What is water worth? Decision time looms

What is water worth? Decision time looms

Tuesday October 20, 2015

A mixed force of local and Chinese workers has been involved in the Te Mato Vai Project. 15101916

Derek Fox, who writes for this paper from time to time was, in a previous life, mayor of Wairoa district in New Zealand for six years, and a councillor for a further six before that.

In that time he got to know a bit about water reticulation systems and charging and disinfecting regimes. In this feature he looks at the steps that need to be taken next in the rebuilding of the Rarotonga water system.

 With the Te Mato Vai project about halfway through now, two very important decisions have yet to be made and they are political decisions which are going to need a considerable amount of intestinal fortitude and dexterity to come up with the right decisions.

Te Mato Vai is the biggest project that has ever been undertaken in the Cook Islands and the costliest, and while it isn’t as high profile as an international airport, it has the capacity to have a huge impact on the health of people living and visiting here, and on the country’s biggest income earner – the tourist industry.

Te Mato Vai has drawn plenty of flak since it began. There have been complaints about the cost (around $60-million) the workforce, the fact that Chinese workers have been brought in. there have even been questions about whether a new water supply system is even needed; and finally there is the ongoing debate about the use of land, particularly around an as yet unformed section of the back road, and around the water intakes – with some landowners demanding compensation.

Notwithstanding the complaints, the work has continued. In all of the places where land is available to lay the two new ring mains – round the back and main roads – the pipes have been laid and pressure tested.

The work force is made up of Chinese and locals and has seen the work proceed smoothly and without fuss, to the extent that it could now be held up because they can’t yet get access to a part of the back road between Avaavaroa and Kauare Road to lay the remaining 2.4 kilometres of pipe; and there is still no certainty about land required for storage and other facilities, around the intakes.

After taking a “softly, softly” approach without a satisfactory solution, the government has been forced into moving decisively by proclaiming the land to complete the back road. In other words legally acquiring use of the land needed.

This will allow the ‘unformed road’ to be surveyed, then contractors can lay the remaining pipe. They will also form a narrow service road. A fully formed road will follow when funds are available, and in due course the owners will be compensated for the loss of things like trees and other assets currently on the land.

But the entire hullabaloo to date is likely to be small beer compared to reaction to the next two decisions. And this is where the intestinal fortitude and dexterity will need to be found.

Whether or not to charge for water once the new system is in place, and whether or not to disinfect the water.

 To my mind the answer to both questions has to be yes, and I know there are elements within the present government, and possibly the opposition too, who feel the same. But there will be opposition and quite possibly substantial opposition. Already there have been comments like “God provides the water, why should I pay for it” and in terms of disinfection, “I’ve been drinking the tap water all my life and it hasn’t affected me.”

The water may well fall free from the heavens, but gathering it up and delivering it to your home or workplace and taps, costs money. And each year we currently have about 1000 people getting sufficiently sick from water borne diseases that they see a doctor or go to the hospital. The young and the old are particularly vulnerable – so there is a cost there too.

Let’s take a look at the Rarotonga water system, and what may lie ahead for water users. The Te Mato Vai project team is tasked with coming up with a system of managing and paying for the new water reticulation system once it is up and running.  A report has been commissioned on potential payment systems in the future, but in order to know where to start it’s necessary to know how much water needs to be managed and delivered and to who.

On average on any given day there about 8.5 million litres there’s available in the system. There are just over 3100 households on Rarotonga and they use the most water; but other consumers include some big commercial users and resorts, which use tens of thousands of litres a day each, along with government offices, schools and other institutions, like community halls and agricultural users.

A very limited survey carried out by installing meters to measure the water going into a mixture of properties on the island has thrown up some interesting indicative consumption figures.          

The homes that were metered for the survey had between 2 and 11 people living in them. The average household size is 3.6 persons and they use on average about 400 litres a day each.

On the other hand, while the resorts have many more people occupying them, their average use of water is about 300 litres per person per day. The one government office and a community meeting hall surveyed, used about 75 litres per person a day.

The three schools surveyed had too wide a variation to seem credible but school use is assumed to be 40 litres per person a day for the five-day week.

Agricultural use has been the hardest to get a handle on. Five growing operations were metered for the survey, and they averaged a daily use of about 24,500 litres between them. Estimates of overall agriculture water usage range between 500,000 and one million litres a day, but nobody knows for sure.

At the time of the survey last year, one house in five reported having a pig or pigs, and the pig population was just over 5200. Pigs can drink between 10 and 30 litres of water a day. Pig water consumption has been calculated at more than 100 000 litres a day.

There were about 12 and a half thousand chickens being kept at that time, but like the 1211 goats, they don’t drink much water.

The survey came up with 185 head of cattle and four horses, and while both animals can drink many tens of litres of water each day, overall their consumption is not significant.

Despite the anticipated opposition, the new water system will have to be paid for one way or the other. It’s likely the government will absorb the cost of building it, but future operating costs are a different matter.

