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Public Disclosure Authorized Inter-sectoral Water Allocation, Planning, and Management I Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Inter-Sectoral Water Allocation, Planning and Management

\World Bank South Asia Region Rural Development Sector Unit

in collaboration with

The Government of India Ministry of Water Resources

The World Bank Waslhington, D.C. L 1 Web: www.jainbookagency. I E-mail: Publishers New Delhi C-9,Connaught Place,New Delhl-I Ph :23416390/91192/93194, 51 513852 Fax . 011-23731117 1 Allied Publishers Limited Regd. Off: 15 J.N. Heredia Marg, Ballard Estate, Mumbai 400038 Prarthna Flats (2nd Floor), Navrangpura, Ahmedabad 380009 3-2-84416 & 7 Kachiguda Station Road, Hyderabad 500027 16-A Ashok Marg, Patiala House, Lucknow 226001 5th Main Road, Gandhinagar, Bangalore 560009 17 Chittaranjan Avenue, Calcutta 700072 8 1 Hill Road, Ramnagar, Nagpur 440010 13114 Asaf Ali Road, New Delhi 110002 751 Anna Salai, Chennai 600002

First Published, 1999 O 1999 by The International Bank for Reconstruction and DevelopmentlThe World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. ISBN 0-82 13-4465-X ISBN 81 -7023-906-0

This document was initially released as a World Bank report dated June 27, 1998.

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Cover Design: Amy Meyer Phifer Photo Credit: IRS satellite image of Allahabad and surrounding area at confluence of rivers Ganges and Yamuna. Generated and supplied courtesy of Nationai Remote Sensing Agency (NRSA), Balanagar, Hyderabad-500037, India.

Inter-sectoral water allocation, planning, and management I World Bank, South Asia Region, Rural Development Sector Unit in collaboration with the Government of India, Ministry of Water Resources. p. cm. indudes bibliographical references. ISBN 0-82 13-4465-X 1. Water-supply - India - Management. 2. Water supply - India - Planning. 3. Water resources development -Government policy -India. I. World Bank. South Asia Regional Office. Rural Development Sector Unit. 11. India. Ministry of Water Resources. TD303.AlI56 1999 333.91'15'0954 - dc21 99-1 1626 CIP

Published by Sunil Sachdev and printed by Ravi Sachdev at Allied Publishers Ltd., Printing Division, A-104 Mayapuri, Phase-11, New Delhi 110064 vii Abbreviations and Acronymns ix Acknowledgements xi Bank Preface xiii GO1 Preface xvii Executive Summary

I. 'The Need for Better Managing India's Water Resources 3 The Issues Framework

2 Figure 1. Population and Water Availability Trends in India 3 Box 1. Examples of Emerging Water Issues and Imbalances in India

2. 'The Resource Situation and Emerging Issues 7 A. Water resources assessment 9 B. Sectoral growth trends and emerging inter-sectoral issues 10 C. Inter-state water issues 11 D. Environmental and health-related issues 14 E. The costs of inadequate management

3. Existing Mechanisms and Limitations 17 A. Policy framework 18 B. Legislative and regulatory framework 21 C. Institutional mechanisms 26 D. Economic mechanisms 30 E. Technological mechanisms -

33 Matrix 1. Existing Mechanisms and Limitations

4. Reform Options and Recommendations 37 A. Improving the policy framework 39 B. Strengthening the legislative and Regulatory framework 42 C. Establishing government and non-government institutions for water resources management 50 D. Introducing economic incentives for efficient water allocation and use 57 E. Technological improvements 58 F. Improving modeling, data, performance and Environmental monitoring and public information

38 Diagram 1. Interacting Areas for Improving Water Resources Management

5. Strategy and Action Plan 64 A. The reform agenda 67 B. Action plan for implementing the reform agenda 67 C. Getting started 68 Diagram2A. Getting Started - State Actions 69 Diagram2B. Getting Started - Central Government Actions 71 Matrix 2. Action Plan For The States And Central Government Annex I. Boxes on Water Availability and Distribution 87 Box Al.1. River Basin Water Availability 88 Box A1.2. Water Availability in Selected Countries 88 Box A1.3. Global Water Issues

Annex 2. Boxes on Wate~RelatedEnvironmental and Health Issues 89 Box A2.1. Water-related Environmental and Health Issues in India 90 Box A2.2. Impact of Domestic and Industrial Effluents in Bellandur (Karnataka) 90 Box A2.3. Coastal Zones in India: Environmental Problems and Management Possibilities 91 Box A2.4. State-Wise Groundwater Problem Areas from Industrial Pollution 92 BoxA2.5. CPCB Classification of Fresh Water and Primary Quality Criteria 92 Box A2.6. IS1 Drinking Water Standardsa 93 Box A2.7. Institutions and their Environment and Water-related Programs 96 Box A2.8. Current Environmental and Water-related Programs in India 98 BoxA2.9. Using Price Mechanisms for Pollution Control: The Case of the Dutch Water Boards 99 Box A2.10. Incorporating Requirements of Aquatic Ecology in Water Resources Management: Indian and International Experience 100 Box A2.11. A River Runs Through It: Delhi and the Yamuna River Basin 100 Figure A. Delhi and the Yamuna Basin Area Schematic 10 1 Figure B. Yamuna Flows at Tajewala 101 Figure C. Population Growth in Delhi 102 Figure D. Drains around Delhi 103 Figure E. Fecal Coliforms dls of Delhi

Annex 3. Boxes on River Basin Organizations and Institutions 105 Box A3.1. The Inter-State Water Disputes Act for Establishing Tribunals: Existing Limitations 107 Box A3.2. The Krishna Water Dispute Tribunal Award 108 Box A3.3. River Basin Management: Indian Experience 110 Box A3.4. River Basin Organizations: International Experience and India's DVC Experience 112 Box A3.5. River Basin Management: Murray-Darling Basin Experience, Australia 115 Box A3.6. Joint Management of Shared Aquifers Between the Israelis and Palestinians: Institational Mechanisms 117 Box A3.7. Establishing Institutions for Water Allocation, Planning and Management at State Levels: Experience under the WRCPs in Tamil Nadu and Orissa 119 Box A3.8. Vaigai Basin Stakeholder Participation 120 Box A3.9. Institutional Linkages: Proposed Calcutta Environmental Management Strategy

Annex 4. Boxes on Economics and Pricing 121 Box A4.l. Indian Agricultural and Industrial GDP, 1986-1995 122 Box A4.2. Working Expenses and Interest on Capital Outlay in Irrigation Projects, 1974-1992 123 Box A4.3. Estimated Demand for Water in Mehsana, Gujarat 124 Box A4.4. Differential Pollution Fees for Industry in Tamil Nadu 125 Box A4.5. Water Pollution Fees for Industry in Andhra Pradesh 125 Box A4.6. Calcutta's Water Supply and Surrogate Volumetric Water Pricing 126 Box A4.7. Long-Term Marginal Cost of Water Supply in South Africa 127 Box A4.8. How Domestic Sugar Policies Affect Water Use 128 Box A4.9. Government of Karnataka's Agricultural Policy 129 Box A4.10. Market Faiiure and Rationale for Government Intervention in Water Resources Management

Annex 5. Boxes on Water Rights and Water Markets 131 Box A5.1. Surface and Groundwater Rights: International Experier~ce 132 Box A5.2. Protecting Existing Rights While Instituting a New Water Rights System: International Experience 132 Box A5.3. Pre-Conditions for Efficient, Equitable and Environmentally Sustainable Water Markets 133 BoxA5.4. Opportunities for Establishing Water Rights and a Groundwater District: The Case of Chennai 135 Box A5.5. Economic Scope and Institutional Constraints for Inter-Sectoral Water Allocation: The Case of Hyderabad 136 BoxA5.6. Groundwater Transfers and Latent Water Markets in Periyar-Vaigai Basin, Tamil Nadu 137 Box A5.7. California Drought Water Bank 138 Box A5.8. Water Markets in Chile

Annex 6. Boxes on Technology 139 Box A6.1. Environmental Technology Options for Water Management 141 Box A6.2. Integrated Wetland System for Wastewater Treatment and Reuse 142 Box A6.3. Common Effluent Treatment Plants (CETPs)

Annex 7. Boxes on Basin Modeling and Pianning 143 Box A7.1. Institutional Responsibilities in Water-related Data Collection* 143 Box A7.2. Some Axioms for Good Basin Planning (Knowledge D- ]wen- Knowledge Management) 144 Box A7.3. Modeling for Stakeholder Participation: The THANNI inodel for the Vaigai Basin 144 Figure 1. The Vaigai River Basin (indicating agricultural areas) 145 Figure 2. Current Land Use in Vaigai Basin 145 Figure 3. Urban & Livestock Demand Projections 146 Figure 4. Schematic Input Interface 146 Figure 5. Recent Stakeholder Meeting 147 Figure 6. Crop Water Requirements, Periyar-Vaigai Basin 148 Figure 7. Sample Model Output Interface (indicates optimal water allocation on partial demand schematic) 149 Box A7.4. Inter-Sectoral Water Resources Planning and Management in a River Basin Context 149 Figure 1. Water "Sector" Linkages 150 Figure 2. River Basin Schedule 15 1 Table 1. Tools for Water Resources Planning and Management 152 Figure 3. Decision Support Systems

Annex 8. Brainstorming Session on Improving Inte~SectorallWater Allocation, Planning and Management Annex 9. Proceedings of the National Workshop on Inte~SectoralWater Allocation, Planning and Management 158 Recommendations Of Group 1: Policies, Legislation And Strategies 159 Recommendations Of Group 2: Institutional Arrangements 160 Recommendations Of Group 3: Inter-Sectoral Perspectives, Allocation Principles And Mechanisms, And Economic And Other Instruments 161 Recommendations Of Group 4: Technical, Environment And Public Awareness

References Abbreviations and Acronyms

AIIHPH All India Institute of Hygiene and Public IMD Indian Meteorological Departinent Health IS I Indian Standards Institution (Bureau of APERP Andhra Pradesh Economic Rehabilitation Indian Standards) Project IWS Institute of Water Studies BB Brahmaputra Board MINARS Monitoring of Indian National Aquatic BBMB Bhakra-Beas Management Board Resources System BCM Billion Cubic Meters MOA Ministry of Agriculture CBIP Central Board for Irrigation and Power MOEF Ministry of Environment and Forests CEA Central Electricity Authority MORAE Ministry of Rural Areas and Employment CETP Common Effluent Treatment Plant MOU Memorandum of Understanding CGWB Central Ground Water Board MOUAE Ministry of Urban Affairs and Employment CMC Calcutta Municipal Corporation MOWR Ministry of Water Resources CMDA Calcutta Metropolitan Development Authority NABARD National Bank for Agricultura~land Rural CMWSA Calcutta Metropolitan Water Supply and Development Sewerage Authority NGO Non-Governmental Organization CPCB Central Pollution Control Board NIH National Institute of Hydrology CTU Cen$ral Training Unit NRCP National River Conservation !Plan cwc Central Water Commission NWB National Water Board CWPRS Central Water and Power Research Station NWDA National Water Development Agency DALY s Disability Adjusted Life Years NWP National Water Policy DOWR Department of Water Resources NWRC National Water Resources Council DVC Damodar Valley Corporation NWRDC National Water Resources Data Center EAP Environment Action Program 0&M Operations and Maintenance EIA Environmental Impact Assessment OMVS Organisation pour la Mise en Valeur du EMOS Empresa Metropolitana de Obras Sanitarias Fleuve Senegal (RBO for River Senegal) (Santiago Water Agency, Chile) PWD Public Works Department EMP Environmental Management Plan RBO River Basin Organization GAMS General Algebraic Modeling System RGNDWM Rajiv Gandhi National Drinking Water GEMS Global Environmental Monitoring System Mission GFCB Ganga Flood Control Board RWSS Rural Water Supply and Sanitation GFCC Ganga Flood Control Commission SAIFT Systems and Agricultural Iml~rovementand GIs Geographic Information System Farmer Turnover GO1 Government of India SEWA Self Employed Women's Association HDUG Hydrologic Data Users Groups SIFT Systems Improvement and Farmer Turnover IHH Institute of Hydraulics and Hydrology SPARC Slum and Pavement Dwellers' Association IIT Indian Institute of Technology Resource Center ILGUS Institute of Local Government and Urban SPCB State Pollution Control Board Studies SWPO State Water Planning Organization SWRB State Water Resources Board Currency Equivalents and Units SWRDC State Water Resources Data Center THANNI The Holistic Analysis of Natural Network Currency Unit = Rupee (Rs.) Information US$ 1.00 = Rs. 35.50 (1997) UFW Unaccounted for Water UNDP United Nations Development Programme Weights and Measures UWSS Urban Water Supply and Sanitation UYRB Upper Yamuna River Board 1 hectare = 2.47 Acres WALMI Water and Land Management Institute The metric system is used throughout the report. WHO World Health Organization WP&P Water Planning and Project Wing (CWC) Fiscal Year WPC Water Pricing Committee WRCP Water Resources Consolidation Project Government of India WRRITP Water Resources Research Innovation and April 1 to March 31 Training Project WRM Water Resources Management WA Water Users Association

- Vice President Mieko Nishimizu Country Director Edwin R. Lim Sector Managers Ridwan AlilMichael Baxter Task Managers Keith OblitasIChristina Wood Acknowledgments

his report has been prepared jointly by the World Bank and Government (of India (GOI) under the task management of Keith Oblitas, Christina Wood and S. Rajagopal fiom the TWorld Bank, and Arun Kurnar (Secretary, MOWR) and Z. Hasan (Chairman, CWC) from GOI. Principal report writers were Keith Oblitas and Halla Qaddumi, in association with S. Rajagopal, Christina Wood and the GO1 Steering Group led by the Ministry of Mhter Resources (MOWR) and the Central Water Commission (CWC). The main fact-finding mission was led by S. Rajagopal (FAOCP/World Bank) and comprised Stephano Burchi, M. S. Reddy, Katia Medeiros, E. V. Jagannathan, Ariel Dinar, J. M. Dave, Maria Saleth, Chhat~apadhiSingh and N. R. Ilarshadeep. A background report prepared by the GOI/CWC Sub-committee on Inter-Sectoral Water Planning and Allocation, under the chairmanship of Z. Hasan, served as a key source of information and data. Numerous individuals from India, the World Bank, FAOCP and other agencies have contributed to the report and in particular to the annexed case studies, where attribution is given.

A first draft of this report was issued in 1997 and was Principal reviewers from the World BankIFAOCP followed by a series of workshops and reviews to discuss were: M. Baxter, R. Ali, S. Barghlouti, F. Humplick, J. the report and progressively enhance the analysis and rec- Briscoe, H. Plusquellec, A. Duda, R. Robelus, S. Salman, ommendations and their practical applicability in India. A. Subramanian, B. Blarel, L. Travers, 0. Myint, D. The principal disciission fora were the "Brainstorming Ses- Umali-Deininger, M. Imran, G. Spencer, I. Fraile, S. sion" held in the World Bank, Delhi office on November Balasubramanian, J. Olivares, R. Dubois, A. Kandiah 18, 1997, jointly chaired by the World Bank and GOI; three and B. Appelgren. Principal reviewers from GO1 com- consultation meetings sponsored by MOWR at Baroda, prised: B. N. Navalawala, Krishna Singh, P. Mohandas, Ooty and Delhi in January 1998; the World Bank review R. S. Pathak, I). K. Chaddha, B. S. Minhas and S. R. meeting held in Washington on March 10, 1998, including Shukla. Lists of the participants in the National Work- teleconference link-ups with other World Bank offices and shop and the Brainstorming Session are provided in MOWR; and, finally, the "National Workshop on Improv- Annexes 8 and 9. ing Inter-Sectoral Water Allocation, Planning and Manage- This report is one of five reports under the "India ment" held in Mussoorie on May 12-13,1998 and chaired - Water Resources Management (WRM) Sector Re- by Arun Kumar, Secretary, MOWR. The World Bank and view,'' task managed by K. Oblitas and C. Wood. The MOWRICWC gratefully acknowledge the invaluable con- other four reports cover: (i) the irrigation sector, (ii) the tributions made by the many government and non-gov- rural water supply and sanitation sector, (iii) the urban ernment participants from different sectors in these various water supply and sanitation sectolr, and (iv) groundwa- workshops. Following the National Workshop, this report ter regulation and management. An overview report, has been further revised to reflect the recommendations weaving together all five subject areas in an integrated emerging from the workshop. framework has also been prepared.

The World Bank 1818 H Street N.W. (202)477-1 234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 201433 Cable Address: JNTBAFRAD INlERNATlONAL DEVELOPMENT ASSOC~ATIOM U.S.A. Cable Address: INDWAS

PREFA CE INDIA - Water Resources Management Sector Review Inter-Sectoral WaferAllocation, Plan fling and iwanagement Report

The manner in which countries manage their water resources is well recc~gnizedas increasingly crucial for overall economic deveiopment, social well-being and environmental sustainability. In India's case it is particularly so. ??le acceleration in India's economic growth is putting strain on its water resources, and inducing rapid changes in demand, particuiarly for the burgeoning urban population and ihe needs of high industrial growth. India, as in other rapidly growing count_ries. is facing in~creasing water constraints and competition bet wee^? sectors, and its fumre will substantially depend on how it faces these challenges. They are not easy, zed es this report ,bundantly illustrates, the challenge for India is particularly large. As -?ic:lls;ed in the World Bank Policy Paper on Water Resourc~s:vlanag~x~,;~~ ( 1 YY~), " new challenges call for a new approach", md ihe issues icqulre a comprehensive framework and multi-sectoral persper+i;cs for their resolution.

This report represents a tern-work effort be-ween the Government of India and the World Bank. Its preparation has iinvolved extensive consultation in India and the Bank, culminating in three regional workshops and a fifial National Workshop. chaired by the Ministry of Water Resources and comprising broad representation from the states of India, different sectoral users and both government and no^-government. This is a remarkable achievement and itseif attests to the seriousness of India's intentions and the quality of debate underway in India and 'q the Bank.

The reform agenda discussed in the report is vigorous yet practical. It provides a comprehensive approach, both highlighting the short-term actions to commence the change process and the longer tern vision for ,Wher reform. 1am pleased that the environment has been strongly integrated in all the report's recommendations atnd that issues affecting women and povex-ty groups, often neglected by water professionals in the past, are emphasized. The report presents an excellent opportunity for India to tackle its water sector constraints. I expect it will provide a key reference document for many years to come, benefiting not only India but also other coulatries grappling with these important issues.

Mieko Nishimizu V Vice President South Asia Region

'-"b ADDITIONAL SECRETARY -L---I GOVERNMENT OF INDIA 1 MINISTRY OF WATER RESOURCES ARUN KUMAR SHRAM SHAKTl BHAWAN Seawtary in charge Tel. No. 3710619 New Delhi 199

PREFACE

For last several decades, the world as a whole has been csxpressing concern over exhaustible resources. In more recent years environme~ntalissues have reinforced these concerns. Fresh water is a commodity which encampasses both the aspects of these concerns being the most vital resourca for the very existence of life. In the five decades since Independence, lndia has witnessed phenomenal development of water resources and has successfully met ttie demand of water for diverse uses in the country. As a result, the country has achieved self suRic4ency in foodgrains besides providing assured drinking water throughout the country except for a few problem areas. Investments made during the last fifty ymin water related infrastructure in the country have resulted in rapid expansion of urban, energy and industrial sectors. Safe drinking water is now available to about 85% of India's urban and rural population. However, due to rapid growth of population, urbanisation and industrialisation, India's finite water resourns are naw getting stressed with declining per capita availability and deteriorating quality. This, in turn, is resuking in competing demands for diverse uses of water. iniler-sectoral allocations, planning and management of increasing fragile water resources has thus emerged as a major challenge before the nation. If India's'as~~irationsfor continued economic growth and improved social and environmental conditions are to be met and sustained, fundamental Mwistic and urgent solutions will have to be found to meet this challenge.

While water has multifarious uses, the most important in terms of the quantities required and their essentiality are irrigation and drinking water supply including sanitation. The dimensions involved in the urban demand for drinking, sanwon, which includes the industrial purposes and those in the wral demand for water supply being at considerable variance, the subject of drinking water supply was discussed in two separate Workshops. Ground water development and management presents special challenges and formed a subject by itself in view of its cross-sectoral uses for drinking, as well as for industrial and irrigatic~npurposes both in the rural and the urban areas.

The present report represents the culmination of a joint exercise undertaken by the World Bank and the Ministry of Water Resources, Government of lndia in reviewing the water resourcss sector with a view to evolvi~ngpolicies, strategies and Actinn Plan for its future development and management.

xiii The workshop to finalise the report extensively discussed the existing practices in the country and shortmmings which are likely to affect the future availability and the stress that will result if no remedial measures are taken. Practices considered effective in ather parts of the world have been presented as possible alternatives for czwf~sdl examination end their adoption keeping the country's socio-emnomic ba&ground in view.

Valuable contributions were made in this exercise by the Union Ministries of Agriculture, Environment and Forests, Industry, Power, Rural Areas and Employment, Surface Transport and Urban Affairs and Employment, besides, the Ministry of Water Resources and its organisations, Planning Commission and concerned Departments of the States and Union Territories. 1 would like to thank the Government's Working Group, the World Bank Team, and officials of the Ministry of Water Resources, ather concerned Ministries and Dep'artments of the Union Government and the States and Union Territories for helping the Ministry of Water Resources in carrying out such an exercise and preparing proposals for action.

The report highlights, inter alia, the need for comprehensive, integrated, multi-disciplinary and multi-sedoral approach for development and management of finite and increasingly fragile water resources.

Secondly, it emphasised the weed fcr planning, development and management on the basis of hydr~iogialunits such as river basin and subbasin.

The need for involving stakeholders through conscious devolution of power by the Governments, which plays a predominant role at present is the next key remmmendabion. A paradigm shift in fav~urof participatory approach is recognised as the need of the ROMP.

For achieving the above mentioned objectives appropriate institutions need to be established. This will include the institutions at river basin level, in keeping with the recommendation of planning and management ori a hydrological unit, enabling policy invoiyement including appropriate legislation and regulations which are necessary corollaries of this approach. Centre has to play an important mle and should be, more than that of a friend, philosopher and guide. To make it more effective, use of necessary economic and other instruments has been suggested.

Need for technological upgradatian, data base analysis, public information systems and exchange of data are among the other highlights. In this process the importance of environmental concern has not been lost sight of and these have been given their due place of pride.

xiv While aeation of facilities has often been addressed adequately, lack of dependable and sustainable services, which include timely maintenance either for want of funds or for lad< of due attention, have been duly emphasised. Need for providing funds for the purpose has been suitably incorporated in the report.

That we have no options but recognise the emergent problems in the entire team and take decisive and innovative steps urgently to ensure th problems do not ovenvhelrn us, can perhaps bear repetition.

Executive Summary

The Need for Better Management

ndia faces an increasingly urgent situation; its finite and fragile water resources are stressed and depleting while different sectoral demands are growing rapidly. If India's aspirations Ifor continued economic growth and improved social and environmental conditions are to be met, fundamental changes in how water is allocated, planned and managed must occur.

