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Water Loss Conference, Bangalore 1 Feb 2016

Keynote Address by Mr. Arjun Thapan, Chairman, WaterLinks
Water Lost: Some Issues and Prospects for India
Background
A.

Availability, Access, and Demand

Thank you. When Tim asked me to speak this morning, I felt that I could best
use my 30 minutes to connect some dots on Indias water landscape, and
table a few thoughts. We have all the evidence we need that India is in the
midst of a rapidly gathering water crisis. Almost half of Indias treated urban
water is lost every day. But a great deal more is lost in its mainly waterinefficient farms and factories. And while water is an obvious, key driver of
Indias urban economies and irrigated agriculture, the gathering storm of
potentially crippling water shortages seems to escape most of us. So, let me
get back to basics and see if we can improve our understanding of the main
features of this worrisome prospect.
1. Water and Economy
Lets start with a couple of slides that demonstrate the relationship between
water and economy in the Indian context. Slide 2 (River Basins and GDP
Contributions) illustrates the relationship of basins, populations, and
economy in respect of 2 major river basins in India relative to some others
the Ganges and the Krishna. These two basins are forecast to be among the
top 10 drivers of world economic growth over the next 35 years. But the
question to ask is will this growth occur and, if so, at what cost? The next
Slide 3 (Blue Water Consumption in 10 Most Populous River Basins)
shows us the completely unsustainable withdrawals of blue water relative to
flows in the Ganges and Krishna basins. The gurus tell us that anything over
60% is ecologically and environmentally unsustainable and a recipe for
disaster. So this is a significant relationship, and not a tenuous one.

2. Water Availability
Lets now turn to the availability of freshwater. One of the simplest ways of
understanding how much internal renewable fresh water resources India
currently has is to go by the universal definitions of water stress and water
scarcity. A per capita availability of 1,700 cubic meters/year is the threshold
for water stress, and 1,000 cubic meters/year the threshold for water
scarcity. Indias numbers in 2014 were 1,130 cubic meters per capita/year
(World Bank).
The trend in per capita freshwater availability has been one of steady decline
since 1950. Will this trend continue? It seems it will. In 2011, the
International Water Management Institute forecast: by 2025, all of Asia will
be in an economic water scarcity scenario. Pakistan, most of India, and
more than half of China will face physical water scarcity. If you take a
look at this slide (Slide 4 Global Water Availability), you will understand
what IWMI is saying.
Of course, per capita availability will decline as populations grow. But its also
true that as industrial growth occurs, the competition for water between
cities and industry (including energy) becomes more intense. When you
factor in the inefficiencies of water supply, the near-absence of wastewater
treatment (so extensive pollution of groundwater sources), the depletion of
water tables everywhere, the absence of water conservation, and the
ignorance of demand management, and you have a recipe for anarchy.
What do I mean by anarchy? Essentially, in the municipal sector, the inability
of city governments to provide a reliable 24/7, potable water service. No
town or city in India has 24/7 service. Indias non-revenue water rates are
among the highest in the world hard to measure, but conservatively
estimated at over 50%. The impacts on productivity and public health have
been estimated at $54 billion annually.

