Week 4 - Valuing Water

WATER ECONOMICS AND GOVERNANCE
EL
Valuing Water: Economic Value of Water
Week 4 - Lecture 16
PT
N
Dr. MANOJ KUMAR TIWARI
SCHOOL OF WATER RESOURCES
IIT KHARAGPUR
1
Valuing Water
What is being valued ?
• Water can be perceived as:
• A substance,
EL
• A resource, or
PT
• A service.
N
(Dublin Statement, Principle No. 4)
Water has an economic value in all its
Image Source:
competing uses and should be recognized as https://www.freeimages.com/premium/water-tap-
an economic good with-fifty-rupees-indian-banknote-concept-1917605
MANOJ KUMAR TIWARI
2
IIT KHARAGPUR
Valuing Water
What is being valued ?
For example, public utilities managers

believe they actually provide water
EL
services (treating and delivering clean,
potable water) and hence charge for
PT
services, whereas customers may
N
believe they are paying for water, the
substance.
Image Source:
http://laoblogger.com/clipart-of-water-tap.html
http://clipart-library.com/clipart/8TzKK7MXc.htm
MANOJ KUMAR TIWARI

3
IIT KHARAGPUR
Valuing Water
 Water can be perceived differently according to different stakeholders, times, and places
and thus there are many sources of value.
 Water as a human right
EL
 Commodity that can be the property of an individual
PT
 Economic values such as the concepts of economic efficiency and willingness to pay
N
 Environmental values (value apart from its present or future usefulness to humans)
 Social values (universal availability at an affordable price)
 Public health values where clean water is a necessary for the good public health
MANOJ KUMAR TIWARI
4
IIT KHARAGPUR
Different Functions and Values of Water
 Water for life concerns providing water for the survival of both human
beings (individual and collective) and other living beings.
 This must be recognised as the highest priority in order to guarantee the
EL
sustainability of ecosystems so that access for all to a minimum quantity of
PT
good quality water is recognised as one of the human rights.
N
MANOJ KUMAR TIWARI
5
IIT KHARAGPUR
 Water for citizens concerns providing water for general interest purposes, as
regards public health or the promotion of values of equity or social cohesion.
 It must be ranked at the second level of priority, in connection with citizen’s
EL
social rights and in the general interest of society as a whole.
PT
N
 This is the role of public institutions.
MANOJ KUMAR TIWARI

6
IIT KHARAGPUR
 Water for development is an economic function relating to production
activities which in general concerns private interests like irrigation for
agriculture, hydroelectricity, or industry.
EL
 This occupy the third level of priority.
PT
N
 This function consumes the largest part of all water resources from rivers
and aquifers, and is, therefore, largely responsible for the problems of
scarcity and pollution arising in the world.
MANOJ KUMAR TIWARI

7
IIT KHARAGPUR
Economic Value of Water/ Willingness to Pay
 A commodity/service has an economic
value only when people are willing to pay
for it.
EL
 Water is an essential for life, people
PT
would pay any price for the minimum
basic amount for survival. This is not
N
useful information for policymakers.
Image Source:
Source: Valuation of Water Resources; Glenn-Marie Lange; Center https://iesinternships.wordpress.com/2015/04/24/should-
for Economy, Environment and Society, Columbia University. we-increasing-the-price-of-water-to-promote-less-water-use/
MANOJ KUMAR TIWARI
8
IIT KHARAGPUR
Economic Value of Water/ Willingness to Pay
 But after basic needs are met, people would buy water based on its price
compared to other goods they might buy. So, the value of water is actually the
willingness to pay for water for specific use.
EL
 How much will a household pay for drinking water?
PT
N
 How much will a farmer pay for irrigation water?
 How much will a factory pay for clean water?

