The cost of free water

Jul 11, 2005 (LBO) – Water is free in Sri Lanka.  Anyone who says different will be pilloried.  I say different.  I say that we will pay in lives and devastation if we do not start charging the real costs of water. The lifetime of modern dams that use cement is between 50 to 100 years, depending on the quality of construction.  Dam engineers agree that the dam holding back the water in the Senanayake Samudraya, our first post-independence modern reservoir (constructed in 1952), is now due for a major overhaul that will cost millions.  One engineer went even further, saying that things are so bad that chunks of concrete could be broken off by hand in the sluices of this reservoir.
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The problem of inadequately maintained dams is serious.  The last time a major dam breached, in Kantale in 1986, at least 127 people drowned or were swept away to sea without any warning; more than 10,000 persons were affected; just to rebuild the dam, the government spent LKR 186 million in 1980s money; millions more were spent on rebuilding the other infrastructure and for relief and recovery.  Even today, 19 years after that tragedy, survivors live in fear of another breach. The experts are willing to talk about the dangers of inadequate maintenance; their most recent statements can be found at . But is anyone willing to listen?  Is anyone in government willing to set aside the money that is essential if the problem is to be addressed?
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Sri Lanka is full of dams and reservoirs; in the words of Governor Sir Henry Ward (1855-1860):  “in no other part of the world are there to be found within the same space, the remains of so many works of irrigation, which are, at the same time, of such great antiquity, and of such vast magnitude as Ceylon. Probably no other country can exhibit works so numerous, and at the same time so ancient and extensive, within the same limited area, as this Island.” Around 12,000 small dams and 320 large and medium dams dot our landscape, now not only in the flat lands of the “wev bandi rata” of old, but also in the hill country where the ancient engineers chose not to build.  The water they store is a source of irrigation water, electricity, and in some cases, even drinking water.  All these reservoirs are depreciating assets; they need routine maintenance all the time and major maintenance periodically. Senanayake Samudraya is just the most glaring example. Many dams restored by the British are past due for major maintenance; post-independence dams are coming due every year.  Some, such as Kotmale, have developed problems well before 50 years.

In any other industry, the owner/operators would recognize the depreciation of the value of their assets and the need to maintain them; they would establish depreciation funds that would be credited on a regular basis; these funds would not be used for other purposes; there would be no surprise spikes in the requirements for maintenance; the maintenance would be done on time and with adequate resources. This would be not only because of the danger that inadequate maintenance would pose to the public; it would also be driven by economic logic:  if the asset is run down or destroyed, the owner/operator would not have a business to run; only millions of rupees in damages to pay. But there are no dedicated funds for dam maintenance in Sri Lanka. Our experts do not tell truth to power: the hard truth that as long as the water that is produced in these human-made reservoirs produces no revenue, there can be no assured funds for routine maintenance and major repairs.
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The hard truth is that the collective delusion that water is free is going to cost us plenty. The hard truth that the dams that provide livelihood to our people will also bring death and destruction to them unless we change the way we cost water. Irrigation is a part of our national self image.

We think and act as though the dams and reservoirs were there for ever and will be there for ever.
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We do not think of them as normal capital assets that were constructed by modern engineers since the late Nineteenth Century, using colonial government funds first and then various kinds of loans and grants from foreign donors; that before Governor Ward started the reconstruction of the ancient tanks, our much vaunted irrigation works were non-functional except for a few village tanks. We do not accept that hard truth that unless we immediately start setting apart adequate funds and conducting the necessary repairs, the only question is when we experience the next dam breach, not whether. Our last big dam building spree was in the 1980s: the accelerated Mahaweli project led by the late Gamini Dissanayake. That government had a five sixths majority in Parliament; President Jayewardene held the unsigned resignation letters of the government MPs and controlled the legislature.
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By any measure, it was a stable, powerful government capable of taking hard decisions. But it missed the golden opportunity to establish the principle that dam-produced water costs money to produce and that all users must pay, at least to cover the costs and to maintain the dams in good order. If President Jayewardene and Minister Dissanayake had seized that opportunity, if the World Bank had made water charges a conditionality when they were disbursing their loans, we would not be staring disaster in the face today. The Central Bank, in its latest report, devotes a full page to dam safety.
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It deserves credit for this. Its proposal is that we add an additional levy to the already excessive electricity bills to finance dam maintenance in addition to the inefficiencies of the CEB. But even the Central Bank avoids the core issue: all users of reservoir water must pay for upkeep and maintenance. Electricity generation uses reservoir water and must of course pay; but so do users of irrigation water. They too must pay (or someone must pay on their behalf). Unlike most electricity users who do not live downstream from dams, most users of irrigation water live directly downstream. It is they who will die in the next dam breach; it is their houses and crops that will be destroyed. In the name of short term political gain, it is they who would have been sacrificed by our weak-kneed politicians, engineers and central bank experts. When the JVP and the NGOs next take to the streets to denounce the efforts of dollar kakkas to privatize water, it is the lives and livelihoods of those same farmers that they will be endangering.
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-Rohan Samarajiva:
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