This situation has developed incrementally, but is nev- of rural drinking water is a fundamental societal need. Con- ertheless dramatic. At Independence, population was less flict between sectoral uses - domestic needs in rural and that 400 million and per capita water availability over 5000 urban areas, agriculture, industry, energy, ecological, flood cubic meters per year (m3/yr). Today, fifty years later, popu- control, navigation, fisheries, recreation, ceremonial and lation has grown to 945 million and per capita water avail- religious- is already a serious problem. ability has fallen to hardly more than 2000 m3/yr. The The past management of the country's water resources situation is already critical at river basin and local level;: has been unable to cope effectively with these issues. Wa- six of India's twenty major river basins have less than 1000 ter has been developed rather than managed. Comprehen- m3/yr and environmental problems and localized shortages sive management -on a river basin basis, multi-sectorally, are endemic in all basins. conjunctively for both surface and groundwater, incorpo- Environmental problems include water quality degra- rating both quality and quantity aspec.ts of water - is dation from agro-chemicals, industrial and domestic pol- largely lacking. Cooperation between states sharing river lution, groundwater depletion, waterlogging, soil basins has been limited and sometimes highly contentious. salinization, siltation, degradation of wetlands, ecosystem Management of water has been through a top-down ap- impacts, and various health-related problems. Environmen- proach and has become virtually a government monopoly. tal and health-related issues are less evident than the more A "supply-side" approach - exploiting additional water visible quantity-related problems, but are critically impor- resources - has been predominantly used. This approach tant to social welfare and resource sustainability. has resulted in major economic, social and environmental The current inter-sectoral and inter-state constraints costs. In recent years, however, there has been realization will build rapidly in the coming years. Population is ex- regarding the need to address these problems. pected to grow by some 40 to 50 percent before eventual India has major achievements in the water sector to stabilization, and will be combined with major changes in its credit. A major spurt in development of water infrastruc- the composition of demand resulting from rising incomes, ture since Independence allowed India to harness much of urbanization and rapid industrialization. Industrial needs the country's water resources. These investments have made will be a high economic priority; agriculture, with two- a vital contribution to India's food security, taking India thirds of production dependent on irrigation and account- from a situation of frequent famines and social vulnerabil- ing for 83 percent of consumptive water use, continues to ity in the 1950s and 1960s to a self-sufficient and even ex- remain crucially dependent on water; and the availability porting country. 'Water infrastructure investments have also enabled the rapid expansion of the urban and industrial regulations; (iii) institutions; (iv) economic incentives; sectors and the increased availability of safe drinking wa- (v) technology; and (vi) data, analysis and public infor- ter in rural villages. Further, as described in this report, a mation. Detailed recommendations in each of these areas variety of policies, legislation and institutional initiatives forms the main subject matter of this report. Within this have been taken by India to better manage its water re- framework, several overarching attention areas have also sources as resource constraints have become increasingly emerged. First, a public-private sector partnership is re- apparent. In comparison to most other developing coun- quired. The present almost exclusive domain of the public tries, it could be said that India's water resources manage- sector needs to broaden out to include the private sector ment initiatives are more comprehensive than generally - civil society groupings, academics, NGOs, industry, etc. found elsewhere. The problem, however, is that almost in - in decision-making and implementation. Second, de- every country there is need for significant improvement. centralization, stakeholder participation, and involve- India's needs are particularly severe because of its rapidly ment of grassroots organizations is required. Ce~tralto developing water constraints, environmental problems, these will be the creation of public awareness, transparency huge population, regional inequalities in water availabil- of information and two-way flows of information, and ity, the federal administrative structure, and rapid demo- maximal participation in decision-making and implemen- graphic and economic growth. In such circumstances, while tation by civil society and the various stakeholders involved. much has been achieved, particularly on the development Third, the traditional "supply-side" oriented approaches of front, a great deal still remains to be achieved as regards the past, where response to problems has been sought water resources management. India can, and must, allocate, through primary reliance on exploiting additional re- plan and manage its water resources better. sources, must be balanced by "demand management": The need to better manage the nation's water resources improving the productivity of existing resources through is well recognized by India's planners and policy-makers. the combined use of technology, incentives, public aware- This report, prepared jointly by the Indian Government and ness and other actions. the World Bank and benefiting from'a "Brainstorming Ses- A key need is to develop a new "enabling environ- sion," three regional consultation meetings and a "National ment" that can influence the myriad of actors involved: Workshop" chaired by the Ministry of Water Resources each and every household, private businesses, and the vari- (MOWR) and with multi-sectoral representation from ous social, administrative and political aggregations (vil- across India (both government and non-government sec- lages, socio-economic strata, municipalities, districts and tors), attests to the actions and broader thinking now un- states). This will require establishing an "incentive frame- derway. The need now is to translate these reflections and work" that influences these actors. Direct impact will be initiatives into a more comprehensive action agenda. felt through financial incentives or regulatory actions actually enforced. These translate the policy, legislation, in- The Reform Agenda stitutional and technical capabilities into impact at the level of the individual. The incentive framework must also pro- There are two broad issues that need addressing. First, solu- vide the right directions for the higher organizational ag- tions must be found for competing inter-sectoral de- gregates: state governments and their various water-related mands. Mechanisms must be developed for allocating scarce departments, river basin organizations, the different Cen- water resources between competing uses - irrigation, rap- tral Government agencies, and grassroots organizations. For idly expanding domestic and industrial needs, hydropower, these, policies, legislation, institutional structures and environmental requirements, etc. Second, water must be interlinkages, approval processes, capacity building, infor- managed on a river basin basis, including between states mation, and financial incentives and leverages, also come sharing the same river basin. into play. The findings of this report are that a comprehensive The Action Plan discussed below has taken into ac- approach is required. A combination of mechanisms need count that, while initiatives are underway at the center to be used in the fields of: (i) policy; (ii) legislation and and in some states, for most states and river basins, the country is starting largely from scratch as regards water agencies eventually restricted to policy,, planning and resources management. The change process must recog- regulatory activities (e.g., the U.K. and, evolving in a nize the realities from which change must commence. number of other countries). India's long-term sights Many of the recommendations are, thus, start-up in na- must, necessarily, be far-reaching. The eventual goal ture, comprising primarily the short and medium-term must be the best, rather than marginal change. This will agenda. These actions should not, however, be consid- be essential, and has to be achieved as rapidly as pos- ered the end of the line. Policy-makers and implementors sible if the nation is to achieve its social and economic should keep in their sights the best examples of success objectives. The Action Plan summarized below will en- worldwide, a number of which are discussed in the main able an energetic start in these direction::. text and ib the annexed boxes. As the reform program is implemented, a long-term Action Plan vision needs to be in constant focus. As soon as possible, management of water resources in India will have All reform areas - (i) policy, (ii) legislation and regulations, to be on a river basin basis, including a sophisticated (iii) institutions, (iv) economic incentives, (v) technology, management apparatus, incorporating dl sectoral uses and (vi) data, analysis and public information -require at- and stakeholders and crossing state boundaries. The tention, and mutually support each other. report's recommendations start this process, but re- Improving the Policy Framework India's National ported success stories such as the Murray-Darling Ba- Water Policy (NWP) (GOI, 1987) provides a broadly fa- sin in Australia, including major emphasis on public vorable environment from which to begin. It is in need of awareness and participation, illuminate the possible fur- updating, but the principal problem is that it has not been ther actions. The development of water policies, legisla- translated into action. As per Entry 56 of List I of the Con- tion and regulatory structures in India should look to stitution, development and management of water is pri- the world's best-practices, with appropriate adaptations marily a "State Subject," yet minimal action has been taken for India's circumstances, even if a phased approach is at state levels. Very few states have formulated a State Wa- required to get there. Pricing and other market alloca- ter Policy, and coherent agendas for implPovingwater re- tion mechanisms need to evolve as quickly as possible sources management are similarly absent. ]\Jot surprisingly, to meaningful instruments guiding resource allocation the implementation mechanisms for managing water are and usage practices. Appropriate lessons in this regard also absent or rudimentary in most states. It is recom- can be drawn from the tariff structures used by the mended that each state prepare two guiding documents: world's best-practice water utilities (e.g., Singapore, (i) a State Water Policy responsive to its needs and in line EMOS in Santiago, Chile, and initiatives underway in with the principles of the NWP, and (ii) am Action Agenda Buenos Aires, Argentina), water marketing arrangements outlining the specific actions intended. The Central Gov- found in the Western U.S.A. and Chile, and pricing as ernment should help guide the policy and reform agendas an environmental management mechanism in the Neth- and update the NWP. erlands. A major drive is required to improve technol- Strengthening the Legislative and Regulatory ogy for increased productivity of water in all sectors, Framework The major gap is at state levels where the en- with lessons for agriculture from countries such as Is- abling legislative and regulatory framework for inter- rael, Jordan and California. Hydrological data and mod- sectoral water allocation and management is largely absent. eling capabilities must progress to the levels found in The areas where legislation needs review alnd revision and, other advanced countries in the world. The eventual in- in some areas, creation are: stitutional structures in India will be a major transfor- Amending legislation to enable: creation of new wa- mation from the present and even the initial ter allocation and sharing institutiabns;strengthened restructurings in the reform process: for instance, evo- regulatory powers, pollution control measures, lution to commercialized water services as found in some establishment of multi-sectoral water stakeholder countries (e.g., U.S.A., U.K. and Chile); and government associations, participation of privaie sector and civil society, and new forms of water tariffs, including river basin organizations for basins or portions of volumetric charging; basins within the state. Establishing groundwater legislation and a regula- Establishing Grassroots Institutions. Grassroots tory framework for groundwater management; institutions to implement local-level resource man- Assessing options for defining and making transfer- agement initiatives need to be fostered. Many water able surface and groundwater rights. resources management issues - e.g., conflicts be- At central and inter-state levels, there is a need to ad- tween rural water supply needs and agricultural wa- just two existing Acts to enable the center to play a stron- ter pumping; or a local industry polluting village ger catalyzing role in the creation of river basin water bodies - have their origin and prospects for organizations (RBOs) and the resolution of inter-state wa- resolution at such micro levels. ter disputes. The first priority should be to amend the Creating Inter-State River Basin Organizations River Boards Act. The Act should be amended to give (RBOs). For all inter-state basins, riparian states powers to the Central Government to enable establish- should seek to form RBOs as a matter of priority, ment of RBOs. RBOs could take many different forms,. and should be strongly encouraged, including pro- ranging from fairly informal structures facilitating dia- vision of incentives, by the center. The report pro- logue and planning between states, to begin with, to more vides guidance on the wide range of models that formal institutions with executive powers, possibly evolv- could be followed, both internationally and from ing to these over time. A second need is to adjust the In- success stories in India. ter-State Water Disputes Act to substantially streamline Strengthening Central Institutions. The Central Tribunal Award procedures within a mandatory time- Government apparatus needs to be more sharply fo- frame. The adjustments to the Act should include provi- cused to enable it to play a more pro-active role and sions that: (i) the center can establish a Tribunal one year to better integrate the activities of the different cen- after receipt of a grievance from a riparian state if agree- tral agencies connected with water. The National ment is not reached between concerned riparian states, Water Resources Council (NWRC) and National and (ii) following a Tribunal decision, a mandatory Water Board (NWB) need to be strengthened with mechanism for effective implementation and monitoring an operational level Technical Committee and a per- of the Award is established. nianent multi-sectoral professional Secretariat or Establishing Government and Non-Government National Water Planning Organization (NWPO). Institutions. Institutional mechanisms need to be created Also, MOWR and its agencies (e.g., CWC, CGWB or strengthened, particularly at state, grassroots and ba- and NWDA) should establish mechanisms for closer sin levels: interaction. Creating State-level Institutions. The most criti- Adjusting Central Government's Role. The center's cal gap is at state levels where, apart from a handful role should include fostering public participation of states, there is a complete absence of institutions and change through information and public aware- to plan, allocate and manage water on a multi- ness, and capacity building for local and state-level sectoral basis and along river basin lines. The needs institutions. For state governments it would provide are: (i) establishing a multi-sectoral state-level insti- financial incentives, appropriate instruments and tution comprised of a State Water Resources Board facilitation of state initiatives and capacity building (SWRB) and its technical support unit -a State Wa- through: (i) monitoring of state water resources re- ter Planning Organization (SWPO) - including form agendas as part of Plan approval processes dur- provisions for environmental capability; (ii) re-or- ing consideration of water investment proposals; (ii) ganizing the state bulk water supply agency (usually encouraging inter-state cooperation through usage the Irrigation Department) along river basin lines of a River Basin Development Fund for multi-state and adjusting its mandate to include a broader role basin developments where a RBO and basin plan in water resources management; and (iii) creating exist; and (iii) providing technical assistance support and related financing of consultancies, training and compensated water trades (between, for instance, equipment to states for their reform and capacity agricultural water users associations and industries building programs. or municipalities); and (iii) piloting,,with appropri- Building Non-Governmental Participation. ate social and environmental safeguards, voluntary This orientation should underlie all initiatives. water transactions through formal water markets. Initially, given government's present monopoly Inter-State. Encourage multi-component (includ- role, the lead in this process will have to come sub- ing non-water investments) basin development stantially from government. Civil society, plans for inter-state river basins enabling mutually academia, NGOs, industrialists and water user beneficial gains. groups should be brought into decision-making Technological Improvements. All water sectors have and institutions as quickly as possible. Particular substantial room for improving the productivity of water attention should be given to fostering involvement use. A major drive should be launched in all sectors to: (i) of traditionally marginalized groups which have increase water use efficiency; (ii) improvc: productivity of a large stake in water resources issues, such as end use; (iii) employ water conservation, water treatment women and the poor. As non-governmental par- and water recycling and reuse technologies; and (iv) en- ticipation is developed through public awareness able transfer and reuse between sectors. and capacity building, and additional responsibili- Improving Modeling, Data, Performance and Envi- ties are shouldered, the center and state institu- ronmental Monitoring, and Public Infoirmation. Signifi- tions can modify their role accordingly. cant improvement is also required in data and analysis, Introducing Economic Incentives. Major change is necessary to support all of the above actions. The main required in the system of prices and other economic in- needs are to: (i) prepare river basin plans, state water plans centives affecting water use and allocation. Although price incorporating river basin or sub-river basin plans within instruments exist, the levels of existing incentives and the the state, and environmental management plans; (ii) form in which they are applied result in minimal, and in strengthen hydrological measurement networks and insti- some cases negative, impact. There is urgent need to bridge tutions; (iii) establish performance and environmental this "incentive gap" through: monitoring systems for water provision services in all sec- Intra-Sectoral. (i) establish meaningful water prices tors; (iv) involve stakeholders in all water planning and al- (usually requiring significant increases) for irriga- location decision-making; and (v) launch a major public tion, urban and rural water supply and sanitation, information program to educate and enlist the support of at least reflecting the costs of service provision and the general public for the reform agenda. charged volumetrically; (ii) increase agricultural power tariffs and charge volumetrically to establish Getting Started incentives for groundwater and power conservation; (iii) tackle distortions in agricultural commodity and The above Action Plan is presented in full in Matrix 2 (Chap- input prices and domestic marketing policies cur- ter 5), including state and central-level responsibilities and rently encouraging excessive water use and regional a suggested time-frame. Particularly at state levels, there will imbalances; (iv) establish pollution taxes and other be need to take into account the specific: circumstances of incentives to encourage adoption of water conser- the state concerned. No uniform prescription or blueprint vation, treatment, reuse and pollution control prac- will be appropriate for all circumstances. The key need is to tices; and (v) establish, where required, targeted make a start. A strategic, but also opportunistic, approach measures to protect poverty groups. will often be needed, tackling first those issues considered Inter-Sectoral. Develop economically-based water most important and susceptible to change. Some actions, re-allocation systems by: (i) introducing economic however, are particularly critical at the beginning, as they analysis and compensation packages in administra- provide a foundation for other subsequent steps (refer Dia- tive re-allocations; (ii) developing the brokering of gram 2 in Chapter 5 -"Getting Started"). State-level Start-up Actions. The first need in each Central-level Start-up Actions. Actions in the short state will be to set out a policy framework and Action term should be to help create awareness of the issues Agenda. To this effect, an Interim Water Resources Task amongst civil society and government. At the level of the Team should be established quickly to assess the situation states, it would provide technical assistance and create fi- in the state and to draft two guiding documents establish- nancial incentives and levers encouraging change. At the ing the agenda for change: the State Water Policy and the central level, it would make targeted adjustments in the in- Action Agenda. These documents should be reviewed ex- stitutional structure and legislation. To get these actions tensively within the state, including consultation with civil underway, a cross-ministerial Interim Water Resources Task society and major constituencies. The following actions will Team should be established to prepare a short-term Action be likely short-term needs: Agenda for Central Government's role. The following ac- Establish Institutional Capability. Forming a tions will need to be at the forefront: SWRB and its SWPO will be required to steer and Public Awareness. A vigorous program to this ef- implement further actions. fect should be launched, including use of media, lit- Create Public Awareness. A multi-media campaign erature, workshops and study tours. should be launched to create awareness and under- Guidance and Capacity Building. This will require standing of the changes required. multi-disciplinary capabilities, and an advisory role Review and Establish Economic Incentives and ranging from the general and conceptual to highly Mechanisms. A review should be made of existing specific advisory capability to help states devise and incentives for water use and conservation, focusing implement specific actions. The center should also on areas particularly in need of change and wheie help train and build capacity of local-level institu- change can be introduced quickly. tions. Initial Review of State Water Legislation. A review Funding for State Initiatives. A funding provision should be undertaken to identify key areas requir- should be provided for ready access by states to fi- ing change or enactment of new legislation, for ex- nance initiatives at the state or basin level. ample on groundwater protection and management. Applying Approvals Leverage. Develop and apply Launch Initiatives for Inter-State Basins. Pos- in the Plan-approvals process a system for monitor- sibilities will vary depending on the present de- ing state progress in water resources management gree of cooperation between the concerned reform. riparian states. In all cases, some steps towards River Basin Development Funding. Provide cen- further cooperation are possible and should be trally-sponsored-scheme Plan funding for multi- identified and undertaken. state river basin development where RBOs and basin Introduce Technological Improvements. A quick plans exist. review should be undertaken in all sectors of oppor- Reviewing Existing Legislation and Procedures. tunities for enhancing productivity and water use Amendments of the River Boards Act and the Inter- efficiency. State Water Disputes Act should be a priority. Improve Modeling, Data, Performance and En- Strengthening Central Institutions. The short- vironmental Monitoring, and Public Informa- term need is to establish or strengthen capacity to tion. Identify the state-specific actions needed and handle the areas above, including making the NWRC implement. more operational. The Need for Better Managing India's Water Resources

his report' addresses an increasingly urgent situation in India: stressed and depleting water resources faced by rapidly growing demand. This situation has developed incre- Tmentally, but is nevertheless dramatic in its impact. As shown in Figure 1, Intdia's population at Independence was less than 400 million. Now, fifty years later, India's population stands at some 945 million and is projected to grow to some 1.4 billion by year 2025.' Water availability per capita was over 5000 cubic meters (m3) per annum in 1950. It now stands at hardly more than 2000 m3 per capita, or only 40 percent of water availability at Independence. By year 2025, per capita availability is projected at only 1500 m3 per annum or 30 percent of availability levels at Independen~e.~

Such aggregate indicators only partly illustrate the de- localities of most other states in India, the. dominant issue velopment of water constraints in India. Annual averages do is no longer how to (developwater resource:$,but rather how not reflect the.extreme temporal variability in rainfall (dry to manage them within already full uti1in:ation levels and versus monsoon seasons) or the inequalities between basins to allocate such resources between completing uses. Con- and regions in water resources endowments. While resources flicts between different sectoral and regional uses are now may be plentiful in such areas as Eastern and Northeastern wide-spread, as illustrated in Box 1. India, in other areas rainfall is unreliable and in some areas Under its current water management practices, India acutely short. Utilizable water is further reduced by difficul- is facing serious water constraints. Yet India is not really ties in capturing run-off and problems of water pollution. water scarce. The present per capita availability of water in Substantially exacerbating the situation is the concentrated India of approximately 2200 m3 per annurn: actually com- nature of human settlement and economic growth. There are pares quite favorably with a number of ot'her countries. As now few states or river basins in India where water availabil- shown in Box A1.2, per capita availability in many coun- ity or quality issues are not present. tries throughout the world is far less than in India. Yet, a Examples of water constraints in India abound. In number of these countries (e.g., Jordan and Israel) have by states such as Punjab, Haryana, and Tamil Nadu and in large and large managed to harness their water resources to

'This report represents the combined outcome of a joint work program between the Government of India (GOI) and the World Bank. It is one of five reports under theUlndia -Water Resources Management (WRM) Sector Review."The other four reports cover: (i) the irrigation sector; (ii) the rural water supply and sanitation sector; (iii) the urban water supply and sanitation sector; and (iv) groundwater regulation and management. A consolidated report, weaving together all five subject areas in an integrated framework, has also been prepared. These reports were first issued in 1998, and have subsequently been published by the World Bank and Allied Publishers in 1999. 'World Bank, 1997a and 1998g. The water availability index does not incorporate factors, such as water quality, which affect effective water supply, e.g. surface water pollution in India has been found to be linearly related to GDP growth which increased threefold between 1963-1990 alone (Brandon and Hornmann, 1995). It is, therefore, reasonable Go assume that the index representsan upper bound on per capita water availability. 'World Resources Institute, 1997. Figure I. Population and Water AvailabilityTrends in India

1.8 6000 - 1.6 5000 5 .-.-- 1.4 m a 1.2 4000 % 9 .- s cI nz 0 3000 6 '3 0.8 3 - a>L m 0.6 2000 ;Q L 0.4 z I000 0.2 4 0 0 1955 1990 2025 2050

Year

Sources: Population Adon International, 1995;World Bank 1997.

support intensive agriculture, to fulfill drinking water and more comprehensive than generally found elsewhere. The sanitation needs of both rural and urban populations, and problem, however, is that almost in every country there to satisfy the needs of industry. The handling of environ- is a need for significant improvement. India's needs are mental issues has also been managed more successfully. particularly severe because of its rapidly developing wa- India has major achievements in the water sector to ter constraints, environmental problems, huge population, its credit. Significant infrastructure was created in the 19th regional inequalities in water availability, the federal ad- century, and even much earlier, and is still serviceable. ministrative structure, and rapid demographic and eco- There has been a major spurt in development of water in- nomic growth. In such circumstances, while much has frastructure since Independence, allowing India to har- been achieved, particularly on the development front, a ness much of the country's water resources. These great deal still remains to be achieved as regards water re- investments have made a vital contribution to India's food sources management. India can, and must, allocate, plan security, taking India from a situation of frequent fam- and manage its water resources better.5 ines and social vulnerability in the 1950s and 1960s to a The need to better manage the nation's water resources self-sufficient and even exporting country. Water infra- is well recognized by India's planners and policy-makers, structure investments have also enabled the rapid expan- and in particular in the 1987 National Water Policy. This sion of the urban and industrial sectors and the increased recognition has, however, not been effectively translated availability of safe drinking water in rural villages. Fur- into action. India's policy-makers have, thus, called for ther, as described in this report, a variety of policies, leg- more comprehensive measures, to which this report re- islation and institutional initiatives have been taken by sponds. This report is the culmination of a joint work pro- India to better manage its water resources as resource con- gram between the Government of India (GOI) and the straints have become increasingly apparent. In compari- World Bank and incorporates the comments and recom- son to most other developing countries, it could be said mendations from a series of workshops chaired by the Min- that India's water resources management initiatives are istry of Water Resources (MOWR) and attended by state

Refer to "Water Resources Management," World Bank Policy Paper (World Bank, 1993b) for general overview and guidance on water resources management issues and policy. and Central Government representatives, NGOs and aca- The Issues Framework demics: a "Brainstorming Session" held in Delhi on Novem- ber 18,1997; three consultation meetings sponsored by From this work program and its various discussion fora, it MOWR at Baroda, Ooty and Delhi in January 1998; and has been found that two broad issue areas need addressing: the "National Workshop for Improving Inter-Sectoral Wa- Finding solutions for competing inter-sectoral de- ter Allocation, Planning and Management" held in mands. Mechanisms must be developed for allocat- Mussoorie on May 12-13, 1998. It also includes the finding scarce water resources between competing uses - ings of the GOIICentral Water Commission-chaired Sub- irrigation, rapidly expanding and highly specific do- committee on Inter-Sectoral Water Planning and mestic aind industrial needs, and other uses such as Allocation (GOI, 1997a). hydropwwer, navigation, etc.

Box I. Examples of Emerging Water Issues and Imbalances in India

The decades-old disputes between states have still not been resolved. Even where Tribunals have proposed Awards, ~mple- mentation is proving difficult. In some basins, the riparian states are investing massively and disjointedly in new construction simply to lay claim on future utilizations. Meanwhile, more pressing needs, such as maintenance and modernization of existing systems, are neglected. Chennai (formerly Madras) is regarded as acutely water short, and is clearly so if considered from the perspective of existing per capita consumption. Gross water availability (i.e., not including system losses that are at least 50 percent) is 440 million liters per day,for a population of approximately 4.5 rnillion.Water is now being transported to CIhennai from another bas~n,the Krishna, and consideration has been given to inter-basin transfers from even further afield.lfet, immediately adjacent to Chennai are large water aquifers from which farmers pump groundwater, with electricity provided free of charge, to intensively water two or more crops of paddy per annum. * Delhi's water needs are increasingly encroaching upon agricultural consumption, but without formal mechanisms to achieve this harmoniously. Irrigation efficiency on India's surface irrigation schemes is typically only 30 to 40 percent, and unaccounted for water losses in domestic supply schemes range from 30 to 50 percent. In Jaipur, which obtains nearly all of its water from groundwater, the aquifer is being depleted rap~~dlyand is also being severely polluted due to inadequate sanitation facilities. In Kondenahally village in Kolar Taluk. Karnataka, illustrat~veof many other villages around India, less than five percent of the village households are pumping groundwater to intensively water their agricultural crops.This has dlepleted groundwater levels, resulting in the village drinking water wells successively going dry.Yet the villagers have still not found a grassroots mechanism to sensibly regulate water usage for agriculture and protect the needs of the majority.And the government is still providing power for agricultural pump sets free of charge. In Maharashtra alone, 0.7 million people suffer from water-related illness, out of which almost a thousand die each year. Pollution of drinking water, inadequate maintenance of water delivery systemsand poor sanitation facilities are the principal causes. The lakes of Udaipur are no longer teeming with the Mahaseer fish, otters, crocodiles and migratory birds and flamingos as they once were, due to contamination by industrial and human wastes. For many water sustainability, environmental, or public health water issues, the general public has limited understanding of the nature of the issues and their consequences.The threat of salinization from rising groundwater levels in Northern India. for instance, is not understood by the general population until the water table has reached the root zone, already late for remedial actions. INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

Allocating, planning and managing water on a the status of water resources management found in river basin basis, including between states sharing countries that have successfully dealt with the issues that In- the same river basin. Inter-state mechanisms must dia faces now. Based on these countries' experiences, it will be found for handling geographic disparities in wa- usually be found that change has been a step-wise and evo- ter use and availability between different states shar- lutionary process. Nevertheless, such examples can form ref- ing the same river basins. erence points for India's long-term vision. A number of Both issue areas require addressing not only water quan- international examples are given in this report: successful tity, but also water quality and environmental considerations. river basin organizations and stakeholder participation; In addressing these issues, comprehensive approaches are highly evolved pricing and water allocative mechanisms that required, recognizing river basins as hydrological units and effectively guide resource use and pollution control; and in- the integral nature of surface and groundwater resources. stitutions that have evolved over time to commercial enti- Solutions also need to be found within the realities of India's ties for water service provision, with government roles administrative structures: state boundaries that do not match redefined to functiorls such as planning and regulatory ac- river basin boundaries, and even within states, the very lo- tivities. A number of the report's recommendations repre- cation-specific nature of water allocation issues requiring sent start-up actions towards these goals, but the long-term grassroots participation for their effectiveness. Much can be objectives should be kept in constant sight. learned from already existing examples of successes and in- Several core themes have emerged from the analysis and adequacies both from within India and in other countries. discussions leading to this report. Improving water alloca- The findings of this report, as discussed in the follow- tion, planning and management in India, both between sec- ing chapters, are that the resolution of India's water resources tors and between riparian states, requires first and foremost management problems is not an easy task. In common with a comprehensive approach, using in combination a num- most other countries, water resources management is fraught ber of mechanisms, in the fields of: (i) policy, (ii)legisla - with difficulties. By its nature, water is multi-dimensional. tion and regulations, (iii) institutions, (iv) economic It involves users from different sectors with widely different incentives, (v) tecbnology,and (vi) data, analysis and pub- needs: millions of individual households and firms, each act- lic information. Detailed assessment of what needs to be ing in its own interest in response to the physical and incen- done in each of these areas forms the report's main analyti- tive environment within which it is situated; multi-layered cal framework. Within this framework, however, several levels of social organization and public administration, rang- broad attention areas have also emerged from the analysis. ing from village and societal groupings to local administra- One aspect is that a public-private sector partnership is tions, such as panchayats, and to larger aggregates such as required. The present almost exclusive domain of the pub- blocks, municipalities, districts, states and the nation as a lic sector needs to broaden out to include the private sector whole; government administrations where executive respon- - civil society groupings, academics, NGOs, industry and sibilities for water are typically and perhaps necessarily split other entities such as water users associations -in decision- between many different government departments; and a making and implementation. Second, centralized bureau- question of the respective roles of government, civil society cracy needs to devolve to a more participatory approach: and'the private sector. India's task is made all the more dif- directions emerging from this analysis include greater de- ficult by its enormous population and its federal adminis- grees of decentralization, stakeholder participation and trative structure. The undoubted virtue of democracy, which involvement of grassroots organizations. Third, the tra- is one *of India's blessings, can sometimes make decision- ditional "supply-side" oriented approaches of the past, where making more difficult. Pragmatic and often unique solutions response to problems has been sought through primary re- will need to be found by India. liance on exploiting additional water sources, needs to be bal- As India addresses the changes required, it will be im- anced by much greater emphasis on "demand portant to keep in constant focus and comparative review managementm+finding ways to improve the productivity

An overview review of demand management opportunities, including world-wide eJ ramples, is in Postel (1992). of the existing resources through the combined use of tech- India, the report will assess the needs and options in nology, incentives to encourage conservation and more effi- terms of the intervention areas descrllbed above: (i) poli- cient utilization, public awareness, and other actions.' cies, (ii) legislation and regulation, (iii) institutions, (iv) Also emerging from the analysis is that the change pro- economic incentives, (v) technology, and (vi) data, cess towards better management of water resources can only analysis and public information. Within this framework, partly be directed. An essential need is to establish an en- the other attention areas mentioned above are also dis- abling environment for change within which the myriad cussed. In the following chapter, thle existing water re- actors involved can be influenced. Key to this is the incen- sources issues and constraints are further examined. tive framework For the individual, economic and financial Chapter 3 discusses the intervention mechanisms cur- incentives are particularly important, but they are not the rently in place in India and assesse:s their adequacies. only factors. Regulation based on legislation and institutional Chapter 4 explores the options that are available given capacity to apply such regulation is also required. Policies, India's particular circumstances. In Chapter 5, based on technology, and, above all, institutional structures to imple- the preceding analysis, a Strategy ancl Action Plan is pro- ment all of the above are also required. posed to establish an enabling environment and a pro- Given that the central need is to introduce compre- cess of change to rectify current inadequacies and build hensive measures to handle water resources issues in on existing positive initiatives.

''Demand management" does not preclude also augmenting water supply through harnessing additional sources of water (referred to as "su~~ply-side"solutions). The key point is that the past almost exclusive reliance on supply-side solutions is missing a major opportunity to enhance effective water availability through better management and utilization of existing resources.

The Resource Situation and hmerging lssues

esolving India's water allocation, planning and management issues needs to take account of the current resource situation and the issues that have emerged in recent Rdecades. As discussed in Chapter 1, the issues are cumulative in impact and progressively exacerbated by the narrowing scope for manoeuver. A finite resource base has been subjected to rapid development, primarily for irrigation, over the past few decades. Resources are no longer plentiful and constraints exist in most basins. Meanwhile, water demand has grown rapidly, and particularly rapidly in the case of the non-irrigation sectors. This clhapter reviews the present water availability situation (Section A) and the issues that have developed over time: sectoral water demand trends and emerging inter-sectoral issues (Section B), the development of inter-state water issues (Section C), and the increasingly complex web of environmental issues confronting the sector (Section D). The costs of inadequately managing these issues are discussed in Section E.

A. Water resources assessment Orissa, and the Cauvery delta - where rainfall is typi-

cally greater than 1000 mm. In Western India - Punjab, Rainfall. The average annual rainfall in India is about Haryana, Western Uttar Pradesh, and Rajasthan - and 1170 mm. There is considerable variation in rain both in rainshadow areas of the Deccan plateau, rainfall ranges temporally and spatially. Most rain falls in the monsoon from 300 mm to 800 mm.' season, confined to three or four months in the year, ne- Surface water. India's average annual surface run-off cessitating the creation of large storages for maximum uti- generated by rainfall and snowmelt is estimated to be about lization of the surface run-off. Within any given year, it is 1869 BCM. However, it is estimated. that only about 690 possible to have both situations of drought and of floods BCM or 37 percent of the surface water resources can actu- in the same locality. Regional variations are also extreme, ally be mobilized. This is because: (i) over 90 percent of the ranging from a low value of 100 mm in Western Rajasthan annual flow of the peninsular rivers a~ndover 80 percent of to over 11,000 mm in Meghalaya in Northeastern India. the annual flow of the Himalayan rivers occur over a four- Higher rainfall is found in Eastern and Northeastern In- month period; and (ii) potential to capture such resources dia and some deltaic localities - for instance, Assam, east- is complicated by limited suitable reservoir sites. Water avail- ern parts of Uttar Pradesh, Bihar, West Bengal, Northern ability is highly variable, with the Himalayan rivers being

'Such regional variations have evident impacts for all water users. For instance, in agriculture, in the higher rainfall areas of India, supplernental irrigation has a positive impact on agricultural productivity because of the u~ipredictabilityof and gaps between monsoon showers. In dryer areas, irrigation is essential for achieving high productivity agriculture. semi-perennial due to snow-melt supplies as well as rainfall, Water Resource Availability. India's current and future while most peninsular rivers are dry for about eight months situation can be gauged by the trend in water availability, of the year. Utilizable run-off is very variable. For some riv- already shown in Figure 1. More revealing still is analysis by ers a substantial part of run-off is being or could be utilized. river basin. Occurrence of water availability at about 1000 By contrast the Brahmaputra-Barak, due to its flood flow cubic meters per capita per annum is a commonly taken nature, may only be able to utilize 24 BCM out of its aver- threshold for water indicating scarcity (UNDP).I0 Based age annual flow of 586 BCM. upon this criterion and water availability assessment, pres- Groundwater. India's rechargeable annual groundwa- ently six of India's twenty major river basins - namely, ter potential has been assessed at around 452 BCM in ag- Sabarmati, east-flowing rivers between Pennar and gregate terms. About half of this amount is located in the Kanyakumari, Pennar, east-flowing rivers between Mahanadi Ganga-Brahmaputra-Barak system. On an all-India basis, and Godavari, Cauvery and west-flowing rivers of Kutch and again using aggregate figures, it is estimated that about 30 Saurashtra including Luni - fall into this category (refer Box percent of the groundwater potential has been tapped for Al.1). By the year 2025, five more basins will become water irrigation and domestic use. However, these figures are sub- scarce. According to one estimate, by 2050 only the stantially influenced by the surplus areas of Eastern and Brahmaputra, Barak, and west-flowing rivers from Tadri to Northeastern India. The regional situation is very different and Kanyakumari would be water sufficient." large parts of India have already exploited almost all of their Investment to capture additional surface run-off will dynamic recharge. Haryana and Punjab have exploited about become increasingly more difficult and expensive in the 94 percent of their groundwater resources. Areas with deplet- future. This is a natural consequence of India's past suc- ing groundwater tables are found in Rajasthan, Gujarat, most cess in developing its irrigation sector. The massive in- of Western Uttar Pradesh, and in all of the Deccan states. In vestment in irrigation development since the 1950s, which Tamil Nadu and Karnataka, for instance, basins with falling resulted in surface irrigation expanding from 16 million groundwater talbles are increasingly found and are already hectares in 195 1 to an estimated 45 million hectares by negatively impacting sources of rural water supply and 1996,12is now reaching practical limits in many of India's groundwater irrigators. Resource depletion trends are quite river basins. Further investment in water augmentation alarming. For instance, in 1984-5, 253 of the 4272 adminis- is now no longer possible in some states and basins. Even trative blocks were classified as "over-exploited"or "dark" (i.e., where significant expansion remains feasible, the devel- seriously depleting) in the central Ground Water Board's clas- opment options are usually more technically difficult and sification ~ystem.~By 1992-3 this number had reached 383, costly, As described above, groundwater resources are also representing an increase of over 50 percent. The converse situ- increasingly limiting. The expansion of groundwater us- ation -rising groundwater tables and salinization- are also age has been even more dramatic than that of surface wa- increasingly found in India, due to poor drainage or the cu- ter. From 1951 to 1996 groundwater irrigated area mulative impact of irrigation. In particular, this is a prob- expanded almost seven-fold, from 6.5 million hectares to lem in localities of Northern and Western India: for instance, an estimated 44.3 million hectares." In short, for both sur- in Uttar Pradesh, Haryana, Punjab, and Rajasthan. Paradoxi- face and groundwater resources, the earlier situation of cally, these are amongst the same states where the more gen- substantial under-utilization and considerable develop- eral and widespread problem of depletion is found. ment potential has been transformed in little more than

9Thetotal number of blocks does not include Andhra Pradesh, Gujarat and Maharashtra. The number of over-exploited and dark blocki/talukas/mandaIs/wate~hedsdoes not include blocks in Kerala and Maharashtra, mandals in A.P., talukas in Gujarat and watersheds in Maharashtra. The groundwater resource situation is discussed in more detail in theUlndia- Water Resources Management (WRM) Sector Review, Groundwater Regulation and Management Report" (World Bank, 1998d). '' Falkenmark, 1989.