Source: Valuation of Water Resources; Glenn-Marie Lange; Center for Economy, Environment and Society, Columbia University.
MANOJ KUMAR TIWARI

9
IIT KHARAGPUR
Valuing Water: Use and Non-Use Value of Water
EL
Week 4 - Lecture 17
PT
N
IIT KHARAGPUR
10
Use and Non-use Value of Water
 Economists classify values of water into several types. The two main categories
are use values and non-use (or passive use) values.
 Use values are the cost derived from the actual use the water.
EL
For example – Drinking, irrigation, industrial usage, recreation, etc.
PT
N
 Non-use values on the other hand are values that are not associated with
actual use, or even an option to use at present.
For example – Biodiversity conservation.
MANOJ KUMAR TIWARI

11
IIT KHARAGPUR
Components of the Total Economic Value of Water
EL
PT
N
Source: Economic valuation of water resources in agriculture; by, Kerry Turner, Stavros Georgiou, Rebecca Clark, Roy Brouwer, and Jacob Burke
MANOJ KUMAR TIWARI

12
IIT KHARAGPUR
Total Economic Value of Water
EL
Option value can
PT
be used under
“use” or under
N
"non-use value" to
distinguish it from
existing or current
"use values"
Source: https://academlib.com/15359/environment/making_ecosystem_services_distributional_concerns_visible_incorporating_decision_making (adopted from TEEB 2010)
MANOJ KUMAR TIWARI

13
IIT KHARAGPUR
EL
PT
N
Source: http://www.mfe.govt.nz/publications/fresh-water-rma/option-and-existence-values-waitaki-catchment/3-total-economic-value
MANOJ KUMAR TIWARI

14
IIT KHARAGPUR
Use Value of Water
Use value derives from actual use of the water resource. Use values can be
further broken down in to:
 Commercial value, where water is combined with other factors of
EL
production and the output sold (eg, milk and electricity)
PT
 In-situ use value, where the services of the water resource are directly (eg
N
swimming) or indirectly (eg fishing) used, but the output (utility in this
case) is not marketed.
MANOJ KUMAR TIWARI

15
IIT KHARAGPUR
Use Value of Water
 Option value, where, although individual's/firm's are not currently using
the resource, they might be prepared to pay for the right to use the
services of the resource at some later date. Option value is typically used
to measure the value attached to future use opportunities. Option value
need not be exclusively related to "recreational use".
EL
PT
 Quasi-option value describe the welfare gain associated with delaying a
decision when there is uncertainty about the payoffs of alternative
N
choices, and when at least one of the choices involves an irreversible
commitment of resources. It is not a value that individuals attach to
changes in the natural resource.
MANOJ KUMAR TIWARI

16
IIT KHARAGPUR
Non-Use Value of Water
These are independent of the individual's present use of the resource. Non-
Use values can be further broken down in to:
 Existence value is the value from knowing that a particular environmental
EL
assets exists (eg endangered species);
PT
 Bequest value is the value arising from the desire to bequeath certain
N
resources to one's heirs or future generations (eg habitat preservation).
MANOJ KUMAR TIWARI

17
IIT KHARAGPUR
Non-Use Value of Water
These are independent of the individual's present use of the resource. Non-
Use values can be further broken down in to:
 Existence value is the value from knowing that a particular environmental
EL
assets exists (eg endangered species);
PT
 Bequest value is the value arising from the desire to bequeath certain
N
resources to one's heirs or future generations (eg habitat preservation).
MANOJ KUMAR TIWARI

18
IIT KHARAGPUR
 Total Economic Value (TEV) is the sum of all benefits obtained from a
resource.
EL
TEV = Use Value + Non-Use Value
PT
= (Use Value + Option Value) + Bequest Value + Existence Value
N
MANOJ KUMAR TIWARI

19
IIT KHARAGPUR
 Typically, a resource would never be completely eliminated because of
management actions (although that is possible), therefore, TEV normally has
little meaning by itself.
 Most management decisions entail partial changes to the resource, which
EL
means that the components of TEV may change between events, but may not
PT
be zero in any case.
N
 Consequently, in a policy context or for application of cost benefit analysis, it
is sufficient to know the change in TEV between different states.
ΔTEV = (Δ Use Value + Δ Option Value) + Δ Bequest Value + Δ Existence Value
MANOJ KUMAR TIWARI