3. Accessibility
While Indias water availability situation is uncomfortable to start with, the
lack of accessibility makes it worse. As we saw in Slide 3, the economic water
scarcity is significant, i.e. freshwater resources exist but cannot be accessed
for want of human, institutional, or financial capital. But, to make matters
worse, India is also woefully short on storage capacities.
Indias total reservoir capacity [Slide 5 Indias Water Storage Capacities]
is about 253 billion cubic meters (bcm); this translates into 200 cubic meters
per capita, against a world average of 900 cubic meters. China, by the way,
has 2,200 cubic meters, and the US has 6,000 cubic meters. But even here, we
dont do well. The CWC reported in May 2015 that operating capacities across
91 major reservoirs (160 bcm) were at 28% (44 bcm), i.e. the storage
capacity was suboptimally utilized. It would be tempting to believe that this
is the result of extended dry periods, or prolonged droughts. However, the
data from CWC shows that the average utilization from 2005 has been only
27%. India would, typically, want to go to 500 bcm of capacity. But this is
impossible given the lack of sites and, more importantly, the sub-optimal
utilization of existing capacity will not justify additional investments. Just last
week there were reports of a dispute between farmers and government
officials on the release of water from the Upper Kolab system in Orissa. The
water released for irrigation was much lower than agreed (only 30 million
cubic meters) because power generation was much lower than anticipated
(only 60 MW against a capacity of 120 MW), essentially because of low
reservoir levels. In the final analysis, efficiently operating storages are
important. Pakistan is able to store only 15% of its river flows. About 1/3rd of
its existing storage will be lost to siltation by 2025.
4. Increasing Demand
(Slide 6 Indias Water Equation)

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Indias demand for water is growing exponentially. Several assessments are
available. I have chosen to discuss that of the 2030 Water Resources Group
who carried out a diligent study in 2010. It indicated that, by 2030, India
would require 1,498 bcm. Food demand is forecast to double by 2030 (685
million metric tons). WRG has projected that demand for agricultural water
will account for almost 80% of total water demand (1.2 trillion cm, or double
the demand in 2005). Rice and Wheat alone are expected to demand in
excess of 700 bcm (double that of the demand in 2005). Municipal and
Domestic demand is also projected to increase to 108 bcm, and Industrial
demand to 196 bcm. Among the assumptions made in projecting this
demand are (i) population growth rate of 1% per annum, (ii) GDP growth of
6.8% per annum, (iii) efficiency of water utilisation in agriculture and
industry to remain static at less than 1% improvement annually, and (iv)
share of agriculture in GDP to drop to 10% from 19%.
Against this demand, supply is forecast at 744 bcm (29% of the total 2,518
bcm water resource base for India). The problem is that while the resource
base is substantial, it is also highly variable. It is estimated that 50% of
annual precipitation occurs in 1 month. And 90% of river flows happen only
in 4 months of the year. As we discussed earlier while speaking of storages,
the ability of current infrastructure to buffer this variability is extremely low.
This leaves us with an enormous gap between demand and supply almost
exactly 100%. If you look at Slide 7 (Geographic Water Demand Gap), in
geographic terms, almost 80% of India will face a severe water gap.
B.

Exacerbating Factors The Energy-Water Nexus, Groundwater

Anarchy, Inefficient Utilities

We then have exacerbating factors that make matters worse. Let me briefly
deal with the Energy-Water Nexus.

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5. The Energy-Water Nexus
[Slide 8 India Coal-based Power Equation]
In 2014, India had 234,000 megawatts (MW) of installed power generating
capacity of which about 140,000 MW (60%) was coal-based and about
40,000 MW (17%) hydro-based1. It plans to add 67,000 MW of coal-based
capacity by 2017 and another 393,000 MW by 2047, slightly less than the
number required to sustain a GDP growth rate of 9 per cent2. This is a major
capacity expansion and we can draw two broad conclusions from it. One,
even if the efficiency rating was to increase to 40% from the current average
of 20% (which is possible if India moves to ultra super critical technology),
India would require another 300,000 MW of coal-based power generating
capacity by 2047. The demands this would place on coal and water are huge
and unsustainable. Two, if we make a conservative assumption that 50% of
new capacity from 2014 to 2047 will be based in water stressed or scarce
regions, we must worry because most major river basins are either already
stressed or scarce (these include the Ganges, Indus, Narmada, Cauveri,
Godavari, Krishna, Tapti, Pennar, Mahi, and Tapti basins). The current power
stoppages in Maharashtra, Madhya Pradesh, Kerala, and Himachal Pradesh
on account of low water availability bear witness to an increasing and
widespread trend.
Now, if we undertook a modelling exercise (as South Africa did in 2014) that
incorporated the true costs of water into the energy model for India, we
would probably find that the model chooses dry cooling for most coal-based
power plants. In South Africa, dry cooling makes economic sense even if it
decreases the efficiency of the power plant. There is no reason to believe
that it would be any different for India.
6. Groundwater Anarchy
(Slide 9 The Groundwater Anarchy in India)
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Central Electricity Authority, India. http://www.cea.nic.in/installed_capacity.html