" Refer Indian Water Resources Society (1 997). These water availability indices are for surface mn-off only. Groundwater resources are not taken into account. Counter-acting this, achlal surface water availability is only about 37 percent of the total run-off figures used for these estimates. This figure is the (targeted) created irrigation potential; 39.1 million hectares is the (targeted) utilization (CWC, 1996). "This figure is the (targeted) created irrigation potential; 40.8 million hectares is the (targeted) utilization (CWC, 1996). a generation to a situation of constrained water resources Needs for Other Uses. Other uses - for instance, and limited development options. ecological, hydropower, navigation, fisheries, flood Impact of Global Environmental Trends on Water control, recreation and ceremor~ial- although not Availability. In long-term planning, the possible impacts significant in terms of consumptlive use, will continue from global warming and other predicted or observed to be important and have specific quantity, quality and long-term trends on water availability also need consid- temporal needs. eration. Changes in rainfall patterns in the coming de- The above sectoral planner's figures would result in to- cades could affect India. In Northern India, snow-melt tal demand for water increasing from the current 552 BCM patterns from the Himalayas may change, altering the tim- to 1050 BCM by 2025. This would represent virtually the ing of run-off. Box A1.3 discusses some of the global wa- entire utilizable resources of the country; casting some doubt ter issues involved, which should also be integrated in on the ability to meet projected demand in all of these sec- India's basin modeling and national planning perspectives. tors. What is clear, however, is the rapid increase in non-irrigation demands. Consumption for industry and domestic B. Sectoral growth trends and emerging inter purposes is expected to increase about three-fold and its sectoral issues share of overall water consumption to increase from 17 to 27 percent. The historical situation in which relatively plentiful water Alterations in water requirements and relative claims by resources have been used primarily for irrigated agriculture, sectors is partly a reflection of their changing significance with demands in other sectors insignificant relative to re- in the economy and India's process a~fdevelopment. Al- source availability, is changing rapidly:I4 though industrial development was quite slow in the years Expanding Domestic Demand. Domestic (urban following Independence, industrial growth rates have accel- and rural) water use is at present 25 BCM or about 5 erated in recent years, exceeding agricultural sector growth percent of utilizable water consumption. This is ex- and peaking at 11.6 percent in 1995-6. This is resulting in a pected to rise to about 52 BCM by 2025. While still role reversal between the industrial and agricultural sectors. relatively small compared with irrigation, these de- Agriculture remains the major employelr in India's economy, mands are by their nature a basic and essential need. with about 67 percent of the labor force, compared with 13 Domestic water supply must be 100 percent reliable, percent for industry.I5 However, as shown in Box A4.1, the has high quality requirements, is location-specific, industrial sector now exceeds the agricultural sector in terms and, especially for large cities, is spatially concentrated. of its contribution to India's economy. Rapid industrializa- Rapidly Growing Industrial Requirements. The tion, accompanied by urban migration, has been a driving current water demand of 67 BCM for industry, enforce behind India's consistently strong macro-economic per- ergy generation and other uses is projected to grow formance.16 Industrialization is the main trend in India's de- at a rate of 4.2 percent per annum, reaching approxi- velopment and the basis for future economic growth and the mately 228 BCM by 2025. generation of employment. Nevertheless, irrigation has been Continuing Pressures for Irrigation Expansion. the principal engine of growth for the agricultural sector and Water use in irrigation stood at 460 BCM in 1990 or its role will remain crucial in the future.. approximately 83 percent of total water consumption. Current water resource constraints, therefore, can be Based on government's current development plans, expected to manifest themselves even more rapidly in the irrigation's usage would increase by approximately 70 coming years. While population growth rates have stabi- percent to 770 BCM by 2025. lized and are expected to gradually diminish over the next

'Vigures on sectoral demand trends are from the report prepared by the GOIICWC-chaired Sub-committee on Inter-Sectoral Water Planning and Allocation (GO!, 1997a).

l5World Bank, 1997a.

l6 In 1996-7, India experienced GDP growth rates of approximately 7 percent for the third consecutive year (World Bank, 1997a), a level that the Indian government aims to sustain as indicated in the Ninth Five Year Plan. several decades, the composition of demand is significantly lation and development under the control of the Union is changing as a result of rising incomes and of rapid urban- declared by Parliament by law to be expedient in the pub- ization" and industrialization, with exacting requirements lic interest, is a "Central Subject." However, subject to the in terms of high reliability, water quality, and the localities above, water is a "State Subject" and under India's admin- where water must be delivered. Such developing require- istrative structure, the states have substantial autonomy ments do not necessarily coincide with the natural distri- over water usage within their jurisdiction (refer to chapter bution of water resources. In the first two decades after 3). Complicating this is the very limited development as Independence, such developments were less marked, and, yet of administrative structures for managing water on a more importantly, as resource availability often exceeded river basin basis and especially across state boundaries. As local demands, there was still substantial room for finding a result, there is limited cooperation between states for ad hoc solutions to meet specific needs. Now, as the gap cross-state riparian issues. between the availability of water resources and the demands In the early decades after Independence, the limited on such resources narrows, such an ad hoc approach to institutions and legal structures for holistically managing water allocation, planning and management is no longer water on a river basin basis and especially across state tenable. Competition for water between urban and agricul- boundaries did not materialize as major constraints. This tural sectors will be a major challenge in the forthcoming was primarily because in most river basins potential for century. Further, expansion in irrigation, industry, and do- further development was still present, enabling piece-meal mestic water demands will have serious ii,~plicationsfor investment and usage without the appearance of conflict. competing non-consumptive uses, such as hydropower.18 In few basins does this remain the situation. In some ba- Weaknesses and inefficiencies in existing institutional and sins, for instance the Cauvery and Krishna basins, inter- operational mechanisms for allocating and re-allocating state riparian competition has been highly visible for some water between sectors will have to be rectified. time. In most other basins, recognition of actual or potential competition between states is growing, but the in- C.Inter -state water issues struments to deal with this are still rudimentary. This situation is further exacerbated by the mounting pressures Inter-State Cooperation. The second broad issue is the from urban and industrial demands, also crossing state competition for water between riparian states in a river ba- boundaries. The needs of Chennai (formerly Madras) are sin. The catchment areas of all major river basins in now being partly met by water from the Krishna basin India are located in more than one state, and many rivers outside Tamil Nadu State. The growing water needs of have a number of riparian states. For instance, the Ganges Delhi will need to be serviced from such states as Haryana, basin is shared between eight of India's states (Uttar Pradesh, Punjab, Uttar Pradesh and Himachal Pradesh. The need Himachal Pradesh, Haryana, Rajasthan, Delhi, Madhya to build inter-state cooperation is further accentuated by Pradesh, Bihar and West Bengal) and is also shared with rapidly growing environmental issues. Nepal, Bangladesh and China; the Krishna Basin is shared Inter-basin Transfer of Water. Inter-basin transfers of between Maharashtra, Andhra Pradesh and Karnataka; and water from surplus basins to deficit basins have been con- the Cauvery is shared between Karnataka, Tamil Nadu, Kerala sidered a solution to regional and inter-basin disparities in and Pondicherry. It is well recognized that water planning water availability. However, the necessity to construct large and management needs to be done on a river basin basis, reservoirs to store monsoon flows and to divert water in- and this is clearly stated in India's National Water Policy. In volves enormous economic, social and environmental costs. India's Constitution, regulation and development of inter- Additionally, concurrence of the basin states on the fact that state rivers and river valleys, to the extent to which such regu- the basin is indeed surplus and on the extent of that surplus

"Current urban population is 244 million, or 26 percent of total population. Urban population growth rate is 3.1 percent per annum, significantly higher than overall population growth rate (approximately 2 percent), and urban population is projected to grow by a factor of three from the present level to some 658 million by the year 2025. "India -Water Resources Management (WRM) Sector Review, Urban Water Supply and Sanitation Report" (\Vorld Bank, 1998e). "The actual and potential timing conflicts between hydropower and irrigation are a particularly difficult problem. is also required. This is a politically sensitive and difficult Water quality and quantity issues are inter-linked. The task given states' reluctance to relinquish water perceived as preservation of water quality has direct implications for rightfully theirs. A recognition of these problems has yet to water supply as water quality determine,^ effective water take hold in India and be translated into a study of more availability. Similarly, a minimum quantity of water is re- cost-effective, feasible options.I9These include water-saving quired to maintain the assimilative capacity of a water technologies in irrigation and industry, recycling and reuse body to receive effluents and/or guard against contami- of municipal and industrial wastewater, agronomic options nation (e.g., saline intr~sion).~'The inter-relationship (e.g., improved water management, agronomic practices re- between water quality and quantity is clearly demon- quiring less water, and the introduction of less water-inten- strated in large cities, such as Delhi, where limited water sive crops), and watershed and groundwater management supply is often unsafe for consumption (refer BoxA2.11). (e.g. groundwater recharge).20Technology improvement, wa- Environmental and health issues are, therefore, integral ter conservation and reuse and other forms of demand man- to both inter-sectoral and inter-state issues and are dis- agement need to be given much more emphasis than the cussed within these contexts in the reco-mmendations of traditional supply-side oriented approaches of the past. this report. Below is a summary typology of some of the environmental and health issues involved (refer Box A2.1).

D. Environmental and health-related issues Agricultural Pollution. Agro-chemicals - fertilizers and pesticides - are the main contributc~rsto surface wa- An important set of issues that permeate the two major areas ter pollution from agricultural areas. Although the average above relate to the environment. They include issues of water rate of fertilizer per hectare is relatively low in India,22the quality ranging from agro-chemical, industrial and domestic use of agro-chemicals is unevenly spread throughout the pollution; impacts of water use on groundwater levels (includ- country. In states where consumption is high, such as ing depletion or conversely waterlogging and salinity); soil ero- Punjab, Tamil Nadu, Andhra Pradesli and Haryana, sion and siltation; degradation of wetlands; impacts on flora eutrophication of lakes, reservoirs and tanks is an environ- and fauna; and various health-related problems. Many of these mental concern. Additionally, a number of pesticides clas- problems are less evident to the general population than the sified by the World. Health Organization (WHO) as highly more visible quantity-related issues. Groundwater-related is- hazardous that are either banned or highly controlled in sues, for instance, are gradual in impact. Rising water tables Western countries, are commonly used in Indian agricul- in Northwest India due to over a hundred years of irrigation t~re.~~The impact is far more permanent on groundwater have only in some localities reached the root zone, yet if this resources (refer to Groundwater Degradation). trend continues without appropriate drainage, large tracts of Industrial Pollution. The release bjr industry of un- currently irrigated lands will become salinized and go out of treated toxic organic and inorganic wastewater into production. Similarly, the impacts of pollution are only gradu- watercourses is also a widespread problem.24Initiatives have ally perceived, yet the costs in terms of human and environ- begun to address this problem, including the establishment mental health can be enormous. of Common Effluent Treatment Plants (CETPs) for clusters

'This does not preclude the option of inter-state basin transfers where economically, socially and environmentally feasible ''A further concept is the possibility of "virtual water" import through foodgrains and industrial products from water surplus to water-short basins, as discussed by Tony Allan (London's School of Oriental and African Studies). "This, for instance, is a need being studied for India's Yamuna River, a possible conduit for release of salts in drainage water from fertilizers. In Africa the OMVS, the river basin organization to manage the Single River for the governments of Mali, Senegal and Mauritania, is studying the use of once yearly artificial floods to mimic the former natural conditions prior to constniction of Manantali Dam: flood recession agriculture, dry season pastures for semi-nomadic peoples, fisheries which depend on flooding, aquifer recharge for drinking water supply for villages, etc. "Average world fertilizer concentrations per hectare of arable land in 1991 were 95.2 kgs., while for Japan, Korea, USA, Pakistan and India, the amounts were 400.1,416.2, 97.0,91.2, and 74.3 kgs., respectively. ''The data on the presence of pesticides in water are very limited. However, studies which have been undertaken on the Ganga River, for example, indicate levels of :.ariaus chemicals (HCH, DDT, endosulfan, methyl malathion, malathion, dimethoate, ethion) which exceed international quality standards. Industrial effluents contribute substantially to organic poHution, and in some cities rep,-esent over 50 percent of urban organic load. In the Cauvery basin, for example, the contribution of industrial effluents to the total urban load (domestic + industrial) ranges from 1 percent (District of Coorg) to 81 percent (District of Mandya). of small-scale industries (refer BoxA6.3). However, in addi- safe sources.26 Given that 80 percent of rural domestic tion to implementation problems, the majority of industries water supply is from groundwater (50 percent for urban are not connected to CETPs and only about half of the large areas and industry), contamination from agricultural and and medium-scale industries in India have effluent treatment industrial sources means that water availability of a re- systems (many of them only partial). Even amongst those quired quality is already strained. industries with systems, few have yet achieved stipulated The health costs associated with impure water are stag- emissions standards.I5A total of 1,532 "grossly polluting" in- gering. In Maharashtra alone, about 0.7 million people suf- dustries have been identified in 24 states by the Central and fer from various water-related illnesses, out of which State Pollution Control Boards. approximately one thousand die each year. For children the Domestic Pollution. Rapid population growth and ur- situation is particularly serious: 0.5 to 1.5 million children banization have also placed tremendous pressure on the under the age of five die annually from diarrhea alone.27It country's fragile water resources. The primary sources of is estimated that approximately 30.5 million "disability ad- water pollution from the domestic sectors (urban and ru- justed life years" (DALYs) are lost each year in India due to ral) include human and animal waste and run-off from solid poor water quality, sanitation and hygiene.28These and waste, garbage dumps and street litter accumulation. Lack other issues are a constant preoccupation of the various of water delivery and sanitation facilities, in addition to poor government health departments involved and of agencies system maintenance, has resulted in severely contaminated such as the Rajiv Gandhi National Drinking Water Mission. water and a high incidence ofwater-related disease. The com- Some notable successes have been achieved, such as the plex and multi-faceted impacts of such pollution on the eradication of guinea worm. However, sanitation remains economy and well-being of local communities is illustrated a critical issue and is likely getting worse as population pres- in the case of Bellandur tank at BoxA2.2. sures build. Problems with trace elements also need han- Environmental-related health problems. At least dling: for instance, presence of arsenic in groundwater in five million urban dwellers are estimated to lack access parts of West Bengal or high fluoride levels in parts of to clean drinking water, and a fzr larger number of people Karnataka. do not have access to even the simplest of latrines. Deg- Groundwater Degradation. The presence of natu- radation of water quality from industrial and domestic rally occurring trace minerals - e.g., fluoride, arsenic, pollution is a major cause of environment-related illness. iron - is a source of groundwater contaminati~n.~~How - In large cities such as Mumbai (formerly Bombay) and ever, toxicity of groundwater has been increased further Calcutta, contamination of water in piped distribution by the leaching of agricultural as well as industrial chemi- systems due to inadequate maintenance has resulted in cals into soils. In states such as Gujarat, groundwater has high rates of water-borne infection, including diarrhea been degraded by increases in nitrate concentrations due and enteric disease. to applications of fertilizer to cultivate cash crops, includ- In rural areas unsafe drinking water due to discharge ing oil seeds, cumin, sugarcane, cotton and groundnut. of aw sewage and inadequate disposal of domestic solid Land disposal of untreated wastewater and hazardous waste is a major health problem. In many cases, existing wastes from industries poses a severe threat to ground- tubewells and hand pumps have broken down and remain water quality as illustrated in Box A2.4. Heavy metal con- out of operation, forcing users to collect water from un- tamination is particularly common in thermal power,

" It has been estimated, based on information obtained through interviews with State Pollution Control Board senior officers, that in Andhra Pradesh done, there are 526 largeimediam- and 1208 small-scale polluting industries. Out of these, only 29 percent are complying with standards. "In a study conductei ~y AIIHPH (1993b), it was observed that almost 90 percent of the villagers use pond water for bathing and washing utensils and clothes. More than 50 percent use the same for cooking. "World Rank, 1997c. "DALYs aggregate morbidity and mortality estimates into a single indicator. DALYs are a combination 06 (i) discounted and weighted years lost as aresult of death at a given age; and (ii) disability as a result of morbidity, adjusted by severity (Brandon and Hommann, 1995). '"In many parts of India, these toxic inorganics are found to be beyond permissible water quality limits for drinkingpurposes and present a severe health risk. tannery and mining intensive areas. Additionally, exces- utilized, which is quite ~ignificant.~~Yet, farmers and the gen- sive withdrawals of groundwater, coupled with decreased eral public are often insufficiently aware of the long-term recharge rates, have resulted in contamination from salt impacts resulting from waterlogging, such as salinization. water intrusion in coastal areas. Aquifer degradation is a Watershed and Catchment Degradation. Weaknesses particular problem in states such as Gujarat, West Bengal in land management are inextricably linked with India's wa- and Tamil Nad~.~' ter resource management problems.34Mounl.ing population Groundwater Depletion. The number of blocks that pressures with still insufficient techniques applied for wa- have been classified to have reached either the "over-ex- tershed, land and water resource management have caused ploited" status or the "dark" status is less than 10 percent of over-grazing and loss of forest land. About 6,000 million tons the total number of blo~ks.~'However, blocks classified as of top-soil are lost annually in India through erosion. Not dark or critical have been growing at a continuous rate of only are soils degrading but also the retentive capacity of the 5.5 percent, as indicated in Section A. At this rate, 36 per- land is reduced by lack of vegetative cover. Flash flood run- cent of the blocks would have become over-exploited within off is thus exacerbated rather than the more beneficial per- 20 years.32Furthermore, substantial declines in the water- colation of rainfall as groundwater. This further limits table occur before a block reaches the "dark" or the "over- cropping possibilities on residual moisture amd exacerbates exploited" status. Such declines have impact on a number groundwater depletion, including drying UIJ of traditional of users. Of particular concern, reductions in water-level due sources of rural drinking and domestic water. The many to over-extraction by irrigation users have resulted in dry- catchment management and local-level micro-catchment ing up of domestic water wells in many areas. management techniques already known and promoted in Waterlogging and Salirnity. Overuse of irrigation wa- India need more wide-spread adoption. ter and lack of adequate drainage has led to environmental River, Reservoir and Canal Siltation. Part of the above damage in the forms of waterlogging and increased salinity top-soil losses flow into the streams and rivers causing levels. The Ministry of Agriculture estimated in 1990 that changes in their hydraulic regime. Siltation is a problem in the extent of land affected by waterlogging in India was 8.5 surface water canals and India's many reservoirs and tanks. million hectares. A Working Group constituted by MOWR This adds to maintenance costs in canal and drainage net- on "Waterlogging, Soil Salinity and Alkalinity Problem Iden- works and, for the reservoirs and tanks, significant loss of tification in Irrigated Areas with Suggested Remedial Mea- storage capacity, at an annual rate estimated to range from sures," in its report submitted in December 1991, estimated 0.5 to 1.2 percent.35Losses in storage translate into reduc- that 2.46 million hectares, 3.06 million hectares, and 0.24 tions in hydroelectric power production, inatdequate irriga- million hectares (total 5.76 million hectares) are affected by tion water storage, and reduced flood protection. waterlogging, salinity and alkalinity, respectively, under the Biodiversity loss and Wetlands Reduction. Most of irrigation commands of major and medium projects in the India's wetlands are directly or indirectly linked with the country. This works out to about 20 percent of the potential major river systems such as the Ganges, Brahmaputra, created and about 25 percent of the potential actually Tapi, Godavari, Krishna and Cauvery. Despite the fact that

''In Gujarat, chloride levels over 1,000 mgll have been detected (CGWB, 1991). In Tamil Nado, saline intrusion in one area where groundwater is extracted to supply water for Chennai (Minjur well in Chingelput district) increased from 2 km inland in 1969 to 8 km in 1991 (CGWB, 1991). "Figures do not include Andhra Pradesh, Gujarat and Maharashtra, and come from CGWB (1995). '' "India- WRM Sector Review, Groundwater Regulation and Management Report" (World Bank, 1998d). "Estimates of waterlogging vary by source because some estimates include areas waterlogged during the monsoons as well as lands affected by seepage from canals and poor on-farm irrigation practices. The following reports also deal with these issues: (i) "India - Review of Rain-fed Agriculture and Watershed Develop~ment"(World Bank, 1988a); (ii) ''India - Review of Wasteland Development" (World Bank, 1988b); (iii) "India - Irrigation Sector Review" (World Bank, 1991); and (iv) "lndia- Policies and Issues in Forest Sector Develop- ment" (World Bank, 1993a). ''In Tamil Nadu, where there are 61 major reservoirs and about 39,200 tank storage systems, studies conducted by the Institute of Hydraulics and Hydrology and by the Gauging Division (Water Resources OrganizationlPWD) have shown high losses in the capacity of reservoirs and tanks, with rates of siltation reported as high as 2.6 percent annually and loss of capacity reaching as high as 58 percent (Kundah reservoir). a significant proportion of the country's wetlands are un- supply for domestic uses and hydropower), have der some form of protection, many of these systems are been hampered by limited usage of systematic ba- threatened from increasing and uncontrolled human pres- sin planning and modern modeling techniques. In- sures on the country's natural habitats. The primary cause volvement of stakeholders in planning decisions has of biodiversity loss in wetlands has been the conversion also been very limited. Such an approach has re- of natural ecosystems for agricultural and industrial de- sulted in large foregone mutual benefits to various velopment and the expansion of urban areas, as well as sectors deriving from water projects. The absence the environmental destruction these activities have gen- of comprehensive river basin development plans erated. Water-related projects have, additionally, had a has meant that interdependencies between projects major impact on the ecological integrity of water systems. have not been exploited. Benefits have, therefore, The construction of dams and the diversion of rivers for been lost from lack of basin-wide coordination, irrigation, hydropower and navigation have increasingly poor prioritization of expenditures on projects, and resulted in modification and loss of India's aquatic ecol- inadequate public participation. ogy (refer Box A2.10).j6 The proportion of the national budget absorbed by Coastal Zone Habitats. Coastal habitats are also at risk. the water sector - including debt servicing of wa- For instance, the destruction of coastal areas due to human ter projects, operational deficits, and overt subsi- encroachment has decimated mangrove forests along the dies - represents a huge cost to the economy. The Indian coastline. In estuaries or other brackish water envi- subsidy for irrigation alone was nearly 0.3 percent ronments shrimp culture, as well as other fauna and flora, of GDP in 1994-5 (World Bank, 1996). Despite have sometimes been affected by pollutants. Typical coastal such expenditures, investment levels are not environment issues and coastal management possibilities are enough to cater for India's rapidly growing indus- discussed at Box A2.3. trial and domestic needs and to handle the environmental problems, or to handle the needs of E.The costs of inadequate management irrigation. Within such a situation, inefficient investment and management of water resources is A growing recognition of the severity of the water prob- clearly unaffordable. lem has prompted debate on water utilization throughout * A coiltinued over-emphasis on traditional struc- India. Positive examples of comprehensive approaches to tural means for increasing water supply will trans- water development and allocation exist in India. However, late into exorbitant costs of future provision (both as also typically found in other fast developing countries fixed and unit costs) since the easiest and least ex- where water resource issues have emerged only recently, pensive water projects have already been exhausted. these success stories are still exceptions rather than the It is unlikely that such water supply schemes can norm. In most instances water decisions are still fragmen- be successfully undertaken given growing budget- tary, do not fully exploit multi-sectoral usage opportuni- ary constraints and limited public sector invest- ties, are conceived within a context of discrete geographical ment funds. Furthermore, it is not clear whether units rather than basin-wide, and do not fully incorporate such methods, in themselves, will be able to cost- long-term demand trends or environmental concerns. The effectively supply the required quantity and qual- environmental, social, fiscal and opportunity costs of the ity to all of the various uses. Already, urban zreas current approach are likely to be substantial. Some ex- and industry are facing high water costs in being amples of the costs are: forced to develop ever more distant sources as op- Historically, water projects, while often designed for posed to tapping nearby sources currently used by multi-purpose uses (e.g., irrigation bulk water agriculture.

36 For example, the freshwater Gangetic Dolphin, endemic in the Ganga river, is on the verge of extinction due to the destruction of its habitat from changes in the river hydrology. Water pollution and reduction in water quantity have a cost of nearly US$ 1 billion. The provision of improved adversely affected various income-generating water water and sanitation services to all portions of the popula- .- uses and activities." tion now under-served would reduce the incidence of wa- It has not been possible to quantify the costs, either op- ter-related DALYs by an estimated 11.3 million, or by 17 portunity or actual, of issues discussed in this chapter. Some percent. This represents a savings of US$ 3.1 to 8.3 billion sense of their dimensions may, however, be obtained from in terms of avoided deaths and iliness.jq If, through better the following. In the irrigation sector some 325 billion ru- demand management, a saving of 10 percent of urban water peeP or over US$9 billion were spent in the Eighth Plan. If were made feasible, this would be equivalent to a 10 percent as little as 19 percent of this expenditure were inefficiently addition to India's entire urban water supply infrastructure allocated due to inadequate planning, this ivould represent measured in curre~t-dayreplacement cost terms.

"For example, the disappearance of the Hilsa fish has had a negative impact on the livelihood of fishermen at Patna, hllahabad and Bunor. The migratiol~ot the Hilsa fish, which used to be abundant and found op io 1,500 krn upstream of Hoogli estuary, was affected by Farnkka Barrage. The numbers have decreased ir. Patna, .\llahabad and Buxor by an estimated 95 percent. "World Bank, 1997a. '"Brandon and Hommann, 1995

Existing Mechanisms and Limitations

ackling the water resources issues described above will require comprehensively addressing the various mechanisms available for improving the situation. This chapter will assess each of these mechanisms in turn: (a) policy, (b) legal and regulatory, (c) institutional, (d) economic, and (e) technological. The discussion will examine both their positive features and their present limitations with a view to identifying the areas where change is required.

A. Policy framework On specific issue areas other policy statements also have a bearing: for instance, on environmental issues, the Under India's Constitution, subject to Entry 56 of List I, 1992 Policy Statement for Abatement and Pollution, the water is considered a "State Subject," with legislation and 1992 National Conservation Strategy and Policy State- administration substantially framed within the context of ment on Environment and Development, and the 1988 state boundaries. The most comprehensive water policy National Forest The "Report of the Committee statement issued at the GO1 level is the National Water on Pricing of Irrigation Water" (GOI, 1992) is the most Policy (NWP), adopted by the hational Water Resources detailed official document on water pricing. Policy di- Council in 1987. In only a few cases has the national policy rections are also contained in the Five Year Plans, Fi- been translated into specific state-level policies. The NWP nance Commission Reports, policy statements on the is, nevertheless, a significant conceptual document and is agriculture sector, and other government statements. frequently referred to in discussions of water policy in In- More recently, the New Economic Policy of 1991 and dia. It calls for a holistic and integrated basin-oriented ap- subsequent policy statements relating to liberalization of proach to water development, the promotion of the economy, market-based approacfles to economic conjunctive use of surface and groundwater, and water- management, privatization of urban water'" and decen- conserving crop patterns and irrigation and production tralization of irrigation management have established a technologies. It also defines priorities for different uses, broader and more economically-oriented environment including drinking water as first priority, discusses vari- for water policy debate. ous environmental issues, proposes participation of ben- The National Water Policy (NWP) and other govern- eficiaries in water management, and provides for water ment policy statements such as those mentioned above are pricing to cover the costs of operations and maintenance broadly in the right direction. For the NJNP, now ten years and part of capital investment costs. old, it would, nevertheless, be appropriate to revisit this

l0ThePolicy Statement for Abatement ofPollution is the most significant of the three. It emphasizes pollution prevention in place of the conventional "end-of-pipe treatment" of effluents and also identifies the adoption of best available and practicable technologies as the key element for pollution prevention. "For instance, the "India Infrastructure Report" (G01,1997b). INTER-SECTORAL WATER ALLOCATION.PLA NNING AND MANAGEMENT

document and update it in line with the further evolu- B. Legislative and regulatory framework tion of thinking in India and internati~nally.~~There are several conceptual issues where improvement is desir- The existing constitutional provisions and water legislation able. Generally, there is an over-emphasis on adminis- in India do not provide a legal framework with which to trative mechanisms for water allocation, rather than tackle water sharing issues between sectors and between in- value-based or compensatory mechanisms. This ap- dividuals: proach is reflected in the existence of priorities, which Primary powers are vested at state levels which do not allow limited flexibility for value-based criteria to influ- correspond to river basin boundaries. ence water allocation between sectors or uses. Further, Surface water rights are not clearly defined and are priorities have been determined without reference to the not secure, and such rights cannot be commercially social and economic value of the activities concerned. transferred For instance, water for industrial use is considered as Groundwater rights are in a purely private good con- fifth and last priority, whereas value-added (and possi- text, ignoring externalities, and such rights cannot be bly employment generation) would typically be greater transferred independently of land. than water used for irrigation which is listed in second Environmental laws have not been comprehensively priority (after drinking water). Subsidy-based ap- operationalized. proaches to water provision are advocated in the NWP, - Regulatory standards are either not enforced or do not in part contradiction to statements on cost recovery and exist. substantially out of line with more recent thinking under the New Economic Policy. Provisions for environ- State Powers over Surface Water mental issues also need updating. Throughout, the Under Indian statutory law, as interpreted and applied by NWP's effectiveness as a policy guide is reduced by its the courts, all surface water is public property, whether it is generality, understandable given that it was the outcome natural flow in a river or storage behind a dam or natural of a national consensus exercise. lake. In other words, the Indian Government has the right The principal problem, however, is that the NWP and to regulate, develop, and administer surface water, and ri- other policy statements have not been translated into ac- parian claims to the use of such water are subordinate to this tion. As discussed below, the NWP is not supported by right.44The responsibilities apportioned to the states and the enabling legislation, and in some cases is actually contra- Union by the Constitution fall into three categories as listed dicted by the existing water laws. Even more important, in Schedule VII: The Union List (List I), the State List (List the national policy is neither reflected in corresponding 11), and the Concurrent List (List 111). Water is mentioned and state-specific State Water Policies4' (the primary ad- in both List I and List I1 as follows:45 ministrative unit in India's federal structure), nor in ba- List I (Union List), Entry 56. "Regulation and Devel- sin-level policies and action plans. In the majority of opment of inter-state rivers and river valleys to the extent to situations in India the enabling framework for implement- which such regulation and development under the control ing sound water allocation, planning and management is of the Union is declared by Parliament by Law to be expedi- largely absent. ent in the Public Interest."