20
IIT KHARAGPUR
Valuing Water: Valuation of Water
EL
Week 4 - Lecture 18
PT
N
IIT KHARAGPUR
21
What is the Value of Water
 A 1 L bottle of mineral water costs Rs 15-20 in any typical market place.
 The same amount of tap water (with same quality ?) in homes typically costs
about < 5 paisa.
EL
PT
 Billions of litters of River water flow through the power plants, performing a
N
critical function, but the water costs almost nothing for state permits.
MANOJ KUMAR TIWARI

22
IIT KHARAGPUR
What is the Value of Water
EL
PT
N
Source: The Value of Water: A framework for understanding water valuation, risk and stewardship, International Finance Corporation, World Bank Group, 2015
MANOJ KUMAR TIWARI

23
IIT KHARAGPUR
Principles of Water Valuation
 Market allocation of water can be sub-optimal as it may fail to address those
demands that are primarily of a life-support nature (mainly identified as):
o Basic human needs - Markets may fail poorly in guaranteeing socially equitable
EL
allocation of water to a degree that infringe on the basic human rights for water for
living including preservation of cultural and social values.
PT
N
o Environmental flows - Market failures are abound in meeting basis environmental
flows, which are essential for the sustenance of the ecological system due to the
absence of a mechanism to internalise some of these needs.
Source: Atapattu, N. K., Economic Valuing of Water, in World Water Assessment Programme Sri Lanka Case Study: Ruhuna Basins, April 2002
MANOJ KUMAR TIWARI

24
IIT KHARAGPUR
Principles of Water Valuation
 Market allocations can be quite effective in improving allocations between
competing economic functions of water in production areas, i.e.
o Agriculture
EL
o Industry
PT
o Power generation
N
o Recreation
Source: Atapattu, N. K., Economic Valuing of Water, in World Water Assessment Programme Sri Lanka Case Study: Ruhuna Basins, April 2002
MANOJ KUMAR TIWARI

25
IIT KHARAGPUR
Methods of Water Valuation
Two broad approaches
 Inductive methods use statistical techniques to infer economic values from

data on observed human behaviour.
EL
PT
 Deductive approaches derive estimated willingness to pay from constructed
N
models that hypothesise human motivations along with measured or predicted
conditions of production or consumption.
Source: Freshwater Values Framework. A Review of Water Valuation Methods Utilised within Total Economic Valuation , Working Report 2013/001, Auckland Council
MANOJ KUMAR TIWARI

26
IIT KHARAGPUR
The different methods of water valuation

targets different components of TEV of
water resources.
EL
PT
N
MANOJ KUMAR TIWARI

27
IIT KHARAGPUR
EL
PT
N
MANOJ KUMAR TIWARI

28
IIT KHARAGPUR
EL
PT
N
MANOJ KUMAR TIWARI

29
IIT KHARAGPUR
EL
PT
N
MANOJ KUMAR TIWARI

30
IIT KHARAGPUR
Hedonic Pricing Method
 The Hedonic Pricing Method (HPM) is based on Lancaster's characteristics
theory of value assuming that people value the characteristics of a good, or the
services it provides, rather than the good itself.
EL
 Therefore, prices will reflect the value of a set of characteristics, including
PT
environmental characteristics that people consider important when purchasing
N
the good. Most applications use residential housing prices to estimate the
value of environmental amenities.
MANOJ KUMAR TIWARI

31
IIT KHARAGPUR
 It can be used to estimate economic benefits or costs associated with:
 Environmental quality, including air pollution, water pollution, or noise
 Environmental amenities, such as aesthetic views or proximity to recreational sites
EL
Following information must be available to apply the hedonic pricing method:
PT
 A measure or index of the environmental amenity of interest.
N
 Cross-section and/or time-series data on characteristics values for a well-defined
market area [Ex. homes with different levels of environmental quality, or different
distances to an environmental amenity, such as open space or the coastline.
MANOJ KUMAR TIWARI