http://indiaenergy.gov.in/doc/Coal_Sector.pdf

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A word now about groundwater. If water is central to agriculture and
industry, energy is key to moving the water around. The agriculture sector
contributes about 17% of the countrys GDP but absorbs 52% of the labor
force, and takes about 85% of total accessible freshwater3. Within this, about
60% is groundwater-based (an estimated total of 432 bcm) over 23 million
pump units across the country. There has been a 12-fold increase in demand
for energy in India over 1950-2010 but a 25-fold increase in demand from
agriculture4. The fact that most of this electricity is provided at no cost to
farmers has resulted in power subsidies contributing as much as 85% of
state fiscal deficits5. A consequence of this massive groundwater withdrawal
is that water tables have declined almost everywhere in India but principally
in the Indus and Gangetic basins, and in Tamil Nadu. In Gujarat, one of
Indias driest states, groundwater tables declined by more than 170 meters
and are dropping at 6 meters per year. According to the Central
Groundwater Board, 70% of Indias groundwater sources are seriously
compromised including 50% that is irreparably damaged by overuse.
7. Inefficient Utilities
(Slide 10 Hours of Service in some Indian Cities)
(Slide 11 Consumer Connections per 1,000 population)
What about Indias water utilities? These are notoriously inefficient as these
slides from a 2012 study6 show. Water supplies range from 30 minutes to 12
hours per day in Indias cities. They also highlight some strange paradoxes
Vadodara, for instance, has the highest rate of connections per 1,000
population, yet its service is for less than 1 hour per day.

Swain.A and Charnoz. O (2012) In Pursuit of Energy Efficiency in Indias Agriculture: Fighting
Free Power or Working with it? Agence Francaise de Developpement
4 Mukherjee, A. (2011) Food-Irrigation-Energy Nexus in the Context of Groundwater Use in India,
ICIMOD, Kathmandu, Nepal
5 Mukherjee, A. Ibid
6 Measuring the performance of water service providers in urban India: implications for
managing water utilities by Gupta, Kumar, and Sarangi, TERI University, 2012
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And while the water lost figure is about 50%, it is instructive to note that
none of the utilities has adapted to climate change impacts which are likely
to further stress water availability. The Indian Auditor General has said in a
recent report that Delhi alone has lost about $350 million of treated water
each year for the past 4 years. Water supply in Delhi, a city of almost
21million, is available for no more than 3-4 hours a day with most
consumers investing in expensive coping mechanisms that are, among other
things, hugely energy inefficient.
Wastewater is a serious issue and contributes to water lost essentially by
polluting the limited freshwater. According to a 2012 study by the Central
Pollution Control Board (CPCB), India generated 38,000 million litres of
wastewater per day whereas the treatment capacity was only 29% (11,000
million liters per day). By 2050, this is projected to increase to 100,000 MLD.
Delhi and Mumbai, that generate 18% of total sewage, have 40% of the
countrys capacity. Note also that the CPCB says that upto a 33% of Indias
wastewater infrastructure does not operate according to prescribed
environmental standards. The deficiency is, therefore, severe.
Risks
8. Increasing Competition and Higher Costs
Let me now turn to Industry and briefly discuss increasing competition for
water and higher costs.
Water for Industry (including energy) is already under stress. Industrial
water demand is likely to increase to 18% in 2025 from 8% today about
192 bcm. We have discussed the case for Energy. Last week, the Union
Cabinet issued a directive that all thermal power plants would now have to
use treated municipal wastewater to meet their cooling water requirements.
Nagpur is the first city to be linked to NTPCs super thermal power plant in
Mauda (2,320 MW). But the economics of this directive, or the costs that