" Refer, for instance, to the World Bank Water Policy Paper (World Bank, 1993b). "While most states still do not have State Water Policies, this situation is changing. For instance, Tamil Nadu (1994) and Orissa (1995) States have formally issued State Water Policies, and Rajasthan and Punjab are in the process of finalizing State Water Policies. Andhra Pradesh has issued an Irrigation Sector Policy (19981, which also discusses water resources management issues. 4'Although British legislations in India during 1859-77 recognized the customary rights of individuals and groups over water resources, a radical shift occurred with the Easement Act of 1882 which made all rivers and lakes the absolute rights of the State (meant in the generic sense of polity). 45AlthoughList 111, the Concurrent List, does not have an entry on water, it does mention "Economic and Social Planning."Since water is a significant input in agricultural development and industrial development which are indicators of economic development, and since water is a primary need (drinking and sanitation) for social planning. water resource development could be covered under the Concurrent List also. fist I1 (State List), Entry 17. "Water, that is to say, wa- of water resources across sectors. These problems are com- ter supplies, irrigation and canals, drainage and embank- pounded by the legal question of whether original gov- ments, water storage and water power subject to provisions ernment-granted assurances of water allocation can be of Entry 56 of List I." withdrawn in favor of new uses (e.g., water originally In the de facto interpretation of these responsibilities committed to agriculture diverted for domestic uses, in- the power of the states has emerged as pre-eminent. Thus, dustry, etc.) or whether this amounts to a violatioil of an notwithstanding the powers conferred on the Union Gov- established riparian right. While this issue falls in a gray ernment in Entry 56, water has come to be perceived as a area and is yet to be tested by the courts of law, it is likely "State Subject," per Entry 17. This has serious ramifications to increasingly appear in the future given changing water for inter-state water development and allocation. Surface use priorities. There are also difficult questions concern- water needs to be managed on a river basin basis. The frag- ing how rights are claimed. Riparian rights based on geo- mentation of basins by state boundaries and lack of coop- graphic principles alone neglect the legitimate claims of eration between them is a critical issue. It is also a hazy issue those located away from the water body. The ill-defini- in that, except through specific inter-state agreements or Tri- tion alld insecurity of water entitlements equally applies bunal Awards, the actual rights of each state are not clearly to different sectoral users: users of irrigation canal water, defined. Indian policy and law-makers implicitly understand industries, and rural and urban water supply systems. that inter-state waters need to be shared and that other Thus, states' sovereign and absolute rights over surface riparians have rights. Nonetheless, each state interest argues water have in the past been challenged in courts by ripar- for as large a share as possible, without legal clarity on what ian landowners who claimed their rights had been in- these shares are. fringed upon by the government in pursuit of its Individual usufructuary rights for surface water are irrigation projects. Nothing prevents the courts from en- also unclear, as the legislation has failed to devise a struc- tertaining such litigation in the future and possibly mak- tured system and process for providing secure, defensible ing the legal question less clear.47Unless surface water and enforceable surface water rights. Riparian rights, rights are better clarified, conflict and litigation are likely where a person abutting upon a stream can use water to be increasingly common in the future. without disturbing a similar benefit to other riparians, have been accepted by the Indian courts as natural rights.46 Groundwater Rights However, individualized rights of abstraction and use of The issue for groundwater is that rights give groundwa- such water can only be established through expensive and ter a purely private good context in its management, ig- time-consuming litigation in the courts. Consequently, the noring social and environmental costs. Moreover, even right to abstract water from natural rivers and streams is where private ownership of groundwater is clearly defined, left in a legal limbo at best, and to an adversarial-style pro- transferability of ownership. independently of land is not. cess of claiming such rights at worst. Not only does the For groundwater, the legal and absollute right rests with legal uncertainty surrounding water rights openly invite the owner of the overlying land.4%ll groundwater exist- conflict, but it also creates imbalances in water developing and found beneatlh private property, therefore, is fully ment, stifles private sector investment in water projects, under the control of t.he owner of that land who is free to and seriously constrains the allocation and re-allocation extract and use it as he or she sees fit. Tying water rights

MNotably,this form of water rights system is recognized only in the case of natural streams, but does not apply to waters flowing in irrigation canals or stored in man-made reservoirs (in which case water can be drawn only with a government-issued permit). "For example, both the Madras High Court in 1936 and the Bombay High Court in 1979 have established that the Government's sovereign rights do not amount to absolute rights. 48Groundwateris considered an easement connected to land under land tenure laws and the 'dominant heritage' principle implicit in the Transler Property Act IV of I882 and the Land Acquisition Act of 1894. Under the law of riyarianism applicable in India, ownership of groundwater accrues to the owner of the land above and its use and disposi- tion are governed by the tenancy laws. By virtue of these laws, groundwater is "attached like chattel" to land property and cannot be transferred separately From the land to which it is attached (Singh, 1992). to land rights has implications for access to water and the are required to develop a remedial program within a spe- distribution of benefits from water use. This system has cific time or close down.s2 These laws are insufficiently led to de facto rights at the field level where larger farm- used by the states for protection of water resources due ers with higher pumping capacity and deeper tubewells to incomplete monitoring and enforcement. Moreover, have a disproportionate claim over the resource than oth- there is need to adapt these laws to the rapidly changing ers. Inadequate regulatory restrictions on the exercise of circumstances and new environmental protection needs private property rights in groundwater (e.g., well-spac- that have emerged in more recent years. For instance, as ing and depth norms, power supply manipulations) has discussed later in the chapter, the permitted levels of fines resulted in excessive withdrawals in many areas, spelling or polluter fees for industry in existing legislation are usu- disaster for the sustainability of groundwater stocks and ally so small as to have no impact. water supply (see below).49The current inseparable linkage between land ownership and ownership of ground- Limited Application and Enforcement of water rights also constrains the potential for inter-sectoral Regulatory Standards allocation (refer to Water Trading and Water Markets). A number of standards have been provided for regulating water quality. The Central Pollution Control Board (CPCB) Limited Application of Environmental Legislation defines water quality requirements for five different catego- For environmental protection, the key problem is inad- ries of inlandlfresh waters and these are largely being fol- equate application of the laws that already exist. These in- lowed by the states (refer Box A2.5). The Bureau of Indian clude: (i) the 1974 Water Prevention and Control of Standards (formerly the Indian Standards Institution (ISI)) Pollution ActS0 which established water quality and efflu- established drinking water quality standards in 1983 (refer ent standards and the requirement that polluting indus- Box A2.6). WHO guidelines are utilized for parameters not tries must seek permission from the SPCB to discharge covered by the IS1 standards' list.. Under the 1986 Environ- waste into water bodies; (ii) the 1977 Water Cess Act5' ment Protection Act, effluent standards with respect to more which allows a cess (fee) on water consumed by indus- than 60 categories of industries were de~eloped.'~Hazard - tries and local authorities; and (iii) the 1986 Environment ous Waste Rules were issued in 1989, providing important Protection Act which authorizes the Central Government tools for the management of hazardous substances and, con- to protect and improve environmental quality, control and sequently, the prevention of surface and groundwater con- reduce pollution from all sources, and prohibit or restrict tamination. Another regulatory change mandated after the siting and/or operation of an industrial facility on en- 1992-93 requires firms to conduct annual environmental vironmental grounds (including the closure of any firm audits and submit their findings to their respective State Pol- that violates the Act's restrictions regarding effluent dis- lution Control Boards (SPCBs).These various standards are charge). The Act also permits individuals to initiate legal broadly in line with international practice. The need is to action against anyone violating it. For example, industries better apply them, requiring more complete measurement and other polluters not meeting environmental standards and monitoring systems and capacity to enforce compliance.

"Prompted by equity and ecological concerns a few Indian state legislatures have passed legislation seeking to regulate groundwater extraction and use. The sparse legislation which exists, however, tends to be limited in its scope of application. For instance, legislation in Maharashtra focuses on protection of the sources of drinking water supplies. Legislation has also consistently failed to address the issue of groundwater extraction rights, favoring instead regulation of the depth of the wells, as with Gujarat's legislation regulating tubewell construction. In West Bengal, regulation of power connections to pumping equipment has been introduced and effectively implemented since 1993 as a result of administrative initiative and practice. IOAmended in 1978 and 1988. 5'Amended in 1995. 52Threeother environmental laws that include provisions to reduce environmental problems in the water sector are: (i) the 1991 Public Liability Insurance Act; (ii) the I980 Forest (Conservation) Act; and (iii) the 1995 National Environment liibunal Act. This last has created a tribunal with power to award compensation for damages to persons, property, and the environment arising out of any activity involving hazardous substances. "The standards are to be achieved within a period of one year from the date of their notification. If a particular SPCB desires, it ma~~educethe time limit and also specify more stringent standa.ds within their jurisdiction. The board cannot relax either the time limit or the standards. By contrast, the regulation of groundwater extraction ing out proiects with serious environmental problems and, suffers from a major gap in enabling legislation and the re- for many others, has enabled design modifications better sultant regulatory environment. Apart from a limited Act for catering to environmental issues, or mitigation measures the Chennai metropolitan area and, more recently, a Bill in to reduce negative environmental impact. Maharashtra for protecting drinking water supply and a groundwater Bill in Gujarat, none of the states in India have C. Institutional mechanisms groundwater acts. Providing investment and operation is privately funded, there are thus no controls on well-spacing The present institutional arrangements in India, including and abstraction. An indirect attempt is made through the central, state and local institutions, and both formal and in- access rules applied by the National Bank for Agricultural formal structures, do not enable comlprehensive water allo- and Rural Development when providing credit for invest- cation, planning and management. The main problems that ments in wells and pump-sets. The application is assessed exist are: against the degree of development of the aquifer ("over-ex- Inadequacies in necessary institutions for comprehen- ploited," "dark," "gray," or "white" areas) as assessed by the sive wster allocation, planning and management, par- state groundwater authorities. There are also rules for mini- ticularly at state and basin levels where they are mum spacing between wells. Similar rules are also applied frequently absent. by State Electricity Boards for power connections. However, Lack of coordination between institutions, duplica- they are frequently bypassed.54Apart from their inability to tion of responsibility and responsibility gaps. control resource depletion and ecological degradation, they Inadequate fostering of grassroots institutions. are also inequitable as they restrict the new entrants who are Lack of involvement of civil society -local commu- mostly resource-poor farmers and more importantly, offer nities, NGOs, the private sector and academia. . no protection to the poor farmers relying on traditional water-lifting technologie~.~~Pricing of electricity at a fraction State-level Institutions of real economic value (refer to Groundwater Pricing) fur- The interpretation of the constitutional division of power ther exacerbates the virtual vacuum in regulation of ground- between the center and the states primarily places the de- water abstraction. velopment and management of water under state-level jurisdiction, subject to certain limitations in cases of use Introduction of Environmental Impact Assessments of inter-state river waters. However, effective state-level in- An encouraging development has come under the 1994 stitutions governing multi-sectoral water use and allocation Environmental Impact Assessment (EIA) Notification. are, in most states, conspicuous by their absence. With few Under this regulation an EIA has been made mandatory exceptions (refer below), there are no formal institutional for 29 categories of development activities involving in- mechanisms that consider the different sectoral demands vestments of Rs. 500 million and above. The list includes and plan and manage water between them. Because irriga- various industrial and mining enterprises, river valley tion is the largest user of water, state irrigation departments projects (hydropower, major irrigation, flood control), have been responsible for construction, maintenance and ports, harbours, airports, highway and tourism projects. management of water resource development schemes. An The environmental clearance is given by the Ministry of obvious outcome of this arrangement is that irrigation de- Environment and Forests (MOEF). Application of this mands have received priority over water requirements in recent initiative is progressively increasing awareness other sectors. This has been further exacerbated by a strong amongst state and central government development plan- orientation towards civil works co~lstruction,resulting in ners, and increasing awareness of environmental issues at very limited attention to water planning and management, implementation levels. It has had some effect on screen- even within irrigation. Most irrigation departments still

Dhawan, 1989. "Dhawan, 1990; Moench, 1992. contain a cultural bias towards civil works rather than wa- environmental issues. Maharashtra has established a Wa- ter management stemming from their origins as public ter Resources Authority, Punjab is proposing to establish a works departments. In the case of Tamil Nadu, the laud- Water Resources Council, and similar considerations are able recent step to create a specialist Water Resources Or- under way in Rajasthan. ganization was, for instance, only carried out in 1994.56The other specialist government departments (for RWSS, Local-level Institutions UWSS, power, etc.) also have not been given a mandate for There is similar need for development of water institutions multi-sectoral water planning. The combined result is that, within the states, including at grassroots levels. With very few while irrigation departments (and other specialist govern- exceptions there has been no attempt to create river basin ment departments) have all tried to consider water in a organizations to manage water comprehensively within a broader context, they have seldom fully succeeded because river basin or, for inter-state rivers, the part of a river basin of the "institutional gap" as regards specific institutions and within the state. The need for a river basin approach is be- mechanisms for handling inter-sectoral issues. coming urgent in many cases. For most rivers where resource Another problem is the frequently found fragmenta- utilization is already high, the issues described in Chapter 2 tion of responsibilities for water sector issues between dif- (including competition between sectors, industrial and ur- ferent departments. Groundwater is frequently handled by ban pollution, and difficult necessary decisions regarding another department (e.g., in Bihar, Kerala, Rajasthan and future allocations or re-allocation) are readily apparent. The Uttar Pradesh, and formerly in Orissa). Major, medium, and positive steps currently being taken by Tamil Nadu to estab- minor irrigation are also sometimes split between depart- lish a Vaigai Basin committee with stakeholder participation ments (e.g., in Andhra Pradesh, Bihar, Maharashtra and merit emulating much more broadly (refer Box A3.8). In Uttar Pradesh). Environmental issues connected with wa- addition, the states should consider decentralizing their water are usually handled by separate departments, such as ter resources departments along river basin lines, as has been Environment, Health, Forestry, State Pollution Control done by Haryana, Tamil Nadu and Orissa under their WRCP Board, etc. Water quantity and water quality issues are usu- programs (refer Box A3.7). This is enabling more effective ally handled separately and by different departments. In management ofwater along hydrological lines than had been nearly all states, urban water supply and sanitation, rural possible previously. water supply and sanitation, and irrigation are in separate Grassroots Institutions. Not least in importance is the departments, without formal mechanisms to assure cross- need for effective grassroots management of water. Many coordination on water issues. water management issues have their origin and their solu- Recognizing the need for tackling such inadequacies, tion at very local levels. For instance, availability of water is a number of states are taking measures to improve inter- becoming a critical issue for rural water supply throughout sectoral coordination of water issues. Under their World India, especially in the Deccan plateau and arid Western re- Bank-assisted Water Resources Consolidation Projects gions. Because of over-use by irrigation, local groundwater (WRCPs), Tamil Nadu has created a State Water Resources levels are depleting. Contamination of drinking water is also Council and Orissa, a State Water Resources Board. Both a problem, especially from cities with inadequate effluent are chaired by a neutral senior party (respectively, the Chief treatment and larger villages which typically do not have sew- Minister and the Chief Secretary) (refer Box A3.7). These age disposal networks. Severe sources of point pollution, of are permanent committees with membership from all key rivers and g~pundwaterare also a rapidly developing prob- government departments with interest in water. For each, lem due to industrial expansion without associated effluent a technical secretariat has also been created to act as management. Very often, these issues are entirely resolvable convenor of meetings and to provide the professional staff if the community got together and took pragmatic action. inputs on a multi-sectoral basis for preparing river basin For example, a farmers' water users association (WA) in plans and examining inter-sectoral water issues, including Tambaraparani Basin, Tamil Nadu, has expressed concern

%This was a result of the Institutional Study carried out by Government of Tamil Nadu as part of its preparation exercise for the World Bank assisted Tamil Nadu Water Resources Consolidation Project. about the additional extractions of water and the pollution local level by giving more decision-making authority to resulting from new industrial development. The WUA has panchayats (village governments) in rural areas and Nagar been encouraged to take steps to form a cross-sectoral stake- Palikas in urban areas; (ii) promoting fiscal decentralization holders association, including industrial representatives and by increasing the percentage of state resources reaching lo- the local government apparatus. Initiatives should also be cal institutions; and (iii) creating a pl,anningsystem for vil- undertaken to encourage the participation of women and lages and municipalities and entrusting implementation to other minorities who have been overlooked in the past. In the Panchayat Raj and urban local-leirel institutions. While particular, women are larger stakeholders in water than men creation of such bodies under these Acts is still in its infancy, as they are the primary fetchers of water and users of water potential is available for adding respo~nsibilitiesand powers for household purposes, are most directly concerned with (legal and financial) for managing water. This may need spe- sanitation, pollution and health issues, and have a signifi- cific water committees within the panchayat institut'lons to cant role in agricultural prod~ction.~' carry out these functions. In even more frequent cases, particularly in rural areas, A second major potential is offered through the promo- problems and solutions are at micro levels: the village or the tion of irrigators' water users associai:ions, including an ex- panchayat. For example, a village has in its power the ability panded role in water resource management. India is now to make decisions about protection of local ponds or other ready for a breakthrough in this regard. In states such as water bodies from pollution resulting from human and ani- Andhra Pradesh and the WRCP states, major programs are mal waste. Similarly, excessive extraction of groundwater by underway to help establish water users associations in con- a few farmers, resulting in drying up of rural drinking water junction with improvement of the irrigation systems.58The wells, can also be controlled, as can pollution from local small eventually envisaged role is for WUAs to fully manage the industries. Traditional village institutional structures for lower-level irrigation systems and to be federated into man- managing water (especially for tanks, ponds, wells, and mi- agement committees for participation in management of nor irrigation schemes) have been a part of India's history. whole commands, which could also lbe extended to partici- Many of these, however, have eroded over time, partly as a pation in river basin management. The new GOI-World result of the increased involvement of government in man- Bank strategy for irrigation managements9 emphasizes estab- aging water schemes during this century. Such informal or 1ishingWUAs on an India-wide basis, presenting obvious op- formal water user groups now need to be fostered again. portunity for their further adaptation to include other Two developments provide major opportunity. The first stakeholders and handle water resource management issues is the decentralization movement in India and, in particu- more broadly. lar, the options available under the 73rd and 74th Constitu- tional Amendment Acts of 1992 to establish or revive local Interstate institutions government structures at district, block and municipal lev- Inter-state institutions for allocation, planning and man- els. These Acts support reforms in local governments and agement of water resources in basins crossing state bound- promote the development of local-level participation, pri- aries are even rarer in India than state-level institutions. marily through: (i) shifting administrative functions to the Yet, as discussed in Chapter 2, the catchment areas of all of

"In water scarce areas, such as in Rajasthan, women travel as far as 2 km. to collect water. Also, by some estimates, women spend as much as 60 percent of their time on agricultural production activities in the field. "In the WRCP States of Orissa and Tamil Nadu, WUAs are being established under the Systems Improvement and Farmer Turnover (SIFT) components. In Orissa, and now being designed into the Tamil Nadu program, an agricultural intensification program linked with the SIFT is also included (SAIFT: Systems and Agricultural Improvement and Farmer Turnover). The same is under preparation under the proposed Rajasthan WRCP. The boldest WUA program is being commenced in Andhra Pradesh under the Andhra Pradesh Economic Rehabilitation Project (APERP) lrrigation Component. In AP, the following initiatives have already been undertaken: !i) issuance of a Farmers Management of Irrigation Systems Act in 1997; (ii) state-wide elections in June1997 for WUAs across thestate (10,292 WUAs have been constituted); (iii) elections in Novem- ber 1997 of Distributory Committees (federations of minor-level WUAs at distributory level); and (iv) commencement of an intensive trair~ingand support program for the WUAs. As with the WRCP states, the WUA activities are paralleled by improvements of the distribution systems and an agricultural intensification program. These actions are highly consistent with the recommendations in the "India -Water Resources Management (WRM) Sector Review, Irrigation Report" (World Bank, 1998f) and with the recommendations of the Committee on Pricing of lrrigation Water (G01, 1992).

59"lndia- WRM Sector Review, Irrigation Report" (World Bank, 1998f) India's major river basins are inter-state, making the reso- used for resolving inter-state water disputes. Five Tribu- lution of inter-state water allocation issues of critical im- nals have been established thus far: (i) Krishna Water Dis- portance. There is urgent need throughout India to pute Tribunal, (ii) Godavari Water Dispute Tribunal, (iii) establish river basin organizations (RBOs) or various forms Narmada Water Dispute Tribunal, (iv) Ravi Beas Water of inter-state ~oordination.~~There is, fortunately, a host Dispute Tribunal, and (v) Cauvery Water Dispute Tribu- of examples internationally and a few successfu1 examples nal. Decisions in the cases of the first three, which include in India. In India, the Bhakra-Beas Management Board, the awarding of specified quantities of water based on the successfully operates and maintains the headworks and principal of equitable apportionment, have been accepted parts of the main system providing water to Punjab, by the states involved. It required, however, years for such Haryana, parts of Rajasthan, and Delhi. The Ganga Flood Tribunal decisions to be made, and in the case of the Control Commission undertakes planning and coordina- Krishna Tribunal, this is coming up for re-award in 2000. tion of works related to flood control across seven riparian Since at the time of re-award, decisions are based inter- states. The Brahmaputra Board is responsible for coordi- alia on water usage claims, there is a tendency for states nated flood control across seven states and union territo- to make public investments in an unplanned manner (re- ries. The Upper Yamuna River Board is responsible for fer Box A3.2). A better mechanism would be to consider allocating available flows between Haryana, Uttar Pradesh, future rights on the basis of the adequacy of current wa- Rajasthan, Himachal Pradesh and Delhi. These and other ter management practices and to actively discriminate Indian examples are described in Box A3.3 and have all had against such inappropriate investment. positive impacts. The more general case, however, is a com- Although better than nothing at all, and arguably as plete absence of any institution for handling river basin is- good as many other legal mechanisms for resolving disputes sues across states. found in other countries, India's Tribunal Awards are ac- Another means to reach progress towards institutional knowledged to have a number of deficiencies. First, it can cooperation between states is through the River Boards Act take years before a water issue ripens into a fully blown dis- of 1956 which enables states to enroll the Central Govern- pute, prompting the states even to consider seeking to es- ment in setting up an advisory River Board. This mechanism, tablish a Tribunal. Second, even when a Tribunal is however, has never been used, suggesting that changes are constituted, the decision-making process is extremely required to make it more effective. The present Act requires lengthy and time-consuming; it takes an average of 15 years prior consultations with the states concerned before setting to issue the final Award. Inability to determine the facts of up a river basin organization, and the boards so set up only the case is the primary cause for inordinate delays in the have power to advise. As the River Boards Act comes under final decision. This is often due to disagreement and hag- the "Union List" of the Constitution (List I, Entry 56), the gling over supporting data by the states involved. The constitutional powers are already present for amendment of adversarial nature of this process, as well as the Tribunals' the Act to provide greater capacity for the center to inter- membership consisting only of representatives of the legal vene where greater state cooperation would clearly be in the profession, has resulted in over-emphasis being placed on public interest. the effectiveness of presentation and legal minutia. As a re- The second legal mechanism is the Tribunal Award sult, facts tend to get blurred and judges are forced to sift system (provided for under the Inter-State Water Disputes through often biased evidence submitted by claimants. Such Act of 1956 established under Article 262 of the Consti- Tribunal discussions also tend to become highly politicized tution6').The Tribunal has been the primary mechanism as, for instance, in the case of the still unsuccessful Cauvery

fa It should be noted that the term "river basin organization'' as used in this report, is a generic term, referring to any form of institution or institutional coordination mechanism which facilitates inter-sectoral water allocation, planning andlor management on a river basin -whether intra-state or inter-state - basis. This is in contrast to past usage of the term "RBO" in India, which has tended to refer to more formalized types of RBOs and to inter-state RBOs.

6' "Parliament may by law provide for the adjudication of any dispute or complaint with respect to theuse, distribution or control of the waters of, or in, any inter-state river or river valleys" (Article 262, clause 1 of the Constitution). River Trib~nal.~~These and other issues surrounding the irrigation), the Ministry of Health arid Family Welfare, limitations of the Tribunal system are described further in Wasteland Development Board, Ministry of Surface Trans- Box A3. Unless Tribunal procedures can be improved, port, Inland Waterways Authority of India, and for financ- the difficulties of Tribunal Awards are likely to become ing and planning, the Ministry of Finance, the Planning more apparent over time as inter-state water issues grow Commission, and the Finance Commission. Some of the in intensity. current environmental programs ongoing in India and environmental tasks and programs by agency are described Union-level Institutions in Boxes A2.7 and A2.8. At the central level, the Ministry of Water Resources An issue well recognized by water professionals in In- (MOWR) is recognized as the nodal ministry responsible for dia is the need for much better coordination between water. Under MOWR a number of technical agencies, such these different entities. Water respon:sibilities are highly as the Central Water Commission (CWC), primarily con- fragmented. Some of the divisions are detrimental to com- cerned with surface water; the Central Ground Water Board prehensive analysis and treatment of water issues: for in- (CGWB), handling groundwater; and the National Water stance, the split of surface and groundwater which has Development Agency (NWDA), primarily assessing inter- discouraged unitary analysis as a combined resource and basin transfer options, have been created. Other entities conjunctive use. The division between water quality and linked with MOWR include the Indian National Commit- water quantity is also artificial. The separation of main

tee for Irrigation and Drainage, sponsoring some research water services - irrigation, urban, rural, etc. - does not activities, and the Indian Water Resources Society, a non- foster comprehensive planning and tackling of issues such governmental organization which sponsors networking and as re-allocation from agriculture to urban and industry, publications. MOWR also sponsors a number of national water sources for rural drinking water, and pollution of research institutes, including the Central Water and Power water bodies by industries. Furthermore, in some cases re- Research Station (CWPRS) and the Central Training Unit sponsibility divisions are not clear, leading to overlap or, (CTU), both at Pune, and the National Institute of Hydrol- much worse, inadequate handling of issues. In particular, ogy (NIH) at Roorkee. environmental issues are often the victim of unclear re- Many other ministries and agencies are also involved sponsibilities. For instance, the Central Pollution Control with water. Water quality and environmental matters come Board (CPCB) and the State PCBs fc~cuson control and under the Ministry of Environment and Forests (MOEF), abatement of industrial pollution, while pollution from although MOWR also considers these matters. The MOEF agricultural activities is often neglected. is entrusted with coordinating India's Environment Action The MOWR, with support from other ministries, has Program. It has also launched a number of environmental taken various initiatives to encourage coordination and a initiatives including the Wetlands Conservation Program unitary approach to water resources issues. The National and the National River Conservation Plan. Urban water Water Resources Council was established in 1983 and, supply and sanitation projects come under the Ministry of amongst other achievements, produced the National Water Urban Affairs and Employment. Rural water supply and Policy. Strong encouragement is also lorovided by MOWR sanitation is handled by the Rajiv Gandhi National Drink- and its agencies to river basin planning and holistic water ing Water Mission in the Ministry of Rural Areas and Em- management. It is still recognized, however, that there re- ployment. Water for hydro and thermal power involves the mains much to be done to more effectively achieve the co- Ministry of Power and the Central Electricity Authority. operation required at central level. Better cooperation would There are other ministries and agencies with evident strong also enable the center to have greater irnpact on water issues interest in water, such as the Ministry of Agriculture (for at state and inter-state levels.