32
IIT KHARAGPUR
 Example:
 Farm prices with or without access of surface or groundwater
 The difference in the prices could be attributed to availability of water resources
EL
 Limitations:
PT
 Only considers the value for which people have willingness to pay
N
 Irrelevant of qualities of attributes being valued are not known
 The method is relatively complex to implement and interpret, requiring a high
degree of statistical expertise
MANOJ KUMAR TIWARI

33
IIT KHARAGPUR
Travel Cost Method
 The Travel Cost Method is used to estimate the value of recreational benefits
generated by a resource.
 It assumes that the value of the site or its recreational services is reflected in
EL
how much people are willing to pay to get there.
PT
N
 It is referred to as a revealed preference method, because it uses actual
behaviour and choices to infer values. Therefore, peoples’ willingness to pay
are revealed by their choices.
MANOJ KUMAR TIWARI

34
IIT KHARAGPUR
Travel Cost Method
 The basic premise of the travel cost method is that the time and travel cost
expenses that people incur to visit a site, for example to a river walking path,
represent the price of access to the site.
EL
 Thus, peoples’ willingness to pay to visit the site can be estimated based on the
PT
number of trips that people make at different travel costs.
N
 This is similar to estimating peoples’ willingness to pay for a market good based
on the quantity demanded at different prices.
MANOJ KUMAR TIWARI

35
IIT KHARAGPUR
Travel Cost Method
 Uses:
 Changes in access costs for a recreational site
 Elimination of an existing recreational site, or addition of a new recreational site
EL
 Changes in environmental quality at a recreational site.
PT
 Limitations:
N
 Data intensive and requires user participation
 The simplest models assume that individuals take a trip for a single purpose – to
visit a specific recreational site
MANOJ KUMAR TIWARI

36
IIT KHARAGPUR
Valuing Water: Water Valuation Methods
EL
Week 4 - Lecture 19
PT
N
IIT KHARAGPUR
37
Water Valuation Methods
 Hedonic Pricing Method
 Travel Cost Method
 Averting Behaviour Method
 Residual Analysis
EL
 Market Price Method
PT
 Replacement Cost (or Substitute Cost) Method
N
 Contingent Valuation Method
 Choice Modelling or Choice Experiment Method
 Deliberative Monetary Valuation
 Benefit Transfer Method

MANOJ KUMAR TIWARI
38
IIT KHARAGPUR
Averting Behaviour Method
 Assumes that people make choices in order to maximize their level of well-
being when faced with environmental/health risks.
 Averting behaviour requires expenditures that would not be made if not faced
EL
with the environmental health risk.
PT
 For example, the purchase of bottled water or water filters may only be made when
N
faced with the risk of contaminated drinking water. These increased expenditures
provide an estimate of the economic benefits of environmental policy that reduces
the drinking water risk.
MANOJ KUMAR TIWARI

39
IIT KHARAGPUR
Residual Analysis
 Budget analysis is used to estimate returns attributable to water.
 Water is treated as one input to the production of good. The total returns are
calculated and all non-water expenses are subtracted. The remaining value is
EL
attributed to water input.
PT
N
 Limitations:
 Only part of use value is estimated
 Market inputs can bias the estimates, if not evaluated with care.
MANOJ KUMAR TIWARI

40
IIT KHARAGPUR
Market Price Method
 Estimates economic values for ecosystem products or services that are bought
and sold in commercial markets.
 The standard method for measuring the use value of resources traded in the
EL
marketplace is the estimation of consumer surplus and producer surplus using
PT
market price and quantity data.
N
 The market price represents the value of an additional unit of that good or
service, assuming the good is sold through a perfectly competitive market.
MANOJ KUMAR TIWARI

