time for action is now, and comprehensive reform of the water pricing system is a crucial step towards securing Pakistan’s water resources for generations to come.