And there is nothing new about having water charges in Rarotonga. In 1907 a water charge of a pound a year was levied per “compound” for the then-new water system. In the 1960s the water charge was raised to three pounds a house and six pounds a business. Although the domestic charge was done away with in 1972, the business charge is still on the books but was never collected. Interestingly too, if you were to adjust that three pounds for inflation, today it would come to $128 a household a year.

The present water system is paid for from general taxes. If you’re a taxpayer part of your taxes go towards an annual figure, said to be about $800,000 to keep the water flowing. It doesn’t matter if you’re a little consumer or a large one,  you pay the same. The system is haphazard and reactive, not proactive.

So if there’s a problem with an intake or a water main blows out, the Infrastructure Cook Islands crew goes out and fixes it. There is no scheduled or ongoing maintenance programme, just a patch up when something goes wrong.

Because everyone thinks they’re ‘paying’ for their water regardless of how much they use, there is no interest in carefully managing this increasingly scarce resource. Leaky taps or pipes, and water just left running don’t matter too much; and there is no incentive to control use.

That’s one way of running your water supply, but in places like New Zealand new methods are coming into force.

Some places have a dedicated fixed water charge, which is levied on every property connected to the system. But again there is no recognition of large or small users, domestic or commercial.

There’s no connection between what you use and what you pay. Everyone, regardless of their consumption pays the same, which can be patently unfair – and continues not to take into account the conservation of water by restricting over use

Then there’s a ‘user-pay’ system, where a rate - a value - is put on each litre of water used; properties are fitted with meters to measure usage and the consumers are charged accordingly.

Sometimes there’s a mixture of charging regimes, like a fixed charge and user-pays.

It’s likely too that ‘administering’ the new water system will come out of the general government departments and instead be taken care of by an SOE – a state-owned enterprise. That’s the modern transparent approach to government popular in places like New Zealand and Australia, where formerly government run power and telecommunications organisations and tv stations are set up as stand alone SOEs, to deliver their services to the public.

If or when that happens, then the $800 000 currently loosely tagged for keeping the old leaky water system going can be reallocated for other purposes.

The report commissioned by TMV last year, suggests it could require about $1.4m to administer the spanking new water system, and the testing and monitoring and billing system that comes with it; and that charge will be met by the consumers.

The report suggests four different consumer groups should be recognised: Domestic or households, all commercial or business users, government and community consumers, and agricultural users.

It suggests there should only be one tariff set for each group and charged according to metered usage. So it doesn’t matter whether you have a small shop or a resort, you pay the same amount per litre used, but only for what you use.

The report also recommends that households should be given a certain fixed free allocation of water per month – say 300 litres a day; and that it should not be dependent on the number of residents.

The report suggests a fixed allocation rather than one based on the number or people living in the house because it will be simpler to manage and avoids the possibility of it being abused.

While the report does contain some indicative tariffs, because there are a number of variations on which tariffs can be struck, it leaves that decision to be made locally.

But in each case the figures are tiny with commercial tariff rates ranging from 8 to 13-cents a litre.

Compare that to the cost of a bottle of soft drink or bottled water. At those rates a resort or tourist accommodation might need to charge an additional 24 to 39 cents per guest a day, based on the daily consumption rates the current metering is showing.

Because businesses like restaurants use relatively small amounts of water the increase in their costs would be miniscule.

At the moment there is no relationship between what water is used each day to how much people pay for it, but once there is, there is a powerful incentive to properly manage and maybe modify the way and amount of water you use.

Suddenly that leaking tap or connection is costing you money and it may be a lot cheaper to fix it and cut down on the amount of water you’re using. Likewise businesses may choose to adopt water saving practices and devices to cut down their usage.

All of these decisions still lie ahead of us but are about to be brought into sharper focus, because soon the Te Mato Vai team will be calling for tenders to install meters on each of the properties drawing water from the system.

Only through metering will we really know how much water Rarotonga is using each day and who’s using it. The completion of the new ring mains and feeder pipes should take care of any loss of water from the reticulation system; and the new water administrator – with the help of the new meters – will know how much water is being delivered to you – and under the suggested SOE arrangement I outlined earlier, will charge you according to the tariff set for your category of consumer.

What your annual water bill ends up being is really to a large degree in your hands. You can restrict your water use to meet your immediate needs and cut out any waste. You might decide it’s time to catch and store and use that water that just gushes off your roof each time it rains, and further reduce what you draw from the metered supply.

Or you may decide having a nice big flower or vege garden and keeping a few pigs is more important, and well worth the extra you pay for water; that’s your call. And if your neighbour decides to do that, that’s fine because he will be paying for it and you won’t be subsidising him.

Oh, and while you’re enjoying the benefits of this new modern water supply which is costing you a fraction of a cent for each litre, why shouldn’t it already be disinfected when you turn on the tap?

Why would you still want to have to drive or walk somewhere to buy and pay, at its cheapest,  about 38-cents a litre for safe water for your family to drink?