41
IIT KHARAGPUR
Market Price Method
 Limitations
 The true economic value of goods or services may not be fully reflected in market
transactions
 Market data may only be available for a limited number of goods and services
EL
PT
 Seasonal variations and other effects on price must be considered.
N
 Could also be approximated using market price of close substitute
MANOJ KUMAR TIWARI

42
IIT KHARAGPUR
Replacement Cost (or Substitute Cost) Method
 Potential expenditure incurred in replacing/restoring the function that is lost.
 Estimate values of ecosystem services based on either the costs of avoiding

damages due to lost services, the cost of replacing environmental assets, or
EL
the cost of providing substitute services, respectively.
PT
N
 These methods are particularly applicable where there is a standard that
must be met, such as a certain level of water quality
MANOJ KUMAR TIWARI

43
IIT KHARAGPUR
 Examples:
 Improved water quality by measuring the cost of controlling effluent emissions
 Considering cost of erosion protection services of a forest or wetland
EL
 The water purification services of a wetland by measuring the cost of filtering
PT
and chemically treating water
N
 Storm protection services of coastal wetlands by measuring the cost of building
retaining walls
MANOJ KUMAR TIWARI

44
IIT KHARAGPUR
 Limitations:
 The goods or services being replaced probably represent only a portion of the full
range of services provided by the natural resource.
 Do not consider social preferences for ecosystem services, or individuals’
EL
behaviour in the absence of those services.
PT
 May be inconsistent because few environmental actions and regulations are
N
based solely on benefit-cost comparisons
 Requires information on the degree of substitution between the market good
and the natural resource.
MANOJ KUMAR TIWARI

45
IIT KHARAGPUR
Contingent Valuation Method
 Contingent Ranking: Individuals are asked to rank several alternatives rather
than express a willingness to pay. Alternatives tend to differ according to some
risk characteristic and price.
EL
 Contingent Valuation Method: Construction of hypothetical market by direct
PT
surveying of a sample of individuals and aggregation to encompass the relevant
N
population. Problems of potential biases.
 Can be used to estimate both use and non- use values, and it is the most widely
used method for estimating non-use values.
MANOJ KUMAR TIWARI
46
IIT KHARAGPUR
Choice Modelling or Choice Experiment Method
 Similar to contingent valuation. It is a hypothetical method and asks people
to make choices based on a hypothetical scenario. However, it differs from
contingent valuation because it does not directly ask people to state their
values in dollars. Instead, values are inferred from the hypothetical choices
EL
or tradeoffs that people make.
PT
N
 It can be used to estimate economic values for virtually any ecosystem or
environmental service, and can be used to estimate non-use as well as use
values.
MANOJ KUMAR TIWARI

47
IIT KHARAGPUR
Deliberative Monetary Valuation
 Formal methods of deliberation to express values for environmental change
in monetary terms
 Deliberative methods for environmental decision making is based in
EL
discussion and consensus building and can give stakeholders a wide range of
PT
information, provide a structure for evaluating and discussing complex
N
information, incorporate a range of ethical, moral and monetary values and
use methods for reaching consensus
MANOJ KUMAR TIWARI

48
IIT KHARAGPUR
Benefit Transfer Method
 It is used to estimate economic values for water services by transferring
available information from studies already completed in another location
and/or context. Thus, the basic goal of benefit transfer is to estimate benefits
for one context by adapting an estimate of benefits from another context.
EL
PT
 Benefit transfer is often used when it is too expensive and/or there is too
N
little time available to conduct an extensive valuation study, yet some
measure of benefits is required. It is important to note that benefit transfers
can only be as accurate as the initial study.
MANOJ KUMAR TIWARI

49
IIT KHARAGPUR
Methods of Water Valuation: Summery
EL
PT
N
MANOJ KUMAR TIWARI

50
IIT KHARAGPUR
Methods of Water Valuation: Summery
EL
PT
N
Source: http://www.fao.org/docrep/007/y5582e/y5582e08.htm#TopOfPage
MANOJ KUMAR TIWARI