"The contested (by KarnatakaState) interim Award rendered by the Cauvery River Tribunal in June 1991 is no exception, in view of its interim ntahire. It is also true, however, that the Tribunal has since been incapable of addressing Karnataka's objections, to the extent that the Tribunal has been boycotted by that state and its chairman resigned in 1995. Direct negotiations between Karnataka and Tamil Nadu are reportedly in progress, thus by-passing the now de facto disbanded Tribunal. " Further discussion of the Tribunal Awards system and the five Tribunals established thus far is provided in Salman (1998) Civil Society and the Private Sector depleted and misused, even under conditions of scarcity. Key Finally, the potential contribution of civil society has been features of India's current sub-sectorallintra-sectoral water greatly neglected. By their nature, decisions on water alloca- pricing regime are: tion, planning and management directly impact on commu- Water charges for surface irrigation that are a frac- nities and individuals. No recommendations will be tion of costs of supply, have not been adjusted for successful without the acceptance of the people. Addition- years in most states, and are not volumetrically-based, ally, a considerable reservoir of talent exists in the academic resulting in no incentive to conserve water either by community, the private sector, NGOs and local communi- farmers as consumers or by irrigation agencies as pro- ties. The essential involvement of grassroots institutions, such viders. This is further exacerbated by lack of trans- as panchayats and WUAs, including involvement of local in- parent information on the costs of water provision dustrialists and other members of civil society, has been dis- and on water charges. cussed earlier. An important role can also be played in Charges for groundwater only through the indirect management at the macro-level- state, basin and national. mechanisms of the prices of diesel fuel or electricity For instance, many universities have capabilities in basin charges. In the case of the latter, electricity prices are modeling, hydrology, and other related technical and eco- less than 20 percent of long run marginal cost and are nomic subjects. Interest amongst industrialists is clearly levied on a flat rate basis, rather than by unit of con- present, as evidenced by the Indian Water Works Associa- sumption, providing no incentive to conserve either tion, sponsored by the private sector. If given the opportu- water or power. nity, NGOs are also likely to step forward and could play an Agricultural pricing policies and a domestic commod- important role in motivating and organizing communities. ity trading regime which distort cropping patterns A substantial reason for the limited involvement to date and, consequently, water use. of civil society and the private sector is the limited efforts of Subsidized water and highly centralized water manage- government agencies to inform the public on water sector ment in the rural water supply and sanitation sector issues. In particular, outreach to women has been neglected, which have resulted in poor water service at high cost. yet women are the most interested and involved in rural wa- Water charges for urban domestic consumers that are ter supply, domestic urban water consumption, health and usually below costs of service provision and are un- sanitation issues, and are at least equally concerned as men metered. in agricultural production. More generally, the public at large An inadequately developed and under-priced system has not been comprehensively informed about water sector of economic incentives and disincentives to control pol- issues. In order to foster an environment for change, includ- lution and encourage water saving or reuse technology. ing on difficult policy decisions, such as water pricing, and The absence of sub-sector pricing which reflects the cost to encourage public involvement in water management, there of production and delivery of water and the underlying scar- should be an "awakening" to water issues of common con- city value of water has also served as an obstacle to the cern. Information and dialogue must also be a multi-direc- smooth transfer of water between sectors and states. Further, tional flow, not only from government to civil society, but economic incentives for efficient inter-sectoral allocation - also from civil society to government and between different either through negotiation or "automatic" market mecha- sectoral users within civil society and g~vernment.~~ nisms - largely do not exist in India, with the core problems being: B. Economic mechanisms Absence of a value-based administrative mechanism to facilitate re-allocation and compensation from The existing incentive structure underlies the paradoxical lower-valued to higher-valued uses. phenomenon that unlike other goods where scarcity pruinpts Absence of institutional, legal, regulatory, admin- efficiency and conservation, water resources continue to be istrative and technological mechanisms to enable

The term "awakening" was specifically suggested in the National Work2hop to reflect: the major changes required in the area of public awareness and participation development and operation of formal water markets for water in relation to its actual use by the individual. A for sale or lease of water between users and sectors. volumetric system would be better, but it also needs to be paralleled by prices that are sufficient to have some impact Intra-Sectoral WaterAllocation and piicing on farmer decisions on water usage. Present water rates are Irrigation Pricing. The agricultural sector is the largest user so low that they are negligible relative to gross and net agri- of water (83 percent of water use in India in 1990) and the cultural returns, usually comprising less than 2 percent and deficiencies here thus have particular significance on India's 5 percent, re~pectively.~~Water charges as a percentage of overall water allocation efficiency. In the decades subsequent water productivity are also nominal: in the largest irrigation to the 1950s, irrigation pricing was influenced by a tendency states, charges are only between 0.3 percent (West Bengal) to regard water as a social good and to rationalize its subsi- and 7.1 percent (Uttar Pradesh) of the difference between dization as in the public interest.65This philosophy progres- the productivity of irrigated and un-irrigated lands." The sively became a convenience for vested interests in water net result of these inadequacies is that water pricing has neg- pricing and, in particular, for not adjusting water rates over ligible impact on water use decisions for over 80 percent of time. Very infrequent adjustments became the norm, and in current water usage. some cases states did not adjust rates for over a decade.66The A substantial factor behind the paralysis described cumulative result of these policies is that today's rates are a above has been the lack of transparent public information fraction of costs of water provision. Prices are now so low on water charges, the necessary costs of effective O&M, the that not even the costs of operations and maintenance actual expenditures on O&M, the breakdown of expendi- (O&M) are currently covered by existing rates.67Costs, both ture needs and actual expenditures between maintenance capital and O&M, have escalated substantially, particularly works and operations, and analysis and public information for associated staff salaries (refer Box A4.2). This situation on the structure of staff costs in O&M and identification has seriously impacted on the viability of irrigation. Subsi- of inefficiencies. The size of existing subsidies, what they dies on irrigation amounted to 0.3 percent of GDP in 1994- are for and where they are going (to wealthy or poor farm- 5.68Further, the revenues that are received go into the general ers) has also not been made transparent. Pis a result, the state exchequer rather than to the irrigation department, pro- public is uninformed, uninvolved and highly susceptible to viding no linkage between irrigation expenditures and rev- irresponsible manipulation. This issue also applies to enues and little incentive to improve the service. groundwater pricing (electricity prices for pumpsets) and, Expenditures on maintenance works have long been recog- though usually to a lesser extent, to the urban and rural nized as chronically deficient, resulting in progressive dete- water supply and sanitation sectors. rioration of infrastructure. Groundwater Pricing. The present groundwater pric- A second issue is the method by which water rates are ing structure provides minimal incentives for efficient and assessed. Charges are levied on a per hectare basis, with dif- sustainable groundwater resource use, and in the case of ag- ferent rates by crop and season, in an attempt to at least par- riculture, by far the largest user of groundwater, almost zero tially capture different water uses by crop and varying values price incentives. There are no charges on groundwater itself, of water by season. This system does not, however, charge its pricing being indirect through diesel fuel or electricity

"This is in contrast to the situation prior to Independence. The Br~tishtreated irrigation projects as commercial ventures and devised water rates based on the Full costs of provision, including capital costs plus a return on capital, commensurate with the interest rate then prevailing in the London money market. Water rates were periodically revised upwards. The assessment and collection of these water rates, covering all costs plus a return on capital, were strictly enforced. -Most states have not revised water rates since the 1980s. Punjab and West Bengal have not changed rates since the mid 1970s (and in 1997, Punjab made irrigation free of charge), while Tamil Nadu last revised charges in 1962 ("India: Irrigation Sector Review," World Bank, 1991; "India - WRM Sector Review, Irrigation Report,'' World Bank, 1998f). Change is now beginning. For instance, Andhra Pradesh implemented a three-fold increase in its water charges in 1997, and several other stales have made smaller increases (e.g., Orissa and Haryana).

6'"India - WRM Sector Review, Irrigation Report" (World Bank, 1998f). "World Bank, 1996. "'"lndiz Irrigation Sector Review" (World Bank, 1991).

'O"India - WRM Sector Review, Irrigation Report" (World Bank, 1998f). prices. For diesel powered pumpsets, a variable cost (the price tions, however, have more dramatically impacted agricultural of fuel) is incurred in near direct proportion to groundwa- production and, thereby, water use. Domestic food policies ter usage. For electric pumpsets, almost throughout India, distort cropping patterns and prevent an efficient allocation charges are levied on a flat rate basis per quarter or per of resources - through regional specialization based on month in proportion to the size of the pumpset. Such non- comparative advantage - which results in inefficient water volumetric charging only very indirectly bears relation to use. Domestic food policies do so by blocking the develop- actual water use. Further, in most states, pumpset owners pay ment of an integrated domestic market, and by taxing crops the equivalent of less than 20 percent of the average cost of in those regions where they would have a natural compara- electricity provision and in several states (including Tamil tive advantage, while subsidizing crops in those regions with Nadu, Karnataka and now Punjab), power is provided free less of a comparative advantage. Water-intensive crops thus of charge at enormous fiscal cost. Although many factors in- tend to be promoted in water-scarce states (e.g., sugarcane fluence groundwater exploitation, studies that are available in water-scarce districts of Mahara~htra,~~and paddy in in India and elsewhere point to water pricing as a signifi- Punjab, Haryana, Western Uttar Prade~h~~),while water-in- cant determining factor. For instance, a study in Gujarat tensive crops tend to be oppositely influenced in water abun- shows the expected normal demand curve with an inverse dant states and/or regions (e.g., sugarcane in Eastern Uttar relationship between consumption of groundwater and Pradesh and Bihar, paddy in Eastern India, and in the deltas groundwater prices (refer Box A4.3). Within this backdrop, of Andhra Pradesh and Tamil Nad~).~~ it is not surprising that in many states and districts in India, Rural Water Supply Pricing. Within the rural water groundwater depletion has become a major issue (refer to supply and sanitation (RWSS) sector itself, there are many Chapter 2). This also has significant inter-sectoral and eq- problems regarding water pricing. Although rural drinking uity impacts in that indiscriminate agricultural groundwa- water can be considered to have both social and economic ter use - very often by a relatively small number of larger good features, there has been an overwhelming tendency to farmers - has caused the drying up of many rural commu- subsidize water. Coupled with a past governmental approach nity drinking water wells (refer below)." to the sector - with limited cost sharing and community Agricultural Pricing and Marketing Policies. Distor- participation in investments, operations and maintenance - tions in the prices and markets of agricultural outputs and water subsidies have paradoxically resulted in a poor service, inputs also contribute to inappropriate production incen- many schemes that are not functioning at all, and high costs tives and contamination and misuse of water. For instance, to the local communities. Probably the largest price influ- the centrally-financed fertilizer subsidy leads to serious fer- ences on rural water supply, however, are the present very tilizer imbalances, in particular the over-application of ni- low and non-volumetric charges for electricity used for ag- trogenous fertilizer which through seapage and run-off ricultural pumpsets and the also low and non-volumetric deteriorates the quality of surface and groundwater re- water charges for surface irrigation (as discussed previpusly). sources. A review by Government of Karnataka in 1995 These two distortions provide minimal encouragement for found a variety of distortions favoring indiscriminate use of resource use efficiency in the agricultural sector and, as a di- water (refer Box A4.9).72Output price and market distor- rect consequence, have constrained water availability for ru-

" Groundwater issues are discussed in detail in "India - WRM Sector Review, Groundwater Regulation and Management Report" (World Bank, 1998d). nDi~tortion~include: (i) subsidies for rice production, on fertilizer, pesticides and herbicides; (ii) subsidies on sugar cane seed; and (iii) agricultural power provided free of charge.

" According to some estimates, over 75 percent of irrigation water in Maharashtra is used for sugarcane niltivation which occupies only 3 percent of the state's agricultural area. Refer Box A4.8 for details on how domestic sugar policies (both central and state-level) interact to distort the incentives for location of sugarcane production. 74TheFood Corporation of India policy of concentrated procurement of paddy and rice in water-short Northwest stateslregions discriminates against the development of an integrated rice market, and also discourages paddy production in Eastern India while encouraging paddy production in the Northwest regions. Rice policies in some states, such as restrictions imposed by Government of Andhra Pradesh on exports of rice to other states, tax paddy farmers and discriminate against paddy production in the irrigated or high rainfall regions in that State.

'I For further discussion, refer to the ongoing commodity study series prepared by the World Bank in cooperation with GOI: (i) "The Indian Oilseed Complex: Capturing Market Opportunities" (World Bank, 1997b); (ii) "India's Sugar Industry: Priorities for Reforms" (World Bank, forthcoming 1998a); (iii) "India Cotton and Textile Industries: Reforming to Compete" (World Bank, forthcoming 1998b); and (iv) the ongoing study of foodgrains (World Bank, forthcoming 1998). ral domestic consumption. Many cases of rural drinking wells ferential fees between "green," or lightly polluting indus- running dry or becoming seriously contaminated have been tries, and "red," or heavily polluting industries, are quite documented by various state governments and the Rajiv marginal. Also, the bulk of pollution taxes are not actually Gandhi National Drinking Water Mission. Under India's related to the amount and toxicity of effluent produced, NWP, drinking water has first priority. However, in practice, but are based on the size or nature of the industry. Such largely because of the existing distortionary price regimes fees based on potential to pollute do not encourage mea- both within and outside the rural sector, it often does not sures by industries to control effluents. In other states, "pol- receive its due priority. lution fees" bear even less resemblance to actual pollution. Urban and Industrial Water Supply Pricing. Pricing For instance, in Andhra Pradesh (refer Box A4.5), a pollu- and cost recovery tend to be better in the urban water sup- tion fee is levied solely on the water consumption of the ply and sanitation (UWSS) sector than in irrigation and industry concerned, with no differentiation by type of RWSS. This is largely because industries are charged higher industry and its polllution potential. The fee structure also fees to cross-subsidize domestic consumers. However, as con- favors more water-consuming industries. In many states, cerns water management, the key problem is that pricing has pollution taxes seem to be aimed more at providing the fis- negligible influence on both consumers and suppliers of cal basis for the operation of the pollutio~ncontrol board water. For consumers, in most cities only industries are sub- than at actually regulating industrial pollution. Further- ject to water metering and volumetric charging. Although more, under existing pollution tax rates it is likely that the some cities are attempting to meter domestic consumers, tar- cost of compliance with environmental standards for in- iffs remain so low that there remains virtually no incentive dustry is higher than the cost of non-compliance. Even for users to conserve water. For the UWSS agencies, very few when incentives have been used to encourage industries to are structured as independent commercial entities. Losses are use pollution control equipment, there have been cases absorbed by government and there is, thus, little incentive where the costs of installation and operation outweigh the to be efficient, including in resource usage (e.g., attention penalty associated with non-compliance. Similarly, munici- to leak detection and reducing unaccounted for water). There palities are not adequately taxed against effluent discharge, are few financially viable UWSS agencies. Meanwhile, urban discouraging investment in sewerage treatment. This prob- water supply is under intense pressure from increasing costs. lem is exacerbated by poor monitoring and regulation of Between 1992-1996 costs increased by 45 percent whereas pollution generally.76 water rates for domestic users increased by only 33 percent and 20 percent, respectively, for the first two tiers of the wa- InterSectoral Economic Allocation Mlechanisms ter pricing structure. Current Allocation Mechanisms. Decisions on allocation Incentives for Pollution Control. A positive feature and investments tend to be made with only limited refer- is that both the legislation and the institutions exist for ap- ence to economic analysis and assessment of alternatives. plying incentives and disincentives to control pollution. The Decisions are largely administrative in nature and made on legislative structure is already well developed (as discussed an ad hoc basis rather than through a comprehensive plan- previously). All states have pollution control boards, put- ning process involving the stakeholders concerned. Allo- ting such legislation into practice. Moreover, various forms cation mechanisms, where they exist, are usually inadequate of pollution fees already exist. The problem is that such fees to meet pressing needs for water as they arise, without ad- are usually so nominal that they are ineffective in sending versely affecting existing users and the environment. Allo- the appropriate signals to potentially polluting industries. cations of water to the various sectors are largely bound Thus, Tamil Nadu Pollution Control Board has introduced by history and re-allocations are increasingly made accord- a sophisticated structure of fees with differentials applied ing to a prescribed priority ordering of uses. The criteria according to the classified potential for pollution of the in- used to make such allocations have rarely included consid- dustry concerned. However, as shown in Box A4.4, the dif- eration of the dative value of water in the various uses or

76Forfurther discussion of these issues, see Bhatia, et. al. (1994). sectors. Reallocations of water, typically from agriculture Inter-State Economic Allocation Mechanisms to domestic or industrial consumers, are done through As with inter-sectoral allocation (refer above), inter-state compulsory acquisition and usually without compensation. decisions, largely based on history, are also administratively The critical constraint is the lack of a comprehensive ana- determined with only limited reference to economic and lytical framework or decision support system encompass- regional development considerations. In addition, little ing all water using sectors that enables the appropriate thought has as yet been given to the possibilities of selling determination of pricing and allocation decisions in line or leasing arrangements between states or of multiple-ob- with considered development objectives (refer Box A7.4). jective development programs for shared river basins Better integration of social and economic factors in water (transportation, power, water and other infrastructure), allocation and management will thus require the comple- enabling mutually beneficial development for all riparians mentary development of institutions, planning and analyti- (refer to Chapter 4). cal capabilities. Water Trading and Water Markets. Water resource E.Technological mechanisms transactions in India exist, but they are generally limited to very localized informal water trading between adjacent Technology and Water Productivity farmers, where the practice is quite common especially for Within the technical field, there is substantial scope to al- gr~undwater.~~An example of a more organized grassroots leviate competing pressures on available water through water market that has developed in the Vaigai basin is dis- measures to improve the efficiency of delivery systems, to cussed further in Box A5.6. India has, however, not yet enhance productivity, and to manage demand (refer to developed formally organized inter-sectoral water trad- Chapter 4). India's water use efficiency in all sectors is low ing or markets as found, for instance, in Chile, Western compared to international standards. In the case of irri- U.S.A., and Australia. Unlike in these countries, in India gation, losses in the water conveyance system are high. In the institutions, legislation and regulatory framework do an unlined system, system irrigation efficiency is typically not exist for more formal transactions between, for in- 30-40 percent. Where groundwater recharge would be stance, an agricultural water users association and a mu- beneficial, as is frequently the case, low efficiency of irri- nicipality or industry. In particular, the absence of formal gation systems is appropriate. However, the productivity rights to surface water and of formal rights to sell ground- of end use, in terms of the agricultural productivity per water has hindered transactions in water from low-value unit of water used, is still poor. For instance, on-farm wa- uses to uses with higher productivity. Water trading, rec- ter management is inefficient due to limited or non-exis- ognizing that water is an economic as well as a social good, tent water courses and field channels. Thus, the actual would allow for voluntary transactions rather than the productivity of irrigation is even lower than the irriga- present involuntary and typically uncompensated expro- tion efficiency indicated above. System irrigation effi- priations. Water resource transaztions would enable wa- ciency captures the percentage of water received by the ter to be sold or leased from one willing user to another, fields, but does not capture the effectiveness of irrigation making possible a re-allocation of water to higher pro- in terms of its reliability and timeliness relative to crop ductivity use. The introduction of the more formal water water needs. Excessive use by head-end farmers is also markets where feasible could further provide opportunity widespread because of deficiencies in water delivery sys- for efficient re-allocation using market mechanisms. Such tems. Head-end farmers take all the water they can from water market systems need, however, to be accompanied an unreliable system in case they later do not receive wa- by appropriate local administration and regulation to en- ter. This is exacerbated by the usual absence of commu- sure fairness in their operation and to safeguard social and nal structures, e.g. WUAs, to help improve water sharing. environmental concerns (refer to Chapter 4)." At the on-farm level, water efficiency is substantially nAs discussed in "India - WRM Sector Review, Groundwater Regulation and Management Report" (World Bank, 1998d)

"The potential pitfalls with water markets if such measures are not in place are many. Chapter 4 discusses the particular features required in more detail and recommends that before introd~ictionof a water market, study tours to other countries and careful piloting should be undertaken. EXISTING MECHANISMS AND LIMITATIONS

improved through use of drip and sprinkler irrigation sys- users are not involved in decision-making about the required tems. Agronomic options to use less water through wa- type of data, data quality and data networks, the data col- ter-saving agronomic practices and the use of less lected may have limited relevance to user needs. Overall, water-intensive crops are also possible. Better water har- there is a need for further professionalizat.ion of data and vesting through watershed management practices has also information systems, including training and improved equip- shown effective use of available water. ment for the cadres involved. A systematic and integrated Similar inefficiencies are found for rural and urban wa- approach to the spectrum of activities invc~lvedis required: ter supply. As discussed in the India - Water Resources measurement, collection, collation, quality control, storage, Management (WRM) reports on these two sectors,79infra - retrieval, dissemination and analysis. 'This integrated structure is often in such poor shape that unaccounted for approach is getting underway ia the eight states and five water losses in pipeline systems typically account for 30-50 central agencies (CWC, CGWB, IMD, NIH and CWPRS) percent of the water delivered from treatment plants. Con- participating in the Hydrology Proje~t.~' struction of simple rural water supply systems are also not Limited Basin Modeling and Basin Planning. Actual always up to standards and in many instances are not op- basin modeling is even more limited than the hydrological erational, forcing villagers to resort to unclean water sup- data gaps above. It tends to be restricted to reservoir simu- plies. Water use efficiency in the industrial sector is also poor lations specifically related to an investment proposal or dam when compared to usage of similar industries in other coun- safety, and comprehensive basin plans are either not present tries. Substantial water, and often cost, savings can be ob- or are rudimentary. A few of India's centiers of excellence tained by introducing water-saving technologies, treatment and states are forging change: at the center, the CTU, and reuse of wastewater, and changing industrial processes. CWPRS and NIH; and at the levels of some states, particularly in Orissa, Tamil Nadu, Rajasthan anid Gujarat. How- Data, Basin Modeling and Performance Information ever, such initiatives need to be generali~zedthroughout Systems India, and there is need for access to state of the art mod- Hydrological Data Gaps. Addressing India's water resource eling software (refer Box A7.4).82 management issues also requires substantial improvement Gaps in Performance Measurement and Monitoring. in the data and analytical base and dissemination. First, the Performance measurement and monitoring are also inad- network of measuring stations for river flows, groundwater equate. On only a few irrigation commantds, for instance, levels, water quality and meteorology is insufficient. This in- is there accurate information to assess the impact of irri- adequacy is compounded by the need to improve the qual- gation as a basis for making improvements. Even statis- ity of measuring equipment, the methods of data collection tics on irrigated area can be unreliable, and usually the and collation. Second, many agencies are involved in collect- data available on irrigation efficiency and crop produc- ing similar data.80There is need to develop a coordination tivity are inadequate. Remote sensing is also seldom used. mechanism between these different agencies to standardize Better performance monitoring is also needed in the ur- measurement quality and measured data, and to synthesize ban and rural water supply sectors. While smaller overall data in centralized data banks. Third, such data are often not users of water, their performance levels are probably no easily accessible by concerned users. And, moreover, as better than in irrigation. Improvement by all sectors is

- - ""India-WRM Sector Review, Rural Water Supply and Sanitation Report" and "India - WRM Sector Review, Urban Water Supply and Sanitatio~nReport " (World Bank, 1998c and e, respectively). "CWC, CGWB, CPCB, Health, Environment, Rural Water Supply, the Indian Meteorological Department, etc. from the center; similar fragmentation at state levels; and a number of other actors such as industries and research centers. Box A7.1 illustrates this diversity. "The eight participating states are Andhra Pradesh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa and Tamil Nadu. The World BanWNetherlands-assisted Hydrology Project was approved in 1995. "Assistance to these efforts is being provided by the World Bank. All WRCP projects contain a Water Planning and Environmental Management component, including basin modeling for all of the state's basins. This has included establishment of consultancy and training linkages with Hydraulics Research, Wallingford (U.K:.), Delft Hydraulics (the Netherlands), various U.K. and U.S.A. universities, and several international consultancy firms. An inter-active decision-support model (using GAMS - general algebraic modeling system - software), hasalso been adapted for thevaigai basin by a World Bank-Hanard team. Support has also been provided through software and consultancy to the CTU. essential to under-pin the drive to increase productivity. dissemination and public information and education cam- Transparency, Public Information and Participa- paigns on matters where the public should be particularly tion. Most important of all, there is need for full transpar- well-informed. This would further foster a demand-driven ency of all such data to the general public, as well as public environment for change. EXISTING MECHANISMS AND LIMITATIONS

Matrix I. Existing Mechanisms and Limitations

Existing Mechanisms Limitations Policy Framework National Water Policy does not reflect the recent thinking stated in New Economic Policy, current Five Year Plan, "Report of the Committee on Pricing of Irrigation Water," and other experiences of the sector since 1987 pre-determined priorities, inconsistent with social and economic value of activities concerned over-emphasis on administrative mechanisms for water allocation, rather than value-based or compensatory mechanisms inadequate emphasis on application of economic instruments such as water prilcing and cost recovery environmental issues inadequately addressed weakness as policy guide due to generality absence of legal provisions to operationalize and effectively implement contradicted by existing laws in some cases inadequately reflected in corresponding state-specific State Water Policies and basin-level policies and action plans no mention of encouraging private sector participation less emphasis on participatory approach to water resources management inadequate focuson multi-sectoral approach to planning and management

Legislative and Regulatory Framework State Powers over surface water state jurisdiction fragments river basins as per the Constitution absence of a structured system and process for providing well-defined individual usufructuary rights for surface water legal uncertainty surrounding water rights potentially creates conflict and imbalances in water development. stifles private sector Investment in water projects, and cor~strains inter-sectoral allocation Groundwater rights rights give groundwater private good context in its management and ignore social1 and environmental costs inseparable linkage between land ownership and groundwater rights constrain!; potential for inter-sectoral allocation

Environmental Legislation 1974 Water Prevention and incomplete monitoring and enforcement Control of Pollution Act inadequate adaptation of laws to changing circumstances and new environmental 1977 Water Cess Act protection needs 1986 Environmental Protection Act (EPA) Regulatory Standards SurFdce Water Quality classification inadequate application (except EIAN) (CPCB) inadequate measuring and monitoring to enforce compliance 1983 Drinking Water Quality inadequate regulation of groundwater extraction, including absence of groundwater acts in Standards (ISI) virtually all states, no controls on well-spacing and abstract~on,and ineffective indirect Effluent Standards (EPA) attempts at regulation by NABARD and State Electricity Boards 1994 Environmental Impact Assessment Notification (EIAN) (MOEF) 1989 Hazardous Waste Rules Matrix I. (cont.) Existing Mechanisms and Limitations

Existing Mechanisms Limitations Institutional Mechanisms State-level lnstitutions IrrigationNVater Resources absence of formal institutional mechanisms for coordinated multi-sectoral planning . Departments bias towards irrigation and over-emphasis on civil works Department of Agriculture. Urban fragmentation of responsibilities for water sector issues between different departments Water Supply and Sanitation, Rural Water Supply and Sanitation, Industry, Environment, Health, etc.

Local-level lnstitutions District and block administration inadequate fostering of grass-roots institutions Village panchayats (revived under - lack of effective grass-roots management of water because of limited capacity (financial, 73rd and 74th Constitutional technological, etc.) Amendment Acts of 1992) erosion of informal and formal micro-level water user groups and lack of capacity (financial, Water users associations technological, etc.) to effectively manage water resources

Inter-State Level lnstitutions Advisory River Boards (under limited effectiveness of River Boards Act River Boards Act, 1956) limitations in Tribunal including: lengthy decision-making process, limited information-based Adjudicatory inter-state water decision-making, inadequate representation of disciplines, and lack of effective Tribunals (under Inter-State implementation and monitoring mechanism Water Disputes Act, 1956)

Central-level lnstitutions Ministry of Water Resources fragmentation of water-related responsibilities, including surface and groundwater, water (including specialized organizations, quantity and water quality, and sectoral water users e.g., National Water Resources unclear responsibility divisions, over-lap, and inadequate handling of issues Council,Central Water Commission, - lack of systemic cooperation among central-level institutions Central Ground Water Board, inadequate coordination between GO1 institutions and those at various levels (e.g. state, National Water Board, National local, etc.) Water Development Agency) Other Ministries involved in water, including Ministry of Environment and Forests, Ministry of Urban Affairs and Employment, Ministry of Rural Areas and Employment, Ministry of Agriculture, Ministry of Power, Ministry of SurfaceTrans- port, etc.

Civil Society and Private Sector Academic community limited efforts of government to inform public on water issues and thus general lack of NGOs awareness and participation, particularly of historically marginalized groups such as women Local communities and the poor Private industry general neglect of potential contribution in multi-level water management, consultancy. technical assistance and training hindered by various policy, legal and regulatory, and institutional barrierslobstacles (e.g.. current water service charges and rates of cost recovery are incompatible with private sector participation) I Matrix I. (cont.) Existing Mechanisms and Limitations I Existing Mechanisms Limitations d Intra-SectoralAllocation and Pricing Irrigation Pricing current rates much lower than water provision costs due to no or rate adjustments inadequate O&M and capital cost recovery I area-based charges unrelated to actual water use not effective for efficient water use I nominal impact of low rates on farmer water use decisions lack of transparent information on water charges, the necessary costs of effective O&M. I I actual expenditures on O&M, the size of existing subsidies, environmental costs, etc. 1 Groundwater Pricing absence of direct charge for water use from groundwater sources (indirect pricing through diesel power costs (price of fuel) and electricity pricing) no disincentives for water waste and exces,sive extraction of groundwater due to low (in some cases zero) rural power charges and flat rate (non-volumetric) pricing for electric pumpsets lack of transparent information on actual costs of power provision, the size of existing subsidies, environmental costs, etc.

Agricultural Pricing and Marketing indiscriminate water use due to subsidization of agricultural inputs (fertilizer, herbicides, etc.) Policies distortions in cropping patterns and consequent inefficient water use due to commodity pricing and marketing systems affecting crops and regions differently

Rural Water Supply Pricing overwhelming tendency to subsidize water predominantly government-managed (as opposed to locally or comrnunity managed) inadequate cost recovery and poor service

------Urban and Industrial Water Supply infrequent rate adjustments and low water charges Pricing lack of comprehensive metering and volumetric water charging, particularly for domestic consumers

Incentives for Pollution Control taxeslpenalties ineffective in sending appropriate signals because fees are nominal and not Fiscal incentives for pollution linked to amount of pollution emitted control (offered to industries poor industrial compliance due to low cost of non-compliance (e.g. inadequate regulation by GOI) and enforcement, low penalties) Pollution taxes (set by environmental control boards)

IntelcSectoral Allocation Current Allocation Mechanisms allocations are administratively determined and decisions are made on ad hoc basis, not through a comprehensive planning process with stakeholder involvement - allocations are largely bound by history and re-allocations are made according to prescribed priority ordering of uses, rather than through consideration of relalive value of water in various uses re-allocations typically done through cornpulsory acquisition and without compensation or participation of stakeholders involved

Water Trading and Water Markets absence of well-defined water rights, regulatory framework, institu1:ional structure and enabling technology does not enable formal transactions in water and development of inter-sectoral water markets existing water markets, typically in groundwater for irrigation, locallized and fragmented INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

Matrix I. (cont.) Existing Mechanisms and Limitations

Existing Mechanisms Limitations Inte~StateAllocation CurrentAllocation Mechan~sms decisions are largely based on historical use and are administratively determined, with limited reference to economic and regional considerations and limited participation of concerned parties limited cons~derat~onof possibilities for sellinglleasing arrangements between states sharing a river basin lack of multiple objective development programs on a river basin basis

Technology and Data and Analysis Technology and Water Productivity poor water use efficiency and productivity of end use in all sectors due to physical deficiencies in water infrastructure (e.g., deliverylconveyance systems), inadequate application of water-saving technologies (e.g., drip and sprinkler irrigation, treatment and recyclinglreuse of urban and industrial water) and inadequate application of water-saving techniques (e.g., watershed management, water harvesting) over-emphasis on supply augmentation through traditional structural means and limited efforts to conserve water through demand management, including use of water-saving technologies/techniques, pricing incentives, regulation and public awareness

Data, Basin Modeling and Performance hydrological data gaps including: gaps in measurement stations for river flows, groundwater and Environmental Information Systems levels, water quzlity,and meteorology; poor quality of measuring equipment, methods of data collection and collation; poor coordination between institutions involved in data measurement, collection, collation and storage; limited relevance of data to user needs and restricted dissemination of available data limited and incomplete use of basin modeling with stakeholder participation to analyze various wzter resource development scenarios and to assist in decision-making gaps in performance and environmental measurement and monitoring lack of transparency, public information and participation Reform Options and Recommendations

he review in Chapter I11 of the nation's existing mechanisms for water resources _ _/ allocation, planning and management - their limitations and opportunities for T improvement - sets the stage for the reform options and recommen~dationsdis - cussed in this chapter. The recommendations will necessarily need to begin from the current status of water resources management in India. Thus, many, especially at state and basin levels, can be considered as starting actions in what will need to be an energetically implemented process of change. The change process should aim to reach longer-term goals exemplified in the various cases of successful water resources management referred to in this report. Such longer-term vision is further discussed in Chapter V.