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would have to be financed, and the impact on energy prices and, hence,
economic activity, have been left open.
Slide 12 Industrial Water Availability
In a survey7 published in Sep 2011, the FICCI Water Mission indicated that a
majority of its members used surface water (41%) whereas 35% relied on
groundwater both sources of significant competition with Agriculture.
About 24% relied on municipal water a reliance that is already risky and
likely to get only worse. The danger signs are in evidence while about 75%
of industry feels that water is easily available, 25% feels it is not. And an
almost equal number complains about high prices. But what is significant is
that 60% of survey respondents agreed that water availability was
impacting their businesses and that this number would go up to 87% by
2021.
This pie chart (Slide 13 Risks of Water Impacts) shows that inadequate
availability and poor water quality worry about 50% of industry. 15% are
concerned about the regulatory and policy frameworks disturbing the
allocation of water. The high costs of water worry only 12% (a number that
is at variance with the 25% mentioned earlier) but, encouragingly in my
view, 14% are bothered about climate changes.
There seems to be a rising consciousness about wastewater reuse. About
80% of industries surveyed reported wastewater treatment and reuse.
However, only 24% of this number took the water back to industrial
processes, while the rest used it for horticulture, watering, and other
purposes. Obviously, this will have to change.
Risk Mitigating Options (Slide 14 Risk Mitigating Options)
9. Inducing Water and Energy Efficiencies
http://ficci.in/Sedocument/20188/Water-Use-Indian-IndustrySurvey_results.pdf (precursor to a joint FICCI-Columbia Water Center survey)
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So, what kind of risk mitigating options are available to consumers.

Industries (including Agriculture) need to conduct their own water audits to
understand how much water, of what quality, is being used for what
purpose, at what cost. These audits must form the basis of new standards of
water use where industry best practice is the objective in terms of water use
per unit of business output, i.e. industries need to shrink their water
footprint not merely as insurance against water scarcity but also against
rising costs and uncertainty. Treatment and reuse will form an important
part of the industrial water equation.
A Bureau of Water Use Efficiency has been announced on several occasions.
It has not been established. Industry needs to work with Government to
develop water use standards. Once standards have been set industry-wide,
they need to be enforced.
10. Industrial Water Stewardship
Industrial water stewardship policies need to be designed and adopted by
industry associations. Each industrial plant or manufacturing location
cannot be in a water silo. Water is a community resource. If, for example, an
industry is groundwater dependent, it might want to participate in the
process of building storages to capture run off and recharge depleted
aquifers.
11. Engaging with Governments
Where industries are dependent on municipal supply, it would be helpful for
them to work with local utilities and governments to get them to be efficient.
They might find it advantageous to participate in operational performance
improvement programs, water loss reduction programs, and in involving the
financial sectors in investing in such upgrades.

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India Water Availability Cost Curve (Slide 15)
Finally, I thought that it might be interesting to share this last slide with
you some of you might have seen it at other fora. We have noted that the
doomsday scenario of debilitating shortfalls between demand and supply,
with roll-on effects on economic growth, public health, and social stability
will materialise unless efficiency improvements go way above the lessthan-1% per annum number that we currently have.
But the principal weakness of this forecast is that the drivers to close the
gap are almost entirely in the domain of irrigated agriculture. So, even if
agriculture gets efficient in water use, it doesnt follow that the industrial,
energy, and municipal sectors will axiomatically get efficient. They need
to get efficient on their own. And securing these efficiencies will cost a lot
more than the $6 billion a year that the forecast has estimated.
Let me wind up. Indias water losses, and the costs that they impose, and
will continue to impose in sharper ways, on its economy and society, need
to be addressed. This conference will, doubtless, deal with a number of
issues in the urban space. But it is time that India worried about the
larger water loss picture. If addressed effectively, the 21st century might
well be Indias century. But it also might not.
Thank you very much for your patience.