51
IIT KHARAGPUR
Valuing Water: Full Value and Losses
EL
Week 4 - Lecture 20 (a)
PT
N
IIT KHARAGPUR
52
Components of Full Value of Water
EL
PT
N Source: http://www.fao.org/docrep/008/y5690e/y5690e04.htm
MANOJ KUMAR TIWARI

53
IIT KHARAGPUR
Components of Full Cost and Value of Water
EL
PT
N
Source: http://jzjz.tripod.com/watroger.html
MANOJ KUMAR TIWARI

54
IIT KHARAGPUR
Example Problem
EL
PT
N Source: Lecture Notes by Prof. R. Remesan
MANOJ KUMAR TIWARI

55
IIT KHARAGPUR
Example Problem: Solution
Calculation of net
value of output per
unit of water input
EL
PT
N Source: Lecture Notes by Prof. R. Remesan
MANOJ KUMAR TIWARI

56
IIT KHARAGPUR
Example Problem: Solution
Cost and Value Comparison
EL
PT
N
1.89
Source: Lecture Notes by Prof. R. Remesan
MANOJ KUMAR TIWARI

57
IIT KHARAGPUR
Concept of Water Losses
 Water that has been produced and is “lost” before it reaches the customer
 Worldwide water utilities faces losses in the range of 5 to 60+ %.
EL
 In India, average water losses from urban water utilities is approximately 40 %.
PT
N
 Losses can be real losses (through leaks, sometimes also referred to as physical
losses) or apparent losses (for example through theft or metering inaccuracies)
MANOJ KUMAR TIWARI

58
IIT KHARAGPUR
Apparent and Real Losses
• Apparent losses are the non-physical losses that occur in utility operations due to
customer meter inaccuracies, systematic data handling errors in customer billing
systems and unauthorized consumption. In other words, this is water that is consumed
EL
but is not properly measured, accounted or paid for. These losses cost utilities revenue
PT
and distort data on customer consumption patterns.
N
• Real losses are the physical losses of water from the distribution system, including
leakage and storage overflows. These losses inflate the water utility's production costs
and stress water resources since they represent water that is extracted and treated, yet
never reaches beneficial use.
MANOJ KUMAR TIWARI
59
IIT KHARAGPUR
EL
PT
N
Source: https://www.openintl.com/
MANOJ KUMAR TIWARI

60
IIT KHARAGPUR
Non-Revenue Water (NRW) & Un-accounted For Water (UFW)
UFW is similar to NRW,

only difference is NRW
includes authorized
EL
unbilled consumption
PT
while UFW excludes it.
N
Source:
“IWA Best Practice” Water Balance Terminology
MANOJ KUMAR TIWARI

61
IIT KHARAGPUR
Metering Water Uses
 Water metering is the process of measuring water
use
 Water meters are used to measure the volume of
EL
water used by residential and commercial buildings
that are supplied with water by a public water
PT
supply system
N
 Water meters can also be used at the water source,
well, or throughout a water system to determine
through a particular portion of the system A Typical Water Meter
MANOJ KUMAR TIWARI

62
IIT KHARAGPUR
Metering Water Uses
 Some countries like the United Kingdom adopt the policy of allowing
households to choose if their water consumption will be metered.
 A few researchers conclude that it may be efficient not to meter every
EL
customer and to have a dual system.
PT
 In such model, the optimal water volumetric and fixed charges are
N
estimated, and the customer chooses if he should be metered or not (with
non-metered customers paying higher fixed charges).
MANOJ KUMAR TIWARI