The options and recommendations presented in this discuss the enabling environment anci the incentive frame- chapter will aim at: work for implementing the change process, and make spe- (a) Improving the Policy Framework; cific recommendations on the timing and strategically most (b) Strengthening the Legislative and Regulatory immediate actions to start the reform program. Framework; The main intervention areas discussed in this chapter (c) Establishing Government and Non-Government In- are shown in Diagram 1 ("Interacting Areas for Improving

stitutions for Water Resources Management; WaterResourcesManagement"). -- - - (d) Introducing Economic Incentives for Efficient Water Use; A. Improving the policy framework (e) Upgrading Technology to Enhance Water Produc- tivity; and Fundamental to improving India's water allocation, plan- (f) Improving Modeling, Data, Performance and ning and management is the establishment of a relevant Environmental Monitoring and Public Informa- policy framework at the levels where policy needs to be tion. implemented. The key gap is at the state level where, ex- Within this framework, several other attention areas cept for Tamil Nadu, Orissa, and Rajasthan (under prepa- will also emerge: (i) the need for public-private sector part- ration), State Water Policies do not exist.83Thinking nership; (ii) the need for greater decentralization, stake- through and establishing a coherent policy guide for its holder participation and involvement of grassroots water sector is an essential first step for a state to com- organizations; and (iii) the need to place much greater mence the more comprehensive treatment of water that emphasis on demand management. Chapter V will further is required. Formulating the policy would provide the

"Preparation of a State Water Policy is a standard part of the preparation process for a WRCP project financed by the World Bank. Diagram I. Interacting Areas for Improving Water Resources Management

Water Policies

Legislation & Regulations - J

Incentives Institutions I 1I Water Charges ~ater'~llocGion, Electriciry Prices Volumetric Charges Planning & Pollution Fees Management Technology Investment Incentives Water Markets Modeling, Data Performance & Environmental Monitoring 7 & Public information I

Between Sectors Between States

Water Use Efficiency, Conservation & Environmental Management Economic Growth, Social Welfare & Resource Sustainability

K. OblitaslH. Qaddumi opportunity to review all water-related interlinkages, in- Participatory approach to water resources manage- cluding agriculture, urban and industrial, and environment. mental. Such a policy statement could also outline the key Private sector participation. legislative, institutional, economic and technological actions that the state envisages to improve management of B. Strengthening the legislative and its water resources. Regulatory framework The existing National Water Policy (hWP) also needs updating. This would likely require longer to formulate than Revising and strengthening the legislative and regulatory frame- the individual state-level policies above because of the need work will be fundamental to long-term improvement of India's for dialogue and consensus across states. The most urgent water resources management. The existing legislation provides need is for policies at the state-level, where most water deci- a useful starting base, but as discussed in Chapter 3, requires sions are taken and where policies are usually absent. A longer supplementing in a number of key arleas. Given that some time-frame for revising the NWP would be needed and may changes, particularly those involving colnsensus across states, enable benefiting from the deliberations at state levels. may take longer to implement than others, an opportunistic ap- Core features of the State Water Policies and of the re- proach would likely be required, making the adjustments that vised NWP should include: are most urgent or can be done easily first. More reform- Comprehensive approach to water development on a oriented states or those states where existing legislative inad- river basin basis. equacies are particularly constraining arle likely to lead the way Treatment of surface and groundwater as a unitary in state-level legislative reforms. The center can take action to resource. support the state-level legislative reforms and can, simulta- Multi-sectoral perspectives integrated in all decisions neously, enact legislation supporting inter-state cooperation. and planning. Again, such central actions should focus on areas where reform Integration of both quantity and quality-related as- is recognized as particularly pressing. Silch a "cherry-picking" pects of water use and development. approach rather than attempting comprehensive, simultaneous Full integration of envieonmental and health change will get a process started and create an environment for aspects. enacting more difficult changes later on. Integration of pricing and economic incentives. The areas where legislative change are particularly re- Introduction of administrative allocation mechanisms quired are: incorporating economic or value-based criteria, as Amending existing state-level legislation to enable well as promotion of market-oriented appro ache^,^^ implementation of State Water Policies. together with regulatory mechanisms, to water man- Issuing State Groundwater Acts to regulate ground- agement. water exploitation. Greater emphasis on demand management ap- Enacting or amending central legislation to enable the proaches. center to play a more pro-active role in planning and Assured 0&M funding and related policies and rev- management of water resources from the national per- enues (water charges) generation. spective, including in establishiment of river basin or- Technology improvement aspects, including pro- ganizations. ductivity enhancement, water conservation and Enacting or amending central legislation to enable bet- water reuse. ter conflict resolution and functioning of Tribunals. Intended implementation actions, including core re- - Modifying the water rights system in order to pro- form areas for legislation, institutions, the incentive vide for secure, defensible, ar~denforceable owner- environment, and technology. ship/usufructuary rights to surface and groundwater.

"Development of brokered compensated trades and possibly water markets, initially on a pilot basis. Reviewing and Amending State-level Legislation have enacted specific pieces of legislation, addressing con- Given that the primary responsibility for water de- crete objectives. These are: (i) the Act limited to ground- velopment and management is at state level and much of water in the Chennai metropolitan area and (ii) the Bill the supporting legislation is also under existing state laws limited to protecting drinking water sources in or needs to be included in state laws, an evident need is Maharashtra. However, implementation of these laws has to make necessary legislative changes at the level of each bee< only marginally successful in achieving the stated state. Legislation needs are state specific, depending both objectives. The evident political difficulties of the states on the issues and development objectives in each con- in implementing a state-wide bill on groundwater regu- cerned state and the existing status of the current legisla- lation points to the need for a more widely acceptable for- tive framework. In most states, typical needs for new or mula. In the "India - Water Resources Management revised legislation will be in areas such as: (i) the laws re- (WRM) Sector Review, Groundwater Regulation and quired to implement new or revised institutions and in- Management Report" (World Bank, 1998d), a variant of stitutional responsibilities for water resources this has been proposed, emphasizing the Atablishment of management; (ii) laws relating to strengthening regula- a state-level enabling framework and a grassroots ap- tion of water resources; (iii) legislation relating to pollu- proach to implementation, and focusing initially on the tion control; (iv) enabling legislation for establishment of most critical aquifers. This is likely to be the way forward water user and multi-sectoral stakeholder associations and and the approach should be examined by each state as a participation of the private sector and civil society;85(v) basis for preparing the state's own legislation and regula- enabling legislation for new forms of water charges and tory framework. collection procedures; and (vi) specific legislation regarding water rights and groundwater management. No uni- Amending the River Boards Act form prescription can be given for the new or amended The treatment of water primarily as a "State Subject" sig- legislation required in any particular state. Each state nificantly weakens the capacity of the center to assist the should thus undertake a review of its existing legislation states in improving water resources management and in in light of its State Water Policy and development objec- resolving inter-state water sharing issues.86No river basin tives for the water sector. On that basis, a set of legisla- organizations have to date been created under the 1956 tive adjustments should be submitted to the state River Boards Act despite the widespread view in India that authorities for consideration and subsequent enactment. there is great need for improved collaboration between The legislation needs to be paralleled by strengthening or states for inter-state rivers. The problem is that on such in- creating the institutions required to implement and en- ter-state rivers there is usually at least one riparian (usu- force it (refer to Creating a State-Level Structure). ally the upstream state) which has less interest in the establishment of a RBO. The Act presently requires the Groundwater Legislation prior consent of the states. A simple amendment would be A specific need in all states is the enactment of ground- to give powers to the Central Government to establish a water legislation to enable better regulation and manage- RBO suo moto. This would be permissible under India's ment of groundwater development and extraction. present Constitution as the River Boards Act comes under Although a Model Bill for groundwater regulation has the "Union List" (Entry 56), which clearly recognizes a role been prepared by the Central Ground Water Board, none for the center in managing inter-state rivers. Amendment of India's states have enacted it wholesale. A few states of the Act could be achieved through simple majority in

"Although not a recommendation made in this report, some observers have suggested that the Constitution should be amended to include "water resources abstraction, extraction and use" on the Concurrent List. Water would thereby become an item open for the Union Legislature to legislate upon, with resulting billslacts being adapted and subsequently adopted by states through separate legislative action. It has been argued that such a constitutional amendment would recognize water as having both national and inter-state dimensions for purposes of planning and management across state boundaries as well as being a "State Subject" in terms of specific implementation of development projects and management of state water resources. However, placing water on the Concurrent List would require concurrence of a majority of the states and considerable dialogue, and is unlikely in the short term. Meanwhile, other measures to improve inter-stale and center-state interactions on water have been recommended here instead. Parliament and would be an important under-pinning step tervals (say, 50 years). This will1 help in allaying the for establishing RBOs. Opinions on this vary in India and states' understandable reluctance to lock themselves there are concerns at state levels that this would give un- in deals they may later regret as circumstances change. due power to the center. A variant of the above would be Establishing basin fact-finding mechanisms, with the to empower the center to coordinate the creation of an in- participation of the center and olf the concerned states. ter-state RBO where at least one state has requested this A river basin organization could perform this func- and after an agreed time period for the states to take acti~n.~O tion at their levels.87 Modifying criteria for awarding decision to incorporate economic or value-based considerations. Strengthening the Tribunal Awards System The existing Tribunal Award system for resolution of in- Water Rights ter-state disputes needs to be substantially streamlined. The A more clearly defined system of usufructuary/ownership following complementary and mutually-reinforcing op- rights and a process for the granting by government of these tions should be adopted to ensure both consistency in the rights needs to be established. For surface water there are quality of decision-making and expediency in the adjudi- two options: (i) abolishing riparian rights of individuals and cation process: introducing a system of government-administered water ab- Empowering the Central Government (by necessary straction and use licenses, and (ii) maintaining riparian amendments to the existing Inter-State Water rights but introducing government-administered licensing Disputes Act of 1956) to facilitate institution of requirements. Both options are equal in terms of the com- tribunal^.^^ Specifically, khe Act should be amended plexities associated with their implementation and admin- with a provision that on receipt of a grievance from istration. However, the latter option is more feasible given any party (state) the center may constitute a Tribu- that it represents a less radical departure from existing legal nal after one year if the co-basin states have not yet provisions in maintaining the link be~uveenriparian land and arrived at a negotiated ~ettlement.~~ surface water right^.^' Introducing mandatory time-limits for: (i) the time Water rights options for groundwater include, (i) re- between request or decision for a Tribunal and its es- placing the rule of absolute ownership of groundwater with tablishment; (ii) the announced decision of a Tribu- a statutory system of permits for groundwater prospecting, nal; and (iii) the time period available for a state to extraction and use, and (ii) providing the government with present any objections to a Tribunal decision and for stand-by authority to institute a perrnit system for ground- response by other parties. water extraction and use on a selective basis, limited to the Creating a statutory authority for the effective imple- aquifers in need of priority attention. The second option is mentation of the Award and for managing the river the approach reflected in the Model Bill for groundwater basin whenever a Tribunal Award is made. regulation (June 1996 version), circulated by the Central Fixing by law the review of Tribunal Awards at set in- Government to the states. It is also the approach reflected in

"Amending the River Boards Act to give suo mot0 powers to the center was the subject of considerable debate at the National Workshop, with a number of state representatives opposed to the idea. Part of the reservations may have been due to absence of a clearly defined stnicture and mandate of the term "RBO"in India. It is recognized that opinions in India on this issue are likely to differ. It would thus be appropriate for state governments and the Central Government to reflect further on this issue. It should be noted that at the National Workshop, while there was substantial agreement amongst the state and central government and non-government participants on this issue, a few states had queries or reservations. B9Thisis consistent with the "Sarkaria Commission Report" (1988) recommendation that the Inter-State Water Disputes Act should be amended to provide suo mot0 powers to the center to establish Tribunals. The modified recommendation provided here after the National Workshop has the advantage of allowing the states to come to agreement amongst themselves, the Tribunal process thus being a back-up last resort. It is also consistent with Entry 56 of the Constitution where a pro-active role by the center is clearly indicated. "The Role of the RBO could be restricted to determining the facts and verifying the supporting data (within a fixed deadline of 12 months). These would only be presented by the parties before the Tribunal, with a view to facilitating its decision on the uncontested facts. Where a Tribunal is involved, the center's presence on the Board of the RBO is also advisable to help guide and orientate the Board's functioning. "This is the approach which was adopted in England and Wales when, starting in 1963, all new riparian abstractions and uses of river water were subjected to licensing requirements. the legislation enacted by the States of Maharashtra, Gujarat, defined by their hydrological, climatic and socio-economic Karnataka and by the Union Territory of Pondicherry. The conditions - and, in particular, contain features that safe- advantage of this option over the first is that it offers flex- guard social welfare and the environment (refer to Introduc- ibility to direct effort and resources where the need is great- ing Water Trades and Markets). est. However, a risk is that it may perpetuate ad hoc reactions to crises unless comprehensive, long-term preventive mea- Other Central Legislation sures are also introduced. While amendments to the River Boards Act and Inter-State For both surface and groundwater rights the follow- Water Disputes Act are the most important central legisla- ing substantive features would be required. First, due re- tion needs, the need for other legislative adjustments should gard should be given to existing surface water and also be reviewed. It is recommended that a task force be es- groundwater abstractions and uses at the time the govern- tablished to review the adequacy of existing central legisla- ment-administered permit requirements are introduced. tion and any further amendments or new legislation that Appropriate provisions to protect such rights might be ob- might be required. For instance, further backstopping legis- tained from international experience in establishing new lation may be necessary for the handling of various environ- water rights systems (refer Boxes A5.1 and A5.2). Second, mental issues. permits should not be unconditional, but should be made subject to terms and conditions, including quantity and rate C. Establishing government and non- of water withdrawal, duration of the right, purpose of wa- government institutions for water resources ter use, manner of use, point of abstraction (or location of management well) and point of return of excess flows. Third, the water right should be subject to suspension or cancellation un- Institutional mechanisms need to be created or strengthened der specific circumstances, with necessary safeguards. at all levels - state, grassroots, basin and union - to en- Fourth, records should be made and updated of all water able implementation of efficient water allocation, planning rights licences. Finally, water rights should be transferable: and management. These institutions should include various the ability to conduct exchanges of water rights for a tem- forms of private sector involvement, as well as the partici- porary (leasing) or permanent period of time, is vital for pation of local-level and non-governmental organizations. the water rights system to generate incentives for both wa- As additional responsibilitiesare shouldered by the non-gov- ter conservation and optimal allocation. ernmental sector, central and state institutions can modify In the Indian context, practical means of initially imple- their role accordingly. menting water rights may be required. Initially, piloting could be done in selected areas, where water is more scarce Building Non-Governmental Participation and the potential for mutual benefits from water trading are Underlying all initiatives should be an orientation to fos- evident (refer Boxes A5.4 and A5.6). Also, it may not be prac- ter the role of stakeholders, civil society and the private tical to commence with individual rights. Instead, licensing sector in decision-making and implementation. Govern- could be done for bulk allocations to formal water user ment has an important role to play in water allocation, groups or other local-level institutions. In turn, the water planning and management, but is only an influencing ac- user groups would further distribute and arbitrate informal tor on the primary stakeholders involved. These stake- water rights amongst their members. The individual's water holders include every household in India as a consumer security will derive from the security of the water rights held of water, all of India's farms, commercial entities and in- by the representative group (e.g., water users association, dustries, and larger community aggregates such as water community or apartment dwellers' association, village users associations, villages, associations of industries, etc. panchayat or municipality). Most important, and stressed by Even within government, the state or central-level insti- Indian planners, the institution of a water rights system tutions are only at the apex of an array of more local in- would need to be undertaken in a careful manner which rec- stitutions: panchayats, block and district administrations, ognizes the unique characteristics of different regions - as municipalities, etc. The higher level administrations, both at state and central levels, are not the directly concerned agencies. Then, there is need to encourage other actors to stakeholders. They are not directly accountable, are too get together and to form grassroots or 1arg;er institutions. far from the action to be effective at grassroots levels, and This can require massive effort by government and can usu- do not have the staff or financial capacity to be deeply ally be further enhanced by involvement of leading NGOs involved at micro levels. Thus, emphasis should be placed and academics. For instance, the recent creation across the on enhancing the role of the direct stakeholders in water state in Andhra Pradesh of WUAs required a vast political management, planning and allocation. mobilization campaign and major training and support by Nevertheless, government has a critically important role the government agencies. Creation of grassroots-led RBOs to play. Government has, to date, held almost exclusive re- in India would also likely require facilitation and training sponsibility for all decision-making, investment and man- by government or NGOs. agement in the water sector. As a result, civil society Paradoxically, there is still urgent need to create and institutions in the water sector are weakly developed or non- strengthen government institutions, parti.cularly at state existent. Local government administrations, such as the levels. This is because in most states, while specialized agen- panchayat (village level) institutions, are also still fragile and cies exist for particular components in t:he water sector require progressive strengthening. Government will need to (e.g., irrigation, municipal water supply, rural water sup- play a lead role in fostering and catalyzing change to greater ply, hydropower, etc.), there are no such institutions for civil society and grassroots involvement. Creating this en- inter-sectoral coordination and managem~entof water re- abling environment for change will be one of government's sources (refer to Chapter 3). Without these, the capacity to greatest challenges. do the critical activities described above is not present. The government will thus continue to play 2 core role. Thus, the options and recommendations discussed below It is through government that legislation, the regulatory ap- include both the strengthening of the government appara- paratus, and much of the pricing and incentive environment tus - but in defined areas related to the above objectives is created and applied. Government as a neutral party is also - and the encouragement of a greater role for the non- needed to resolve some disputes. Government, if well asso- government sector. ciated with the academic community, researchers and civil society groups, is best able to identify negative externalities Creating a State-level Structure and inter-generational issues that need to be incorporated The complete absence of state-level institutions for inter- in decision-making. Many environmental or social issues, for sectoral water resources allocation, planning and manage- instance, have temporal or externality dimensions and can ment needs to be rectified as a matter of urgency. The only partly be accommodated through market mechanisms initiatives undertaken by Tamil Nadu and Orissa States, as- or interactions between the directly concerned players (re- sisted under their world Bank-financed .Water Resources fer BoxA4.10). Consolidation Projects (WRCPs), initiatives in other states,92 Building the role of the non-government sector will re- and various international examples also cited in this report, quire energetic actions by government. First, there is a sub- can be used as models, with appropriate adaptation to suit stantial need for better public awareness of water resources the specific circumstances of each state (refer Box A3.7)?3 issues, and public education and outreach should become As far as possible, existing initiatives or institutions should a primary function of state and central water resources be used as a starting point. The first need is to establish a

"For instance, Maharashtra has created a "Water Resources Authority" under the chairmanship of the Chief Minister. The authority comprises experts from the different sectors, NGOs, the Chief Secretary and other concerned Secretaries and meets at two to three month intervals. The Member Secretary of the Authority is the Secretary, Water Supply and Sanitation Department. Maharashtra also intends to strengthen the environmental capability and focus of this structure. Substantial actions are also intended by Punjab under its recently issued State Water Policy. A multi-tiered institutional structure is proposed: (i) a "Water Resources Council:' chaired by the Chief Minister; (ii) a "PunjabState Water Resources Committee" with multi-sectoral representation at Secretary levels and chaired by the Chief Secretary; (iii) a "Technical Advisory Committee," comprising heads of department and other water professionals; and (iv) for handling water issues at decentralized levels, six "Regional Technicall Advisory Committees:' including local representatives of user departments, chairmen of local bodies and Zilla Parishads, representativesof regions farmers and WUAs, and regional non-govern- rnent organizations active in the water sector. 91Similarinitiatives are also underway in Rajasthan State as part of its preparation work for the proposed WRCP in Rajasthan. multi-sectoral institution at the level of each state for mak- The SWPO would, as one of its primary functions, ing decisions and undertaking planning and analysis. This prepare comprehensive basin plans for all river basins would be through creation of a State Water Resources Board, in the state and a State Water Plan, undertake special including technical and environmental capabilities. studies of particular water resources issues, and pre- Establish a State Water Resources Board (SWRB). pare environmental management plans by river ba- The SWRB would be the state's most senior body for sin.96Where feasible, an existing institution may be making decisions on water policy, water allocation adapted to become the SWPO. For instance, in Tamil between sectors, planning of water development pro- Nadu the Institute of Water Studies had responsibili- grams, and resolution of water resources issues. It ties redefined by Government Order to serve this pur- would be a formal committee comprising the heads pose. of all relevant government departments and agencies Establish environmental management capability connected with water, supplemented by representa- in SWRB and SWPO. Special measures will usually tives from water users associations, industry, other be required to establish dedicated capability to stakeholders and academia. It should be chaired by a handle environmental matters. As discussed above, neutral senior party: for instance, the Chief Minister, a special environmental working group should be Chief Secretary, Finance Secretary or Development established under the SWRB. Within the SWPO and Comrni~sioner.~~Initial experience also suggests that at basin levels (see below), an Environmental Unit a specialist working group can be useful for the more should also be established. Membership of the envi- technical work of the SWRB. An environmental work- ronmental working group and staffing of the Envi- ing group is also useful to provide sufficient focus on ronmental Units can generally be found from environmental issues. existing government or academic institutions Establish the SWRB's State Water Planning Orga- (e.g., from universities, the SPCB, Environment nization (SWPO). The SWPO would be the techni- Department, Department of Health and Family Wel- cal secretariat for the SWRB and would comprise fare, Irrigation Department, Groundwater Depart- full-time professional staff in areas related to multi- ment, et~.).~' sectoral water resources planning and management: Institutional adjustment is also needed at the states' hydrologists, basin planners, economists, and sector operational levels. This will generally require institutional specialists from irrigation, urban water supply, rural adjustment of the main agency responsible for bulk wa- water supply, industry, power, groundwater, agricul- ter supply and water resources management, with particu- ture, environment, etc. As far as possible, staffing lar focus on river basin management and a multi-sectoral should be through transfer or secondment of exist- approach.98 ing staff from the various government department^.^^ Reorganize and broaden the mandate of the Irri- The head of the SWPO would be a senior officer (Ad- gation Department. The Irrigation Department ditional Secretary ranklequivalent or above) and should be restructured and reorganized from the tra- would also serve as Member Secretary of the SWRB. ditional narrow focus on irrigation infrastructure.

" Different options are available for the chairmanship of the SWRB. The likely most operational structure would be that it is chaired at the administrative rather than political level. For instance, in Orissa the SM'RB is chaired by the Chief Secretary. As needed, issues or recommendations are brought to the Cabinet (Chief Minister and other Minis- ters). Alternatively, the SWRB could be chaired by the Chief Minister or other neutral senior Minister (for instance, in Tamil Nadu the State's equivalent of the SWRB - the 'Water Resources Council" - is chaired by the Chief Minister). In such situations, a second tier executive committee should also be present in the SWRB, chaired at the Secretary level, in order to ensure regular and frequent meetings of the SWRB. "There will also be need for some recruitment of additional specialist expertise, particularly in economics, basin modeling and computerization, which can be drawn from universities, wnsultancies or other organizations. 96Anexample is the Environmental Management Plan prepared for the Bhavani basin by the Institote of Water Studies, Tamil Nadu. P7Thekey is that environmental capability needs to be created. The environmental units or cells would be integrated within these institutions and should not he considered as separate entities. All planning, decisions and modeling should integrate environmental considerations as part of the process. 'Yypically in India the primary agency is the State Department of Irrigation or Water Resources, but these need adaptation to a broader role. The reorganized department would have compre- cultural awareness is required. For instance, most hensive responsibility for overall basin management, staff in state irrigation, urban and rural water sup- including surface and groundwater, bulk water supply, power and other water-related department! plies to urban, rural and industrial consumers, irri- have almost minimal familiarity with comprehen- gation services, and flood and drainage management. sive basin planning, water resources management, This would typically involve the handling of addi- and environmental issues. Careful selection of staff tional specialist functions such as hydrology and wa- with appropriate specialist backgrounds from dif- ter resources data, absorption of staff and ferent government departments would partially responsibilities from other government departments meet these constraints. Linkage through contracts such as groundwater, and, very- importantly, reorga- or other arrangements with state universities would nization of field staff along river basin lines (or also be helpful. Such initiatives would, however, groups of contiguous basins where small) under need major training and provision of consultancy River Basin Managers. They would also provi.de key assistance to transfer the specialist expertise re- technical inputs to the SWPO and SWRB. The quired. The SWPO and the Environmental Units SWRB, however, would be the core institution for would also need the full range of equipment, com- multi-sectoral planning and allocation decisions, and puters and software required. care is needed to ensure that even such a broadened Public Awareness and Involvennent. This is a irrigation or water resources department does not central and critically important need. In order to have undue influence in the SWRB.99 enable acceptance of water allocation, planning and Create river basin organizations (RBOs) at state management decisions, the public needs to be well level. This would be done progressively, commenc- informed. Likewise, the public should be brought ing with basins where there is particularly obvious into decision-making and information should be need and stakeholder interest. The objective would be transparent and flowing in both directions: from to implement integrated basin management at the op- government to civil society and from civil society to erational (i.e., basin) level with stakeholder partici- government. pation. Initiation of these would be through the River Basin Managers. An initial and already considerable Establishing Grassroots Institutions task would be to bring together the various govern- A core function of the state-level institutional structure mental stakeholders from the different sectoral users. described above should be to develop and foster grassroots This should progress as quickly as practical to incor- institutions for managing and allocating water. These poration of private sector interests (e.g., water users could fill various niches within a river basin: village level associations, industrialists, NGOs), and where already (for instance, village water commititees under the readily identifiable, such stakeholders should be in- panchayats, particularly for assuring rural water supply), cluded from the outset. Over time these RBOs would sub-watershed levels, district levels, anld for the whole assume increasing imp~rtance.'~~ river basin. As discussed in chapter 3, major opportunity In implementing the above institutional adjustments exists to establish micro-level institution,^, in part build- (refer above), two areas should be emphasized: ing on already established water users associations and Training and technical assistance. For all of the through the opportunities created under the Panchayat above, major training, staff familiarization, and Raj Acts. It is, further, at this level where most water

'REffectively,irrigation departments should become"Departments of Water Resourcel" (DOWRs), with a basin management role going well beyond the current mandate. This is being implemented under theTamil Nadu and Orissa, and (forthcoming) Rajasthan WRCPs. An issue requiringcare is to ensure that the SWRB and SWPO are not unduly influenced by any one sectoral user. For instance, in both Tamil Nadu and Orissa the SWPOs have both been created through reorganization of existing,units within thp former public workslirrigation departments. This is proving a useful interim arrangement, but consideration should soon be given to making the SWPOs independent and answer- able only to the SWRB. Current thinking in Rajasthan is to create a SWPO with such independence from the outset. ImAs discussed elsewhere in this report, RBOs can take various forms and degrees of autonomy and executive power. At its simplest, a RBO could be a consultative mechanism (e.g., formal or informal committee) for dialogue between stakeholders. issues initially arise (e.g., point pollution from an indus- necessary equipment or micro-level financing as re- try, over-exploitation of groundwater by a few village quired, etc.). farmers to the detriment of drinking water for the rest of the village), and where the stakeholders can most effec- Role of the Private Sector and Civil Society tively meet together to find mutually acceptable solutions. The private sector, academics, NGOs and other civil so- Micro-level institutions also form the democratic base for ciety should be maximally integrated in both government the larger institutions required at basin level and in rep- and grassroots institutional initiatives. The private sector resentation in the SWRB. The array of field-based NGOs itself -industry and commerce - is a key user and stake- in most states, as well as other forms of civil society, such holder in the water sector. Industrial GDP now exceeds as the outreach activities of industries and academic in- agricultural GDP and its far faster growth rate will institutions, form an important source of talent that can be crease its importance over time. It is, thus, important that channelled to support such initiatives. industrial and commercial representatives are involved in The approach to achieving this is likely to be state spe- water planning and allocation decisions. Establishing an cific. In all states, the state institutional structure de- incentive and regulatory environment to encourage wa- scribed above would likely be an important leader of such ter conservation, recycling and reuse is clearly needed as initiatives. In particular, the basin managers and their field these water users and polluters become increasingly sig- staff could play an important extension role, but should nificant. The private sector can also be an important link-up with universities and NGOs. Other key govern- leader of change and innovation as demonstrated, for in- ment departments would include the agency responsible stance, by the Indian Water Works Association sponsored for rural water supply and the district commissioners and by the private se~tor.'~' block level administrations, but interest would be found The academic and research community should also be in many other government departments as well. The re- more greatly involved. A number of Indian universities have structured Irrigation Department and its basin-organized developed expertise in the water sector: for instance, Anna field staff could commence and coordinate the mobiliza- University and the Indian Institute of Technology in tion effort, which should begin with a broad consultation Chennai, the Engineering Staff College of India at process with NGOs, stakeholders and other government Hyderabad, etc. Where, as in practically all states, basin mod- departments. Initially, a piloting approach would be best, eling and environmental analysis needs to be enhanced, in- concentrating resources and gaining experience from sev- volving or sub-contracting academic or research centers or eral localities where stakeholder interest is already high. consultants would generally achieve higher quality and lower As with the staff for the new state-level institutions, train- government costs than attempting to create such capacity ing and technical support would be required to assist the entirely within the government sector. grassroots-level institutions. Most panchayat institutions, Efforts should also be made to actively integrate groups for instance, are still in their infancy, with a still fragile that have tended to be marginalized, particularly women social organization and financial base. An example of a as they are often the primary stakeholders (refer to Chap- state government-World Bank sponsored initiative to ter 3). Examples of initiatives with women's participation commence building a stakeholder-based RBO is ongoing are contained in the India - WRM reports on RWSS, in Tamil Nadu's Vaigai basin, as described in Box A3.8. UWSS and Irrigation (World Bank, 1998c, 1998e and The key need is that devolution and decentralization of 1998f). For both RWSS and UWSS, women are most di- responsibilities and encouragement of grassroots institu- rectly involved. Amongst the leaders of change are NGOs tions must be accompanied by sustained efforts and such as the Self Employed Women's Association (SEWA) resources towards capacity building in all required areas and Slum and Pavement Dwellers' Association Resource (training, extension, monitoring, accounting and audit- Center (SPARC). For instance, SEWA has campaigned in ing as needed, technology transfer, assistance with Gujarat to involve women in all RWSS decision-making and

la' Brook Cowen (1997) provides Further discussion on encouraging private sector in ~volvementin the water sector. implementation, and for women's associations as a basis for mechanisms or formal committees to faciilitate planning community participation.lo2SPARC's program in Mumbai and coordination to more formal structures, including to assist slumdwellers in gaining access to water supply is hands-on management (refer footnote 60). Creation of the operated through women's groups. Swayam Shikshan state-level institutions will provide a capacity for dialogue Prayog and DRDA are amongst other NGOs active with between the states. The next step should be for the states women's groups. In Aunli irrigation command in Orissa, a involved to commence a dialogue on key river basins. This group of women have formed a WUA as a result of discus- could begin on an ad hoc and informal basis, but should sions within the village, facilitated by a NGO, the Youth aim for agreement on an institutional structure and a man- Services Center.lo3The WUA is headed by a 13 member ex- date for a RBO. The many examples internationally, and ecutive committee comprised entirely of women and in- several in India, can be utilized in making decisions on the cluding 52 women members (out of a total of kind of RBO that would be appropriate for the basin con- approximately 225 members). The executive committee is cerned. Various structures and roles are described in Boxes responsible for making decisions about water sharing and A3.4, A3.5 andA3.6, with a few highlights of different pos- distribution between the users and the various uses of ir- sible forms provided below: rigation canal water (including agriculture, washing, bath- * Basin Planning and Coordination. The Italian ing and livestock requirements), as well as for monitoring Autoritas di Bacino (Basin Authorities) are restricted these allocations. Under a GOI-financed program, Mahila to the formation of basin plans and overseeing their Samkhya, women in Banda District, Uttar Pradesh con- implementation, and membership is exclusively gov- cerned with water supply have formed a registered group ernmental from central and state officials. A largely which monitors and maintains hand-pumps in the area. similar mandate is held by Mexico's Basin Councils, For most institutional initiatives a combined govern- which also serve as fora for negotiation of specific ment-civil society approach may be appropriate. For in- projects and their financing with government. stance, to implement the Calcutta Environmental Water Allocation, Management of Common Bulk Management Strategy, the actors include central and state Supplies, Monitoring, and Coordim~ationof Main- agencies, district and local governments, NGOs and the pri- tenance and Water Quality. India's Upper Yamuna vate sector (refer BoxA3.9). Public involvement and partici- River Board (UYRB) is headed by the Member, Wa- pation should be fostered through public awareness ter Planning and Projects, CWC, with members from campaigns, two-way flows of information, and capacity the co-basin States of Haryana, Uttar Pradesh, building, both at the levels of the government institutions Rajasthan, Himachal Pradesh and Dlelhi. Budget re- and in civil society groupings. quirements are shared equally by the co-basin states. Decisions by the UYRB - after end~orsementby the Creating IntelcState River Basin Organizations Upper Yamuna Review Committee, headed by the Although much can be achieved through the establishment Union Minister of Water Resources, with Chief Min- and subsequent functioning of the state-level and grassroots isters of all co-basin states as member:^ - are final and institutions described above, most of India's larger rivers binding. This is clearly helping to coordinate water are inter-state, necessitating coordination between states.lo4 resources management on this sub-basin. For these situations, river basin organizations (RBOs) need Operations and Maintenance. India's Bhakra-Beas to be established involving the riparian states concerned. Management Board (BBMB) manages bulk water sup- RBOs can take various forms, ranging from informal plies from the Sutlij, Ravi, Beas and Bhakra Rivers and

lo' lndia-WRM Sector Review, Rural Water Supply and Sanitation Report (World Bank, 1998~).

