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Closing the Price/Efficiency GapIssues and Challenges
24 February 2015
Workshop on Water and Green GrowthSession 3a: Synergizing Water
and Green Growth
United Nations Conference Centre (UNCC), Bangkok, Thailand
Juhern KimDeputy Country Representative of the Viet Nam County
Program
Senior Natural Capital SpecialistGlobal Green Growth
Institute
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Key Challenges: Companies, Water, and Risk
Protest at the main gate of the Coca-Cola bottling plant in
Plachimada, Kerala, India, April 5, 2006 (Photo by Kasuga Sho)
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Increasing Concerns, Conflicting Choices
55%Increasing global water demand
80%Untreated sewage
in developing countries
1.8 billionUnsafe drinking water
Inadequate accessto sanitation
OECD 2012 UN 2011 Onda et al. 2012
• Water (and its relevant ecosystem services) as natural
capital
• Trade-offs (water for agriculture v. water for cities)
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Water Pricing: Fundamental Issues (1)
• Getting the price right would magically solve our water
problems?
• Oil pricing for 150 years, why not water?
• Water – whose property?
• Water is public good or economic good?
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Water Pricing: Fundamental Issues (2)
“Water should be recognized as an economic value” “It is a human
right to
access to safe drinking water and sanitation”
Where do we stand?
UN General Assembly (2010)International Conference on Water and
the Environment (1992) Present
“Water at an affordable price is a basic right of all human
beings”
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Water Pricing: Selling Water in the Market?
Source: SIWI
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Water Pricing: Economic Instruments
Water Pricing involve the use of prices and other market-based
measures to improve the way water is managed and used,
enabling users to recognize the true value of water
TariffAbstraction/Pollution
chargesWater markets
Tradable discharge permits
“revenue and incentive effects”
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• Around 70% of towns and cities in the developing world are
using increasing block tariff regimes. Do IBTs, however, really
deliver benefits to the poor?
Tariff: Inclining Block Tariff (IBT) systemU
nit
Pri
ce →
Increasing block tariffs (IBTs):The minimum basic water
requirements are provided to households at a very low rate, while
for additional consumption, the higher the use the higher the
rates.
0 Consumption Volume →
Inclining Block Tariff Structure
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Water Pricing: Hidden Issue over Affordability
1. Widening water gaps:
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Chile: Means-tested Subsidy scheme to identify families for
social assistance
Privatization of public water
company (1980s)
Increased water tariff price
Debate on access to water service
by the poor
Adoption of a subsidy system Law No.18,778
(1989)
Use of price mechanism to regulate demand
Indonesia 7 types of tariff (highest category pays 14 times
those in lowest)
Viet Nam (Ho Chi Minh)
Inclining block tariff; subsidies for poor
Cambodia (Phnom Penh)
Inclining block tariff; subsidies for poor
Philippines Inclining block tariff;
South-East Asia: Increasing block tariff system is
one-size-fit-all solution?
Source: Araral and Wang (2013), International Journal of Water
Resources Management)
Water Pricing: Affordability and Inclusiveness
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Concluding Remarks
01 02 03Trade-offs over water usage –matter of policy
decision
Incorporate concern
over inclusiveness
into national water
pricing scheme
Conduct empirical
studies to examine status
quo and identify
supplementary water
pricing scheme for the poor (i.e. direct subsidy, water bill
coupon)
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1/11
GGGI: Moving towards Implementation
Our Vision A resilient world of strong, inclusive and
sustainable growthOur Objective GGGI Member countries move towards
a model of green growth.While this will be differentiated for
countries, at its core will be strategies that simultaneously
achieve poverty reduction, social inclusion, environmental
sustainability and resource security.
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GGGI Value Chain
1) Focused heavily towards in-country delivery;2) Firmly based
on existence of a feedback loop between in country
experience and analysis and global products and services; and3)
Tailored entirely to the specific circumstances, demand and
capacity of each country
Green impact assessment
Sector/Sub-sector strategy & planning
Design, financing & implementationDiagnosis
Development, economic growth and sustainability diagnosis
Macro economic impact assessment
Sectoral green impact assessment and prioritization
Analysis of costs and investment requirements
Policy and institutions analysis
Development of sectoral/sub-sectoral investment plans and
selection
Design: Project and policy preparation
Financing: Identification of possible financial structures
Implementation
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GGGI: Water and Green Growth Project
Scoping Paper Conference Report
• PHASE I: Oct. 2013-July 2014
• PHASE II: 2015: Urban/Industry context wastewater treatment
(tbc)
http://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-reality
http://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-realityhttp://gggi.org/green-growth-on-the-rise-in-the-mekong-river-basin-from-concept-to-reality
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Thank [email protected]