63
IIT KHARAGPUR
Metering Water Uses
• There are different metering regimes: -
• Rateable Value System (no metering);
• Universal Metering (all connections metered);
EL
• Optimal Metering (the socially efficient number of meters is determined in a
PT
centralized fashion; the number of meters installed is the solution to a social planner's
N
problem maximizing welfare and not the agency's profits);
• Decentralized Metering (the optimal number of meters is determined in a

decentralized way by the agency, which seeks to maximize profit/return, and in this
case it coincides with the socially efficient level).
MANOJ KUMAR TIWARI
64
IIT KHARAGPUR
Metering Water Uses
 Universal metering is only advisable if metering costs are compensated by
the gain in welfare from the difference between water company's cost
savings and consumer surplus losses (resulting from the decrease in
consumption by the consumers that were not metered under Optimal
EL
Metering but are so under Universal Metering).
PT
 When this is not fulfilled, Optimal Metering and Decentralized Metering, are
N
able to determine the socially efficient number of meters (respectively in a
centralized or decentralized but regulated way)
MANOJ KUMAR TIWARI

65
IIT KHARAGPUR
Water Management Through Economic Instruments
 Use of market-based signals to motivate desired types of decision-making.
 They either provide financial rewards for desired behaviour or impose costs
for undesirable behaviour.
EL
 Some argue that economic instruments are better described as market-
PT
based instruments since they rely on complex legislative and administrative
N
arrangements.
MANOJ KUMAR TIWARI

66
IIT KHARAGPUR
• Property rights: Ownership rights, use rights, development rights, and transferable
development rights all promote responsible resource management.
• Fee-based measures: Fees, charges, taxes, deposit refunds, and revenue-neutral
“feebates” all impose payments of specified amounts, thereby creating an explicit cost
associated with environmentally damaging activities and an easily quantifiable incentive
EL
for reducing the activity.
PT
• Liability and assurance regimes: Liability rules and various types of bonds can provide
N
strong incentives to avoid environmental impacts and to clean up and restore
environmental damage.
• Tradable permits: These provide mechanisms for minimizing the social and private costs
of meeting a cap on emissions.
MANOJ KUMAR TIWARI
67
IIT KHARAGPUR
The Fees, charges or taxes, could be used to control demand and fund infrastructure.
o Tariffs for water services o Water Resources Fee

 Abstraction charge
EL
 Drinking water
 Pollution charge
PT
 Sewage
N
 Irrigation (raw water, irrigation service)
 Industrial uses
MANOJ KUMAR TIWARI

68
IIT KHARAGPUR
Valuing Water: Water Audit and Losses Estimation through Examples
EL
Week 4 - Lecture 20(b)
PT
N
IIT KHARAGPUR
69
Water Audit
Accounting of water, considering water inputs, outputs and losses
Can be done at several scales:
o Water Audit of an Urban Water Utility
EL
o Water Audit of an Institution/School
PT
N
o Water Audit of a factory
o Water Audit of a specific industrial process
o Water Audit of a river basin, or sub-catchment
MANOJ KUMAR TIWARI
70
IIT KHARAGPUR
Water Audit of a Water Supply System
Let us take an example:
o Say, the water utility of City withdraws 400 MLD water.
o The population of city = 15 lacks
o Number of household connections = 4 lacks
o Average daily consumption at household connections = 600 L/connection.
o Number of public stand posts = 8,000
EL
o Average daily consumption at public stand-posts = 1,500 L/connection.
o No. of industrial connections = 400
PT
o Average daily consumption at industries = 12,000 L/connection
N
o No. of connections to public sector/government organizations = 2500
o Average daily consumption at public sector/government connections = 5,000 L/connection
o No. of connections to other commercial units = 5000
o Average daily consumption at commercial connections = 1,000 L/connection
o Consider all of the stand post connections and connections to public sector/government
organizations are unbilled, while all other connections are charged for water bills.
MANOJ KUMAR TIWARI