'03 This initiative was promoted under the Orissa WRCP and is currently being studied to assess impact and for lessons applicable more generally (Tayyab, Dhar and Oblitas, forthcoming). lo' Options for inter-state rivers in India's federal structure, as discussed in this report, are also broadly similar to typical issues encountered between riparian countries. Several very positive features for basins shared between lndia and other countries are worth noting. The first is the successful lndus Treaty between lndia and Pakistan. This provided clarity on usage of lndus waters and permitted non-conflicting investment. The second is the recent treaty (1996) on water sharing between lndia and Bangladesh regarding the Ganges. Thirdly, discussions have taken place between lndia and Nepal regarding shared rivers (headstream tributaries of the Ganges river), culn~inatingrecently in the "Mahakali Integrated Development Treaty" (February 1996). Further discussion of the Mahakali and Ganges Treaties is provided in Salman and Uprety (1998). their distribution between the States of Punjab, World-wide, the clear trend is increasingly to consider Haryana, Himachal Pradesh, Jammu and Kashmir, water management along river basin lines and to develop and the Union Territories of Chandigarh and Delhi. RBOs to ensure harmonious management of water resources. The Board is headed by a Chairman, appointed by Successful examples in India, such as the BBMB and the GOI, with members from the co-basin states, CWC, WRB, also demonstrate the benefits to all riparians of hav- CGWB, etc. This plays an important role in the over- ing such institutions. Establishing RBOs should be a prior- all management of bulk water supplies and related ity for state leaders and GOI. A situation-specific rather than power generation. State-specific irrigation infrastruc- a blue-print approach is recommended when formulating a ture below the common BBMB headworks remains proposal for a RBO. The initial structure and mandate of a under control of the respective states. RBO should preferably be as bold and comprehensive as Whole Basin Management. In France, Spain and the possible. Nevertheless, even modest initial mandates would Czech Republic the entire government water resources represent a beginning in sensitive situations. For instance, administration has been patterned along river basin in particularly difficult situations, establishing a committee lines and all government functions related to manage- comprising officials from riparian states would start a pro- ment and development of water resources have been cess and be considerably better than no cooperation at all. placed under the authority of the basin administrations. Somewhat more formal but still limited roles could also be The Netherlands has similar institutions patterned considered as, for instance, in the case of Italy's and Mexico's along "water systems." Germany has also created such RBOs and the UYRB. As cooperation between the states de- institutions, but on a selective basis for specific prob- velops, structures and mandates could become more com- lematic basins. Australia's Murray-Darling Basin Com- prehensive. International experience has shown that RBOs mission, described in BoxA3.5, illustrates the evolution tend to evolve structurally and functionally over time (for of a RBO and its increasing role in environmental man- instance, Australia's Murray-Darling Commission, Box agement. A3.5), and such a natural progression could also be expected Self-Funding Basin Organizations. This is increas- in India. ingly a goal in many countries. The French and Czech Flexibility is also recommended regarding the degree of water agencies are funded through water charges that Central Government involvement in RBOs and the extent to they levy on water users and waste discharges. which existing legislative provisions are used in establishing Germany's river basin entities are funded by member- RBOs. In the case of the BBMB and WRB, substantial Cen- ship payments. The Dutch water boards are funded tral Government involvement is present and has proven ben- through appropriation of part of property taxes and eficial. Exclusively inter-state institutions are, however, also through polluter taxes (refer Box A2.9). feasible. In establishing a RBO, the 1956 River Boards Act pro- Involvement of Users. Mexico's Basin Councils also vides a legal mechanism. However, RBOs can also be estab- involve water users, although membership is still pre- lished without passing through the provisions under the Act; dominantly governmental. In France, the basin agen- to date, all existing RBOs in India have been established inde- cies (Agences de l'eau) are government agencies, but pendent of the Act.'05 Finally, the existence or otherwise of a are supplemented by basin committees (Cornites de Tribunal Award or a potential Tribunal Award need have no bassin), comprising both users and local and central bearing on the desirability or feasibility of a RBO. Generally, government officials. creation of a RBO will actively help achieve resolution of

'''A case by case approach is recommended given the wide diversity of options available and the individual characteristics and needs of the different basins and states in India The need for flexibility and a case by case approach applies both to the structure and degree of formality of a RBO and to the degree, if any, of Central Government's involvement. A RBO which only deals with planning and inter-state coordination, rather than playing a larger role, would in itself be useful. States along another river basin may wish to create a RBO with a more complete role in management. Where Central Government is felt to be a useful member in a RBO, it could play a catalyzing intermediary role, helping, as a neutral party, the state actors to get together. The Central Government could also help the states through review of individual state plans for the portions of an inter-state river within each of the states and by providing assistance to the states in harmonizing their individual plans into, effectively, an overall basin plan. For instance, the SWPO of each riparian state could send its plan to NWPO. The NWPO would review each plan, Forward comments and suggestions back to each SWPO and, possibly after several iterations, this would result in a harmonized basin development and management plan. REFORM OPTIONSAND RECOMMENDATIONS

issues through a Tribunal. Experience, both in India and in- at state levels (refer to Creating a State-Level Structure), an ternationally, is that as RBOs develop in effectiveness the need environmental sub-committee and an environmental cell for Tribunals or other forms of litigation diminish. within the NWPO should also be created to provide sufficient focus on environmental issues. Adjusting Central Government's Role A main function of NWPO would be to prepare or A more pro-active role is recommended for the Central assist in the preparation of master plans for inter-state Government: as a catalyst of change in state institutions; river basins. The SWPOs would prepare basin plans for by using appropriate instruments during the project fi- their parts of the inter-state basins, and the NWPO would nancing and approval process; and by promoting public assist the states in coordinating and harmonizing their awareness. In order for the Central Government to en- sub-basin plans into overall river basin plans. The thus hancq its effectiveness in these areas, it must itself more operationalized NWRCINWB could thereby play a strengthen its capacity. A first need is to assure better co- more pro-active role in promoting best practices in wa- ordination between the many government departments ter resources management and discussing inter-state, na- involved with water (refer to Chapter 3). With some re- tional and international issues as they arise. This would structuring, existing institutions can be used. The present also serve to achieve the much needed improved coordi- National Water Resources Council (NWRC) and the Na- nation between the different Central Government agen- tional Water Board (NWB) provide a senior forum (re- cies involved with water. In addition to these changes, spectively, Chief Minister and Chief Secretary levels) for largely at MOWR's level, restructuring the present MOWR center-state dialogue on water issues, but due to their se- agencies and MOWR itself should be considered. For in- niority these bodies can only meet infreq~ently."~ stance, the present separation of surface and groundwa- The more substantial changes required are to provide ter under CWC and CGWB merits examination. As a NWRC and NWB with permanent technical support. minimum, mechanisms for closer interacl ion amongst all First, a Technical Committee under the NWRC, with rep- its agencies should be established. It is also recommended resentation from all states and key GO1 departments and that the function and structure of the National Water De- chaired by MOWR, should be created and should meet velopment Agency (NWDA) be examined. on a quarterly basis. Second, this should also have a per- The center's financing role should also be applied to manent Secretariat or "National Water Planning Organi- encourage change. At present, Plan approval is provided zation" (NWPO) with strong expertise in basin planning only after approval of a development project by the Plan- and modeling. To make use of the existing structures and ning Commission and the MOEF, subsequent to review by nucleus of expertise already available, it is recommended an inter-ministerial Technical Advisory Committee coor- that the Water Planning and Project (WP&P) wing of dinated by the CWC. These entities, especially CWC, con- CWC be adapted and strengthened for this purpose. A cern themselves with existing riparian rights and levels of nucleus staffing already exists in WP&P and can be utilization, but a sharper focus could be provided. As with strengthened in modeling capabilities and in other sector the present mandatory need for environmental assessments specializations with secondment from MOWR, CWC, when submitting water investment proposals to the center CGWB, NWDA, MOEF, CPCB and other relevant agencies. for Plan approval, the following actions by the concerned Additionally, there will be need for recruitment of econo- state should be advised as expected by the center: issuance mists and computer specialists and some consultancy in- of a State Water Policy, an Action Plan for water resources puts from Indian and international centers of management reform, a program to prepare basin plans and ex~ellence.'~~Third, as with the institutions recommended a state water plan, and a program to introduce financial

'" NWRC is chaired by the Prime Minister with the Minister MOWR as Vice-Chairman, Secretary MOWR as Secretary, and the Chief Ministers, heads of the union territories and concerned Union Ministers as members. NWB is chaired by the Secretary MOWR with the Member WP&P of CWC as Member Secretary, and members comprised of Chief Secretaries of all states and union territories and Secretaries of concerned Union Ministries as members. lo' WP&P has the advantage of already existing and is headed by a senior officer: a "Member" of CWC in the rank of ex-officio Additional Secretary to GOI. As concerns consultancy link-ups, resources from a number of Indian universities could be considered, as well as such centers as CTU, CWPRS and NIH. A number of international agencies and consultancy firms could also provide assistance. incentives for efficient water use. A status report covering modeling, environmental management, hydrology, econom- all of these action areas should be submitted by the state ics and other relevant topics; and provision of consultancy at the time of submission of an investment proposal. Within assistance, computers, and modeling software. a reasonable agreed time limit, actions should be expected and insisted upon by the center. For instance, it would be D. Introducing economic incentives for entirely reasonable for all states in India to have prepared efficient water allocation and use at ieast a draft State Water Policy and an Action Agenda within the next two years. Similarly, preparation of a basin Intra-Sectoral Water Allocation and Pricing plan for the portion of a basin within the state's bound- Efficient inter-sectoral and inter-state allocation in India can aries is only normai professional business and should be be better realized with value-based pricing at the sub-sector insisted upon at the time of any investment proposal. Steps level: major change is, therefore, required in the system of towards creating inter-state REOs should also be consid- prices and other economic incentives affecting water demand ered expected professional practice from ali states.Io8 and supply. Although price instruments exist, the levels of The existing centrally-sponsored Plan funding existing incentives and the form in which they are applied mechanism is, however, only partially effective in lever- result in minimal, and in some cases negative, impact on re- aging change. Overall Plan fund allocations by state are source usage and provision. Unlike other goods, where scar- largely pre-determined and non-approval of funds for a city prompts efficiency and conservation, water resources particular scheme are thus fungible to other purposes. Ac- continue to be depleted and misused even under conditions cordingly, an additional centrally-financed "Basin Devel- of scarcity. There is urgent need to bridge this "incentive opment Fund" could be introduced whereby Plan funds gap": the gulf between the scarcity value of water and the are provided to specific investments in inter-state basins value underlying the current pattern of water allocation and where clear basin agreements have been reached and management. where a RBO has been established. This would thus spe- Desirable practices such as conjunctive use, water-sav- cifically reward states which have made progress in inter- ing agricultural and industrial technologies, water transfers state cooperation. and water recycling - in other words, water conservation Awareness creation, capacity building, training and dis- and optimal water utilization both within and between sec- semination of best practice is another area where the cen- tors - will emerge only when an individual or decision- ter can play a supporting role. MOWR and its specialist making entity (WUA, industry, etc.) perceives a water agencies should mobilize an inter-agency effort to provide constraint. For this reason, economic instruments which pro- a concerted program of technical assistance to the states vide appropriate incentives for both service providers and and civil society. This would include awareness building users should be put in place. Water charges should ideally seminars for senior officials and civil society; study tours be based on the full cost of development and supply of wa- for government and non-government representatives to see ter (both capital and O&M costs110).The water price charged best practices in selected Indian states and internationally; to consumers should cover at least 0&M costs, with the assistance in specific implementation areas (for instance, longer-term goal of covering full capital costs as weil. In re- as states prepare their State Water Policies and Action Agen- vising the incentive regime, due account must also be taken das),'09 specialist training for professional cadres in basin of the social and "public go~d"nature of water. Water is a

lo' A set of pro-active but reasonable time-bound requirements should be established. These might, for instance, include: (i) issuance by the state of its draft State Water Policy and Action Agenda within one year; (ii) establishment by the state of a SWRB and SWPO (two year time horizon); (iii) preparation and subsequent approval by the state government of a detailed and time-bound action agenda for establishing financial incentives for efficient water use and conservation, at least covering agricultural water charges, agricultural electricity and polluter fees (two years); (iv) for any specific investment, provision of a River Basin Plan and Basin Environmental Action Plan for at least the state's part of that river basin (three years); and (v) submission of an Action Plan and some start-up actions completed for creation of a river basin organization at the state level (four years). State progress could be monitored annually through an annual status report. lo' In the National Workshop, a number of states mentioned the likely utility of such advisory assistance as they drafted their State Water Policies.

'lo In the National Workshop it was agreed by representatives from state and central governments, NGOs, academics, etc., that chargeable O&M casts should be based on efficient operations and on the basis of the cost of physical works, of maintenance, and the efficient level of staff, and that any O&M charges in excess of this efficient level should be absorbed by the state. However, this mechanism should not be used for keeping the water charges at very low levels as a populist measure. basic social need and its environmental dimensions go well capital, but the goal of covering 0&M costs.wil1 be a beyond the values attributed to it by individual users. Pric- sufficiently major target in the short term.'ILFor most ing will need to protect the interests of the poor and inter- of India's states, the raising of water charges to cover nalize environmental and public health values. Regrettably, 0&Mcosts will require a one-time or incremental sev- current prices neither protect the poor nor the environment eral-fold increase in the currently applied rates.'I3 (refer to Chapter 3). Accompanying irrigated agriculture productiv- The key areas where sub-sector reform is required are: ity improvements. The above essential step is more (i) pricing of water for irrigation; (ii) pricing of rural water politically and socially acceptable if accompanied supply; (iii) pricing of urban water supply; (iv) groundwa- by activities to increase the prolductivity of irrigated ter pricing; (v) agricultural pricing and marketing policies; agriculture. This could be achieved through im- and (vi) financial incentives for pollution control, water re- provements in the performance of the irrigation use and water conservation. systems, including rehabilitation and moderniza- Irrigation Pricing. As discussed in Chapter 3, the tion of irrigation infrastructure, coupled with in- most pressing need relates to agriculture, responsible for tensification of agricultural extension programs.'I4 83 percent of consumptive water use in India. Although Accomlpanying public aware:nesscampaign. The the problems are well-recognized in India - for instance, above measures should be preceded and accompanied a special study was undertaken and recommendations by a process of consensus building with the political were made in 1992 by the Committee on Pricing of Irri- establishment and civil society, followed by a major gation Water"' - irrigation water charges still remain outreach program to farmers. Acceptability will be far extremely low, stagnant and not volumetric in most of greater if decisions are thoro~~ghlydiscussed and ex- India's states. The following recommendations are based plained and, in particular, if tlne benefits from more on the "India - WRM lrrigaiion Report" (World Bank, productive irrigated agriculture are perceived through 1998f), the "Report of the Committee on Pricing of Irri- this pro~ess."~ gation Water" (GOI, 1992), the experience of states at- Switching to volumetric charging to WtJAs.Each tempting reforms, and best practice as applicable to India state should also implement a change over from area- found in other countries: crop based charging to volumetric charging. Volumet- A major jump in water charges. There is no avoid- ric charging will be particularly important as ing this difficult step. The first essential objective is opportunities for different wiater use levels develop to raise water charges so that they cover the costs of (from diversification of cropping patterns and agri- O&M. As a longer-term objective, water charges cultural technology, new irrigation delivery systems should also cover depreciation and interest on such as dynamic control systeims, and at micro levels,

"'The "Report of the Committee on Pricing ollrrigation Water" (GOI, 1992) has recommended not only full cost recovery (i.e., the recovery of hi11 O&M costs plus one percent each of interest and depreciation allowance on capital) but also has indicated the levels to which water rates are to be increased in different states for such a recovery policy. l'he Committee also recommended an eventual switch over to a volumetric rate stn~cturethrough a three-stage program of reform: (i) simplification and rationaliza- tion of the pricing methods to reflect only area and season; (ii) volumetric wholesaling of water to outlet level water users associations; and (iii) system modifications to technically accommodate the new mode of water distribution within the next 5-10 years. The Planning Commission which reviewed the Committee Report recently has approved the levying of water rates per number of waterings as well as the adoption, wherever practicable, of group-centered volumetric watr:r distribution. '"Required O&M expenditures will be specific to the needs of each irrigation system. Guidance is also provided in the Finance Commission recommendations. "'The recommended best approach is to surmount this hurdle in one large increase. An alternative is to announce the overall increase and its application in annual increments over a defined period (3 to 5 years). Thereafter, and also announced up front, water charges should be increased automatically every year based on an established price index.

'I4 lnfrastmctural rehabilitation and modernization is being implemented under Haryana and Tamil Nadu WRCPs (in part, under the "Systems Improvement and Farmer Turn-over" (SIFT) Program), and is planned by Rajasthan and Andhra Pradesh. In Orissa this is being accompanied by an agricultural intensification program, and an even more intensive mobilization of agricultural extension is planned for Andhra Pradesh and Rajasthan.

'I5 A notable recent example of effective involvement of the public has been thc irrigation sector reform program under implementatior, in Andhra Pradesh (AP). AP has tripled water charges, has formed WUAs for all water systems across the state, is substantially increasing maintenance funding to enable efkctive O&M with participation of the WUAs, and 1s planning to rehabilitate the irrigation systems. Preceding and accompanying these changes has been a massive public awareness and participation process involving the entire political and government-level apparatus and leadership from the Chief Minister. Because the general public and farmers were thoroughly informed and involved and benefits are expected fron~these combined measures, the increase in water charges did not become a major political difficulty. drip and sprinkler irrigation). Volumetric charging Chapter 3). Related to the pricing front, key elements are would likely need to be implemented on a command turn-over of facilities to local communities, cost sharing of by command basis as its introduction needs accom- investments by local communities with matching govern- panying introduction or improvement of the water ment grants, implementing the principle of full cost recov- delivery system, installation of measuring devices, and ery on 0&M and an annual contribution to a replacement arrangements for bulk sales to WUAs. WASagree - fund. Rural water supply will be managed as an economic ing to bulk sales could have preferential rates over as well as social good, recognizing that this is the best way other farmers. Collection of water charges by WAS of assuring that its critical social value is actually translated could also be rewarded by a discount. into available and sustainable safe drinking water for rural Creating a decision-making and price regulating communities. Underlying the new strategy is full commu- apparatus. It may also be desirable to establish an nity participation, a demand-driven approach in investment analytical and decision-making apparatus within the and level and quality of service, and full funding of O&M state so that capacity is available to undertake analy- plus replacement costs by the local communities themselves sis and present recommendations to government. to ensure that their infrastructure is sustained. Andhra Pradesh and Orissa States have, for instance, Urban Water Supply Pricing. Existing difficulties created committees for this purpose. The mandate in urban water supply and Sanitation (UWSS) (refer to of the Water Pricing Committee should include not Chapter 3) indicate that cities could benefit from a review only charges to farmers but also charges for other of existing tariffs and subsequent implementation of a pro- water services, such as bulk water supply to urban gram to improve incentives for water use and to enhance rev- and industrial users and drainage and flood control. enues from domestic consumers. The India - WRM report A broader mandate would also include water rates on UWSS (World Bank, 1998e) includes detailed recommen- in other sectors, such as urban, industry and rural dations on pricing and financial viability.lI6 An incentive- water supply. Better still would be to create a more based strategy is proposed involving delegation of formal price regulatory apparatus in each state for accountability and responsibility to local levels, commercial- water pricing, as for instance has been implemented ization of UWSS agencies, and tariff reforms with targeted in the U.K. and is being created in India's power sec- safeguards for poorer consumers. The recommendations tor in Orissa State. This will become essential over discuss various options for volumetric charging, including time as the private sector, including autonomous ir- practical mechanisms to apply metering generally."' rigation systems managed by farmers and commer- Groundwater Pricing. Charging for groundwater is cial urban water utilities, grows in importance. The currently only indirectly applied through pricing of diesel regulatory body should be fully independent,'and and electricity for pumpsets (refer to Chapter 3). In the case would oversee pricing to ensure fairness as well as of the latter, charging is not done volumetrically and is well financial viability of the sectoral actors involved. below costs of provision, and even zero in some states (e.g., Rural Water Supply Pricing. The Rajiv Gandhi Tamil Nadu, Karnataka and Punjab). In addition to enor- National Drinking Water Mission and the World Bank mous fiscal burdens in all states, such policies have contrib- have carried out a joint review of rural water supply and uted to water waste and misuse. Comprehensive energy sanitation (RWSS) as part of the India - WRM Sector sector reform programs are now being devised in several In- Review (World Bank, 1998~).On the basis of that review, dian states (for instance, under the Power- Sector Reform a completely new RWSS strategy has been formulated to Project in Orissa, and the Haryana Power Sector Restructur- rectify the problems arising from the current policy of wa- ing Project, both funded by the World Bank, and for projects ter subsidization, lack of community involvement, and cen- under preparation in states such as Rajasthan and Andhra tralized water management in the rural sector (refer to Pradesh). Features of these reform programs relevant to

'I6 Also refer to Cestti, et. al. (1996). "'" India - WRM Sector Review, Urban Water Supply and Sanitation Report" (World Bank, 1998e). Refer also to Box A4.6 on Calcutta water pricing, where a surrogate method of near-volumetric charging without meters is discussed, and the examples of urban water supply and sanitation best practice contained in the above report. groundwater management include tariffs to cover the cost market and transport infrastructure. The current market, of energy and the installation of meters.''' As also discussed trade and infrastructure imbalances between regions in In- in the India - WRM report on Groundwater Regulation and dia could, if corrected, have important impact on overall Management (World Bank, 1998d), options to make volu- water resources allocation and use. A review by each state metric (i.e., based on power consumed) charging easier in of agricultural prices and incentives could also point to India could include block approaches: selling electricity volu- practical changes at state levels. It is, thus, also recom- metrically to pancliayats and leaving them to arrange distri- mended that each state's Water Pricing Committee (refer butb and charging amongst their members according to above) should include as part of its mandate a review of usage. Changes in groundwater pricing would be greatly fa- state-level subsidies and marketing policies for water-re- cilitated if the public were much better informed about the lated agricultural outputs and inputs,.120 environmental and fiscal issues involved, and the risk of un- Environmental Incentives. The existing system of sub- sustainable agricultural production resulting from sidies and tax breaks on investments in pollution control- overdrawal of groundwater resources. ling, water conserving and water recycling technologies and Agricultural Pricing and Marketing Policies. As of pollution taxes, should, as discussed in Chapter 3, be thor- discussed in Chapter 3, various distortions result from oughly reviewed and revised. Particular attention needs to India's current central\ and state agricultural pricing and be paid to introducing a significant and punitive variable cost marketing pohcies. The first priority is to adjust commod- on the act of pollution based on a "Polluter Pays Principle." ity and input pricing and marketing policies to correct for At present, both the center and a nurnber of states have fis- such distortions. The World Bank studies on oilseeds, sugar, cal incentives favoring investment in environmental protec- cotton and foodgrains, undertaken in collaboration with tion."' However, they need significant enhancement to make GOI, can be used for these p~rposes."~One important need them effective. For pollution taxes, this would include ma- is the dismantling of price and market-distorting policies jor adjustment and increases in existing pollution taxes and and artificial barriers to domestic trade between states and fines so that they provide a meanin:gful incentive for con- regions to enable less distorted price and market signals to trolling pollution, as well as relating pollution taxes to the determine cropping patterns, regional specialization, and actual amount and toxicity of effluent pr0d~ced.l~~These resultant water use that are more consistent with natural measures should be accompanied by monitoring, measure- comparative advantage. Along with policy changes, defi- ment and regulation of pollution. Additionally, revised wa- ciencies and imbalances in market and transport infrastruc- ter charges and the introduction or expansion of other ture would need to be corrected to support a more efficient incentives for water recycling and conservation are needed regional specialization and integrated domestic market. For to encourage industries to adopt more "eco-friendly" tech- example, paddy marketing activities, emphasizing private nologies and production processes. Each state should under- sector initiatives, can be promoted in Eastern India where take a review of its environmental pricing for water and a relative comparative advantage for water consuming introduce a revised set of incentives and disincentives, pro- paddy exists. This can be encouraged by moving away from viding substantial impetus for industries and towns to in- pan-territorial and pan-seasonal pricing and investing in troduce and sustain environmenta:l and water-conserving

Recent initiatives in this direction include the GOI-issued ordinance that price of power should reflect full costs of supply plus a 3 percent return. Additionally, there are provisions for the center and states to establish power regulatory authorities to monitor power sector pricing lt9Refer to the following reports in the commodity study series: (i) "The Indian Oilseed Complex: Capturing Market Opportunities" (Worltl Bank, 1997b); (ii) "India's Sugar Industry: Priorities for Reforms" (World Bank, forthcoming 1998a); (iii) "India Cotton and Textile Industries: Reforming to Compete" (World Bank, forthcoming 3998b); and (iv) the ongoing study of foodgrains (World Bank, forthcoming 1998). '"In the National Workshop, some participants commented that the main price and market distortions resulted h.om central-level policies, and, therefore, that reforms should take place at that level. It is to be noted, however, that state-level distortioiis are also present as documented in the aforesaid World Bank India cu~nmoditystudies.