71
IIT KHARAGPUR
Water Audit of an Water Supply System
No. of Consumption per Total daily Billed Water Unbilled
connections connection (L) consumption (L) Charges (L) Water (L)
Households 400000 600 240000000 Charges 240000000
Stand-posts 8000 1500 12000000 Free 12000000
Industrial 400 12000 4800000 Charged 4800000
EL
Government 2500 5000 12500000 Free 12500000
PT
Commercial 5000 1000 5000000 Charged 5000000
274300000 249800000 24500000
N
Sum
274.3 MLD 249.8 MLD 24.5 MLD
Unaccounted for Water (UFW) = 400 - 274.3 = 125.7 MLD (31.4 %)

 Non Revenue Water (NRW) = 400 - 274.3 – 24.5 = 150.2 MLD (37.6 %)
MANOJ KUMAR TIWARI
72
IIT KHARAGPUR
Water Audit of an Water Supply System
Unaccounted for Water (UFW)
= 400 - 274.3
= 125.7 MLD (31.4 %)
EL
 Non Revenue Water (NRW)
= 400 - 274.3 – 24.5
PT
= 150.2 MLD (37.6 %)
N
Lets say only 30 % of total losses
are physical losses:
Commercial losses = 88 MLD Source: “IWA Best Practice” Water Balance Terminology
MANOJ KUMAR TIWARI

73
IIT KHARAGPUR
Water Audit of a Irrigation Canal
o Say, an irrigation canal is receiving 25 cusec water
o Agricultural field being irrigated = 50,000 hectares
o Average irrigation depth = 20 mm/d
EL
PT
o The Irrigation services are being charges at subsidized rates from farmers
possessing 65 % of area, while its free for small farmers possessing 35 % of land
N
o Consider physical (real) losses at 20% of total unaccounted flow
MANOJ KUMAR TIWARI

74
IIT KHARAGPUR
Water Audit of a Irrigation Canal
o Water inflow = 25 cusec = 25*3600*24 = 17.28x106 m3/d
o Area = 50,000 hectares
o Average irrigation depth = 20 mm/d
EL
PT
o Total Irrigation Water = 50,000x104x0.02 = 10x106 m3/d
N
o Total losses (UFW) = 17.28x106 m3/d - 10x106 m3/d = 7.28 x106 m3/d (42.1 %)
o Consider physical (real) losses at 20% of total unaccounted flow = 1.46 x106 m3/d
o Non Revenue Water (NRW) = UFW + 35% of total irrigation water
= 7.28 x106 m3/d + 3.5 x106 m3/d = 10.78 x106 m3/d (62.4 %)
MANOJ KUMAR TIWARI
75
IIT KHARAGPUR
EL
PT
N
MANOJ KUMAR TIWARI
76
IIT KHARAGPUR

Week 4 - Valuing Water

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week 4 - Valuing Water

Uploaded by

Copyright:

Available Formats

WATER ECONOMICS AND GOVERNANCE

For example, public utilities managers

MANOJ KUMAR TIWARI

 Water as a human right

 Social values (universal availability at an affordable price)

 This must be recognised as the highest priority in order to guarantee the

 It must be ranked at the second level of priority, in connection with citizen’s

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 How much will a factory pay for clean water?

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Commercial value, where water is combined with other factors of

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Existence value is the value from knowing that a particular environmental

MANOJ KUMAR TIWARI

 Existence value is the value from knowing that a particular environmental

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Most management decisions entail partial changes to the resource, which

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Inductive methods use statistical techniques to infer economic values from

MANOJ KUMAR TIWARI

The different methods of water valuation

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Environmental amenities, such as aesthetic views or proximity to recreational sites

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Travel Cost Method

 Averting Behaviour Method

 Choice Modelling or Choice Experiment Method

 Deliberative Monetary Valuation

 Benefit Transfer Method

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Estimate values of ecosystem services based on either the costs of avoiding

MANOJ KUMAR TIWARI

 Considering cost of erosion protection services of a forest or wetland

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

 Deliberative methods for environmental decision making is based in

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI

MANOJ KUMAR TIWARI