''I For instance: (i) depreciation allowance of 30 percent on devices and systems installed by industrial units for minimizing pollution; (ii) investment allowance of 35 percent of theactual cost of new machinery or plant to assist in the control of pollution and protection of the environment; and (iii) exemption fmrn tax un capital gains arising from transfer of buildings or lands used for businesses of industries that shift from congested urban areas, if these are used for acquiring or consi:mcting buildings for the purpose of business at a new place. "'As recommended in the National Workshop. technologies. Similarly, GO1 should assess the incentivesldis- and allowed to make their choice: continuation of a usually incentives currently applied at its level and also introduce poor service because of inadequate funding by consumers an appropriate revised and augmented structure. The more able to pay, or an improved service financed through higher industrialized nations have already gone through the expe- water charges. rience of industrial pollution and measures to deal with this The pricing structure should be such that necessary problem have been found from which India could benefit. quantities of safe and reliable drinking water are provided For instance, the Dutch water boards are responsible for wa- to the poor. The critical need is to isolate and target the ter quality management and charge polluters heavily accord- segments of the population which really need subsidies ing to their measured level of pollution (Refer Box A2.9).'23 for water, and to provide directed assistance specifically The result has been a remarkable turn-around to a clean to them. This also should be done in a way that minimizes water environment. distortions on resource use and consumption. Particular Protecting the Poor. Implementing pricing reforms attention should go towards protecting the domestic wa- must take account of the public good nature of water and ter supply needs of poor urban and rural households. its importance as a basic need for all segments of the popu- Various mechanisms to achieve this are discussed in the lation and in particular the poor. Most fundamental is the India - WRM reports on UWSS and RWSS, including provision at affordable rates of at least the necessary mini- the use of multi-tiered pricing based on income and tar- mum quantities of safe and reliable drinking water to rural geted subsidies to consumers or ~upp1iers.l~~Such mea- and urban consumers. Unfortunately, this philosophy has sures, as for instance used in Chile, allow appropriate often been hisdirected towards providing subsidies to India's economic incentives to affect the consumption decisions wealthiest citizens. Thus, generally large and wealthy farm- of the majority, and at the same time ensure that social ers are heavily subsidized to over-pump groundwater, while objectives for poorer consumers are met and financial sus- their neighbors in the same village cannot even access tainability of the service is maintained.Iz6 groundwater for drinking purposes. Surface irrigated farmers who have productivity and incomes per hectare several IntelcSectoral Economic Allocation Mechanisms times greater than their less fortunate rain-fed counterparts As discussed previously, efficient inter-sectoral allocation are favored with cheap water. Wealthier urban consumers cannot occur if prices fail to reflect the true costs of water often pay less for water than the extreme poor, who, with- provision and the scarcity value of water itself. Hence, "get- out access to running water, may need to buy from private ting the prices right" at the sub-sector level is fundamental vendors at much gigher unit cost. For the general consumer to achieving optimal water use not only within, but also be-

- farmers, urban and rural households, industries, etc. - tween sectors (refer Box A5.5). There are many instances current water prices are insignificant relative to their valua- where water pricing in one sector has negatively impacted tion of the benefits derived from water use. The key con- water availability or quality in another. For instance, in the cern is improving the water service. In all service sectors, case of pricing for groundwater pumping, insufficient elec- tariff increases accompanied by service improvements would tricity charges have resulted in indiscriminate agricultural enable consumers to be much better off.Iz4Consumers use and, consequently, the drying up and contamination of should be actively brought into the decision-making process domestic rural drinking water supplies. Conflicts over

"'There are many experiences from Europe and other countries from which lessons can also be drawn. England's River Thames, for instance, was an open sewer in the 18th and 19th centuries as a result of urban and industrial pollution. Under the combined impact of institutional and regulatory actions and price disincentives for polluters, the river is now relatively clean, including passage of salmon and other delicate fauna along its watercourse. ""mpacts on consumers of increasing water tariffs are discussed in "India - WRM Sector Review, Irrigation Report" (World Bank, 1998f) and in the two reports in the same series on urban and rural water supply mentioned in the footnote klow. '25''lndia- WRM Sector Review, Rural Water Supply and Sanitation Report" and "India -WRM Sector Review, Urban Water Supply and Sanitation Report" (World Bank, 1998c and e, respectively). 126Asystem of direct subsidies for water is managed by the Central Government of Chile. A budgeted amount of subsidies is allocated among regions and municipalities each year to needy families, according to pre-determined social and economic criteria. The subsidy applies to the first 20 m3 of monthly consumption. The municipalities use the allocated budget to pay the water utility directly (Rivera, 1996). water between hydropower and irrigation can also largely be contributed by the industry or municipality might be ar- attributed to subsidization of water in the agricultural sec- ranged to mutual advantage. This wo~ildbe made more fea- tor. In combination with revising the pricing regime, reforms sible if agricultural and irrigation technologies can also be must also target allocation mechanisms themselves,. Key re- introduced so that agricultural productivity is not im- form areas are: (i) improving administrative allocation of wa- paired. Given the current low pricing of water for all sec- ter by incorporating in decision-making economic or tors and its much higher economic value, especially for value-based criteria; (ii) developing administrative brokering industry, there is substantial room for mutually profitable of compensated trades; and (iii) developing formal water outcomes. Government or civil society (e.g., NGOs) could markets, including the establishment of an institutional, le- play a catalyzing role in such arrangements: for instance, gal, regulatory and technological framework. Reforms in through encouraging consultation artd dialogue and facili- these three areas are based on a common rationale; inter- tating arrangements for beneficial compensation. sectoral allocation should incorporate an economic dimen- Introducing Water Trades and1 Markets. Given the sion, without overlooking the social aspects, whether it occurs reality of the increasing need for water re-allocations, a through negotiation or through "automatic" market ex- voluntary trading mechanism could offer even greater flex- changes. The suitability of one allocation mechanism over the ibility. A limited illustration of the possible gains in India other will depend on circumstance, but in any case the end has been observed in Vaigai Basin, Tamil Nadu (refer Box result should be one of mutual benefits to the parties involved. A5.6). At one location in the Vaigai Basin, farmer-groups Improving Administrative Allocation of Water. have privately developed groundwater transfer pipelines and Current allocation and re-allocation of water are done ad- have organized themselves to transfer water some four kilo- ministratively and, typically, on an ad hoc basis (refer to meters to other farmer groups. Both renters and leasers of Chapter 3). Furthermore, rarely are decisions for water trans- water are better off. The renters benefit through revenues fer from one sector or user to another influenced by eco- received greater than the marginal value product of their nomic or value-based criteria. Such transfers infrequently water while the leasers have used the water to grow high- result in mutual gains or benefits, but instead involve invol- value horticultural crops and their incomes have also in- untary expropriation without adequate compensation. creased substantially.Although such informal bilateral water Administrative allocations should at least include other par- trades are wide-spread in India,I2' in common with most allel development actions for those giving up water so that other South Asian countries, more formalized and regulated their welfare is also enhanced. They would also require a water markets have not developed. 'This contrasts with the much stronger knowledge base (hydrological data, sector- situation in such countries as Chile, the Western U.S.A., and wise water accounts and basin modeling) than is currently Australia where regulated water markets, based on an explicit usually available, as well as information dissemination to all water rights system, exist and have reportedly proven to be affected parties.'27 effective as a means of allocating water resources to their Developing Brokering of Compensated Trades. most productive use through a voluntary and automatic A potentially better option would be the brokering between mechanism (refer Boxes A5.7 and A5.8).129In Chile, such op- affected parties of more commercial agreements. An indus- portunities have been developed through legislation and in- try or municipality could, for instance, be encouraged to stitutional support to a common-place transaction. Water negotiate with an agricultural WUA for partial utilization rights are fully transferable and independent of land use and of the WUA's water allocation. A combination of agricul- ownership, the most common transaction being in the form tural and non-agricultural services, investments and fees of renting of water. Appropriate lessons need to be drawn

"'In the National Workshop, specific points made by the participants supporting these recommendations included: (i) sector-wise water allocation should be determined and notified as a water right and publicized to the basin population; (ii) each sector should plan for and utilize water efficiently within its stipulated allocation and be held to this allocation by the "basin authority"; and (iii) the basin authority should maintain sector-wise water accounts and release these for public information. "'AS reported by Shah (1993), Palanisami (1994) and Meinzen-Dick (1996)

Refer also to "India - WRM Sector Review, Groundwater Regulation and Management Report" (Box 3.5, Water Rights Reform: The Cases of Chile and Mexico) and to "India- WRM Sector Review, Irrigation Report" (World Bank, 1998d and f, respectively). INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

from these experiences, keeping India's socio-economic con- ensure equal access and transparency in market operations ditions in view. and to safeguard social welfare and the environment. Physi- Only limited assessments have been done to date on how cal and technological modifications to enable trading are to apply more formal water markets in the Indian context. also essential. These include improved water management, Box A5.4 discusses possible creation of a "groundwater man- volumetric control and measurement of water, and hydro- agement district" and a water market between a farmers' logical monitoring. water users association and Chennai's Metrowater to both Introducing more formal water markets in India augment Chennai's water supply and provide attractive re- would first require careful reflection, review of experience muneration to farmers.130The proposal would involve leas- in other countries, and appropriate adaptation to Indian ing by farmers of part of their groundwater usage coupled realities, including features to enable workability in the with agricultural technology adjustments to maintain or en- Indian context. Given these circumstances, careful assess- hance overall agricultural productivity while using less wa- ment of the options is essential, and initial experimenta- ter. Reflections are also ongoing in Tamil Nadu's Vaigai Basin. tion and piloting would be a prudent first step. Features The possible options there include creation of a stakehold- for success would likely include, first, establishment of a ers' river basin organization and opportunities for renting grassroots management unit in the locality concerned to of water between water users associations with surplus wa- monitor and regulate against overdrawal of water and so- ter and Madurai (refer Box A3.8).I3' Particularly instructive cial exploitation by powerful interests and to provide dis- would be to review the experience in countries which are in pute resolution mechanisms. Second, the management the early stages of piloting or establishing water markets, as unit should substantially involve stakeholders or should for instance in Mexico. closely interlink with a separate stakeholders' association The Vaigai example above and international experience elected under democratic principles and including by-laws are worth learning from, but considerable caution is also and voting rights to fully integrate women, the poor and required. Even in the cases of the most highly developed disadvantaged groups. Third, water rights may be more water markets, as in Chile, these have not replaced, but are easily administered through rights provided to water user instead complementary to comprehensive planning and wa- groups rather than to individuals, and water transactions ter resource management.'32 Further, water markets are not should also be handled at the group level. Fourth, tech- without potential pitfalls, and two issues are of particular nological changes and supporting investment would be concern. First, Indian government planners are rightly con- required to improve water management, to enable volu- cerned about- safeguarding against potentially deleterious metric measurement of water flows and to distribute wa- impacts of water marketing on the welfare of smaller farm- ter according to transacted agreement^."^ Finally, an ers, disadvantaged groups and the landless. Second, pro- enabling legislative environment would be required. For tecting the environment is also a concern, in particular, initial piloting, Government Orders might be sufficient, protection against overdrawal of groundwater or over-use but eventually, revised legislation would be needed. of surface supplies (Box A5.3 reviews some of the issues). The following shorter-term actions are recommended: With this in mind, development of water markets would Study tour to assess international experiences (e.g., require a strong supporting and regulatory framework. This Chile, U.S.A., Australia and Mexico), followed by would need to include enabling institutions and legislation preparation of a strategy note on options that might making rights for surface and groundwater transferable be available in India or for specific localities. through the leasing or selling of water. Additionally, a Selective piloting of water markets in a few specific grassroots, locally based administration is necessary to locations where the need for a water market has been

"%Brcoe, 1996.

13' Oblitas, Rogers and Harshadeep, 1996 '" It is estimated that in Chile, only 20 percent of water needs were met by water markets in recent years. Examples of such technology in India include Majalgaon Command in Maharashtra where a computer-operated dynamic regulation system is being introduced (refer "India- WRM Sector Review, Irrigation Report" (World Bank, l998f)). identified, i.e., where there is already full utilization rent irrigation efficiency is only 30-40 percent. Unac- of water resources (Chennai, Vaigai, Delhi, Hyderabad counted for water (UFW) in dorn~esticwater supply and water-short districts in Rajasthan), and where schemes is typically 30-50 per~ent.'~~'VVaterrecycling is in- strong stakeholder interest is present. frequent. Even the water that does reach the user is gener- Monitoring of such pilots, adjustments as needed, and ally unproductively used, especially in agriculture. Huge consideration of further replication as appropriate. gains are possible in India from improved technology. Not only are large water savings in all sectors possible, but it is Interstate Economic Allocation Mechanisms only with improved water control and measurement sys- Although inter-state allocation will need to rely primarily tems that re-allocation and new pricing systems can be upon development of institutions (inter-state river basin or- implemented. ganizations) and supporting enabling legislation, economic The most important area to tackle is irrigation, respon- criteria should be given due weight in inter-state decisions. sible for some 83 percent of India's water consumption. Even These include regional development considerations in evalu- modest improvements in irrigation efficiency would have ating state needs and direct incorporation of economic vari- large impact on effectively increasing water a~ailabi1ity.I~~A ables in basin modeling. Further, direct economic incentives first major gain is available through improving irrigation could also be applied. For instance, in the case of the water management using existing technology. Basic repairs interlinked Periyar-Vaigai Basins in, respectively, Kerala and to bring a system to its original design potential or higher Tamil Nadu, it is likely that the value of water in water-short productivity (e.g., de-silting, repair of structures, addi- Tamil Nadu would be much greater than in relatively water tional hydraulic flow structures, measuring devices, etc.), abundant Kerala. In situations where a state has available linked with farmer involvement in irrigation management, surplus water, a brokered commercial transaction could be can substantially improve the productivity of irrigation of mutual benefit to both states. Water sharing between states systems and expand effectively irrigated area, or can can also include broader development considerations than achieve the same results as before using less water, thus water alone. For instance, integrated development of river releasing wateir for non-irrigation p~rposes.''~Still higher basins across states could include a variety of infrastructure levels of irrigation efficiency can be achieved through fur- (water, roads, power, etc.), thus making water-specific deci- ther technical measures such as passive or active control sions amenable to trade-offs with other developments and systems. A remote-controlled dynamic regulation system enabling mutual gains for all parties.'34 is being introduced in Majalgaon Command in Maharashtra enabling specific water deliveries to differ- €.Technological improvements ent parts of the command, responsive to crop water requirements, and also able to adjust where showers fall in Major scope for enhancing effective water supply and im- a particular part of the command. At the micro level, low proving the productivity per unit of water, with evident pressure drip irrigation or sprinkler irrigation offer sub- positive impact on the environment, is available from tech- stantial gains in efficiency. Such systems are not neces- nological improvement (refer to Chapter 3). In effect, much sarily just for use of groundwater. For instance, even in more can be done with the same, or even less, water. Cur- the supply-based Warabandi surface irrigation systems of

""his approach is currently being discussed, for instance, between India, Nepal and Bangladesh where mutual gains are assessed feasible through a combination of investments in transportation infrastructure, hydropower, water and other developments. Ongoing support for this is being provided through the World Bank under the "South Asia Regional Development Initiative" (formerly, the "South Asia Development Triangle").

"'"India -WRM Sector Review, Urban Water Supply and Sanitation Report" (World Bank, 1998e). "'The key need is to improve the "effective productivity" of water, rather than "irrigation efficiency" per se. Lining of channels would reduce conveyance losses, but such losses can often be beneficial where groundwater recharge is desirable. More important is to ensure that water gets to the root zone of agricultural crops in the right quantities and at the right time. Situations of excess water in head reaches and insufficient water in tail reaches, poor timing of delivery relative to crop needs, inefficient application at field levels, and sub-optimal agricultural technologies are the more important matters to tackle. "'As being undertaken, for instance, in the Minimum Rehabilitation or Systems Improvement and Farmer Turn-over Programs through the World Bank-assisted Water Re- sources Consolidation Projects (WRCPs) in Orissa, Haryana, Tamil Nadu, and in the APERP Irrigation Component in Andhra Pradesh. Northwest India, individual farmers or farmer groups almost invariably needed. Improved monitoring and me- could construct small ponds in their fields linked to small tering is also usually required. A price environment, pos- overhead tanks to operate drip or sprinkler irrigation for sibly supplemented by investment incentives or tax breaks, part of their holdings from their surface water allocations. should be created to provide incentives for industries to Improved irrigation effectiveness from actions such as conserve water and to undertake water treatment and re- the above is still only part of the answer. Further substantial cycling. For most municipalities and industrial centers, in- gains are possible if the interface between irrigation and ag- vestment in water treatment facilities is usually required ricultural technology is also developed. Beyond irrigation to reduce pollution and enable reuse; as practiced, for in- efficiency, improvement in water control generally - the stance, with India's Common Effluent Treatment Plants reliability and precise timing and quantities of water deliv- (CETPs), discussed at Box A6.3. Water conservation tech- ery - is also important. Agricultural technologies need to niques can also be encouraged. In Saurashtra and Kutch be modernized to make maximum use of irrigation supplies. Districts of Gujarat it was traditional practice to have a In the not so long-term India must look to the irrigation and rainwater collection terrace on the rooftops of houses and agricultural technologies being practiced in water-short to harvest rainwater collected in underground tanks. This countries such as California, Israel and Jordan. traditional practice has been progressively abandoned as Various "eco-agriculture" or other eco-friendly tech- communities received subsidized piped water supply. Ad- nologies also exist. For instance, in West Bengal techniques justing the price incentives and making such water har- are being used by local communities to reuse domestic vesting mandatory in building codes might encourage a waste water for productive purposes, thus both enhanc- return to the former desirable practices. Chennai and ing productivity and reducing domestic pollution. Do- other cities are quite pro-active in encouraging water har- mestic waste is used to support fish culture vesting as part of building codes. In Chennai, water har- and the effluent from the fish ponds is used again for ir- vesting can substantially augment city supplies, whereas rigation (refer Box A6.2). Significant water harvesting rainfall not collected goes into the city drains and im- technologies are already available for agriculture and have mediately to the sea. been promoted under various watershed management projects funded by the government, World Bank and other F. Improving modeling, data, performance and agencies. These include earth bunds, check-dams, terrac- Environmental monitoring and public ing and vegetative barriers such as the use of vetiver grass information or other plant hedges. Other environmental technology options, covering different sectors, are discussed at Box Achieving improved water resource management also re- A6.1. Forging these technological innovations in irriga- quires a substantial upgrading of the data base and its prac- tion techniques and agricultural practices should be vig- tical application in basin plans, environmental monitoring, orously pursued, including active adaptive research and and measurement of performance. As discussed in Chapter demonstrations, visits to examples of success within In- 3, there are critical inadequacies in data measurement and dia and in other countries, and development of good re- management, poorly developed information systems, dupli- search and information networks between Indian cation of efforts and lack of coordination between different researchers and innovators and their counterparts in other agencies, and difficulties in accessing data especially for non- c~untries.'~~ governmental stakeholders. Professional capabilities in ba- Improving the efficiency of domestic and industrial sin modeling are also very limited in most Indian states. water supply schemes also offers substantial scope for ef- Furthermore, the limited basin modeling that is done is Sel- fectively augmenting supply. Most municipalities could dom made available to the general public. Significantly up- benefit from investment in management techniques to re- graded performance monitoring is also required for duce UFW. A leak detection and pipe repairs program is irrigation and domestic water supply schemes as a basis for

'j8 The proposed Water Resources Research Innovation and Training Project (WRKlTP) would include sponsorship of such activities. the technological improvement drive. There is also need for provision of other facilities (e.g., satellite imagery) is transparency of information and, in particular, for active required. The training program currently provided by public dissemination of results and efforts at public educa- the MOWR's Central Training Unit (CTU) at Pune, tion so that the general public can become stakeholders and also supported by The World Bank,"4zshould be fur- leaders of change (refer Box A7.2). The center and a num- ther expanded and the center and states should iden- ber of states are forging initiatives in these directions on tify a network of other central arid state training which most of the recommendations below are based, but institutes including universities also to provide spe- they need broad-basing across all states: cialist training. Such efforts should also be back- Preparation of Basin Plans. stopped through twinning arrangements with other Preparation by each state of comprehensive River international centers of ex~ellence."~ Basin Plans for all basins or parts of basins in the The above drive to improve basin modeling capabili- state, followed by preparation of an overall State ties should also be facilitated by taking a few basins Water Plan.'39 This would be done by the State for particularly intensive study, including introduc- Water Planning Organization (SWPO) as its pri- tion of state of the art modeling skills. For instance, mary objective in the first several years after estab- the World Bank is providing assistance to Tamil li~hment.'~~ Nadu's Institute of Water Studies (IIWS) in develop- - Preparation by the SWPO's of Basin Environmen- ing for the Vaigai Basin an inter-active basin planning tal Assessments and environmental assessments of model (refer Box A7.3).144 specific environmental issues identified as requir- - Basin modeling should be an inter-active process ing urgent resolution (e.g., a particularly urgent with a high degree of stakeholder in~olvement.'~~ pollution or health problem, groundwater deple- This approach is also being piloted for the Vaigai tion, etc.).141 Basin in a joint exercise with IWS and Tamil Nadu's As opportunities arise, basin plans and environmen- Madurai basin manager where a stakeholder com- tal assessments should also be done on an inter-state mittee is commencing establishment with a view to basis, through inter-state cooperation and possible its progressive development, through the interaction supplementary assistance from the center. The work and discussion process between stakeholders, into a of each SWPO on the part of the basin in its respec- RBO (refer Box A3.8).'46 tive state could be readily combined for this purpose. Improving Hydrological Data. The World Bank/ A concerted training program, including transfer of Netherlands-assisted Hydrology Project, operating in eight modeling software, provision of computers, selective states of peninsular India,147is already matking an energetic

'19The Basin and State Water Plans would cover all uses of water, including agricultural, RWSS, UWSS, industrial, power (both hydro and thermal), navigation, environmental needs, recreational, ceremonial, etc. '" The work being undertaken by Tamil Nadu and Orissa States, under their World Bank assisted Water Resources Consolidation Projects (WRCPs), and commencing in Rajasthan and Haryana, could be studied by other interested states.

14' Environmental and other needs should also be integrated into each of the basin models and incorporated as specific modules in the basin modeling exercise. Modeling exercises should include, for instance, the minimum flow requirements for environmental and navigational needs, assimilation requirements for treated effluent, sustenance of fisheries and aquatic life, maintenance of biodiversity and special social requirements, and the impact of dumping of solid waste and effluent emanating from municipal areas, industries and hospitals.

I" Funds have been provided under the World Bank's Institutional Development Fund grant for purchase of computers and software, hire of specialist consultants from India and overseas, and study tours to centers oFtechnical excellence and have helped to significantly build up CTU's capabilities. "'For instance, India has already established links with Hydraulics Research, Wallingford, U.K.; Delit University and Delft Hydraulics, Netherlands.

'44 The Vaigai model is called THANNI, meaning "water" in Tamil and an acronym for "The Holistic Analysis of Natural Network Information:' Prilncipal contributors to the development of the model have been N. R Harshadeep, P. Rogers, S. Rajagopal, E. V. Jagannathan and G. Subramanian (World BanWHarvard UniversityIlWS, Government of Tamil Nadu). In identifying stakeholders, careful attention should be paid to incorporating all multi-sectoral uses of water; for instance, navigation requirements have often been neglected. In the Vaigai basin participatory modeling exe~ise,an unexpected and significant stakeholder turned out to be thousands of washermen. Oblitas, Rogers and Harshadeep, 1996 "'Andhra Pradesh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa and Tamil Nadu start in this direction. The points below, already underway, Periodic reports on water quality and quantity, per- could also be considered by other Indian states. formance indicators and environmental aspects (re- The existing network of measuring stations for sur- fer below) should be issued on a regular basis and all face and groundwater, including water quality, should such information should be made accessible on the be expanded. This would require assessment and ra- internet and on CD-ROM.!5' tionalization in each state and river basin of the ex- Improving Environmental Monitoring and Manage- isting combined network of such stations from the ment. different agencies involved (state agencies, CWC, Environmental monitoring could be improved CGWB, CPCB, IMD, etc.) through establishment of performance indicators for Each state should establish a State Water Resources environmental aspects of water development and Data Center (SWRDC). This would assemble all data management. on surface water, groundwater, meteorology and wa- The improved hydrological data measurement and ter quality from all collecting sources (government collation described above should be further supple- and private) in the state, based on river basins or a mented by collection, analysis and publication of en- part thereof lying within the state. The SWRDC would vironmental and ecological data. collect, collate, analyze and store hydrological data in In all water projects, provisions should be made for state data banks. Additionally, the SWRDC should preparation of Environmental Management Plans promote the formation of Hydrologic Data Users (EMPs) and a budget provided under the project for Groups (HDUGs) to bring together users of data. Re- the EMP. trieval and ready dissemination of all data would be * Procedures for environmental clearance of projects provided to HDUGs14' by a Geographic Information should be made quick and transparent. System (GIs) based on river basins or sub-basins.149 Industrial pollution should be assessed by pollution A National Water Resources Data Center (NWRDC), load (i.e., by the actual toxicity aqd amount of efflu- again combining ground and surface water, includ- ent) rather than by assumption according to the cat- ing water quality and meteorological data, is being egory of industry and the presence or otherwise of established. The SWRDCs should fully network with effluent treatment plants. the NWRDC and both the NWRDC and the The performance of Common Effluent Treatment SWRDCs should provide data to HDUGs at all lev- Plants (CETPs) should be evaluated and the findings els, based on river basins, sub-basins, or a part incorporated in future investment and management thereof.Is0 decisions for pollution control. Establishing Performance Monitoring Systems. Pollution of water resources from non-point sources For all surface irrigation and domestic water supply (e.g., fertilizers and pesticides) should be monitored schemes, relevant measurement and monitoring in- and research, regulation and public education under- dicators of performance (including environmental taken to minimize such pollution. impact) should be established and followed. This Mechanisms should be developed for monitoring and would underpin the drive to improve productivity resolving problems arising out of inter-state transfer and efficiency. of polluted water.

14' 14' TO cover costs, affordable fees for provision of data would generally be desirable. Where quality data is readily available in user-friendly form, most users are hlly prepared to pay for such data. The key current constraint is that data is not readily available. Implementation is commencing under the World BanWNetherlands-assisted Hydrology Project in peninsular states and in the World Bank-assisted WRCP states. These initiatives also include establishment of Data User Committees, including non-government representatives, to orient data collection and dissemination to the practical needs of the stakeholders. '" Establishment of the NWRDC is also supported under the Hydrology Project. Discussion has also taken place in India about a possible National Water Information Bill to set out the rules for ready access to water information.

15' It was also recommended in the National Workshop that the Central Pollution Control Board and State Pollution Control Boards should issue periodic reports on the water quality of rivers and aquifers, which should be published and formally sent to state governments, municipalities, industries and other interested parties. Special attention is needed for environmental assess- is essential. There is need for an active "outreach" ment and protection of lakes, estuaries and wetlands. process where various mechanisms a.re used to en- Achieving Transparency and Public Information and courage involvement of the public anti better under- Participation. standing of water sector issues. The media (radio, In all of the above areas, data and analysis should be television, newspapers, including in lalcal languages), fully transparent and made available to HDUGs and seminars, workshops, political gatherings and other the general public. In the cases of basin planning, en- mechanisms should all be used. It is important, both vironmental management planning, and in monitor- for the quality. of knowledge and for the participa- ing and implementing technological improvements, tory process that knowledge flows in all directions, stakeholders should be brought in as active partici- including from civil society to gove:mment. In or- pants in the analysis and recommendations. Examples der to implement the major change agenda discussed of such initiatives include the participatory basin in this report, a strongly participatalry approach is planning exercise commencing in the Vaigai Basin and needed. This will be fostered through the "awaken- the irrigation technology improvements underway ing" of perceptions and empowermerlt of stakehold- with WUAs in Andhra Pradesh and Orissa. ers. In this process, particular attention should be Public awareness and participation will generally re- paid to communications with and active involve- quire substantial changes in the way government ment of traditionally more marginal or less vocal agencies have traditionally conducted business. Full groups, such as women, the poor and other minor- transparency and ready availability of information ity gro~pings.'~~

It is Aoteworthy that the need for public awareness and participation was one of the strongest thematic messages recommended by both government and non-government participants in the National Workshop.

Strategy and Action Plan

here is clear need for improving the nation's inter-sectoral water allocation, planning and management. Severe water constraints - quantitative and qualitative -- are now T present in most of India's river basins and will grow cumulatively over time. However, India's water constraints are more a matter of managing its resources than of absolute scarcity, per se. To its credit, India has made major advances in the development of its water resources. However, a number of other countries with less water are doing more with the resources that they have. Given India's huge and growing population and ambitious social welfare and economic growth aspirations, the management of its fragile and finite water resources, and the associated major reform program required, must aim for the best, rather than marginal change.

A long-term vision needs to be in constant focus as the draw lessons from the structures successfully in place in reforms are implemented. Because India is starting from a Europe and the U.S.A., even if a phased approach is re- largely "greenfield" situation as regards water resources man- quired to get there. Pricing and other market allocation agement, especially at state and river basin levels, the change mechanisms need to evolve as quickly as possible to mean- process must recognize the realities from which change must ingful instruments guiding resource allocation and usage commence. Many of this report's recommendations are thus practices. Examples are the tariff structures used by best "start-up" in nature, comprising primarily the short and practice water utilities (e.g., Singapore, EMOS in Santiago, medium-term agenda. This, however, is not the end of the Chile, and initiatives underway in Buenos Aires. Argen- line. India should keep in its sights the best examples of suc- tina), agricultural pricing policies that better guide re- cess from around the world and within its own borders, a source use, water marketing arrangements found in the number of which have been provided in this report. This Western U.S.A. and Chile, and pricing as ,an environmen- should help to guide the short and medium-term actions by tal control mechanism in the Netherlands. A major drive India and the progressive implementation of further change. is required to improve technology for increased produc- Such best practices, themselves evolving, should be tivity of water in all sectors, with lessons for agriculture kept under constant review by India's planners and policy- from countries such as Israel, Jordan and California. Hy- makers. As soon as possible, management of water re- drological data and modeling capabilities must reach the sources in India will have to be on a river basin basis, same level of sophistication as found in the U.S.A. and including a sophisticated management apparatus, incor- Europe; the needs in India are even more pressing than porating all sectoral users and stakeholders and crossing in these countries. The eventual institutional structure in state boundaries. The recommended actions start this pro- India will likely be a major transformation from its present cess, but success stories such as the Murray-Darling Ba- form and the initial restructurings in the reform process: sin in Australia, including major emphasis on public for instance, evolution to commercialized water services awareness and stakeholder participation, illuminate the as found in the U.K., U.S.A. and Chile, and government further actions required. The development of water poli- agencies eventually restricted to policy, planning and cies, legislation and regulatory structures in India can regulatory activities as found in the U.K. and evolving in a number of other countries. India's long-term sights must for change at the level of: state governments and their vari- necessarily be far-reaching. The Reform Agenda discussed ous water-related departments, river basin organizations, the in this report will enable an energetic start in these different Central Government agencies, and grassroots or- directions. ganizations. For these, policies, legislation, institutional structures and interlinkages, approval processes and finan- A.The reform agenda cial leverage, also come into play. Additionally, the incentive framework needs to be The key need is to develop a new"enab1ing environment" broadened to a more client-driven and decentralized envi- that will provide for better water resources management in ronment. The present government monopoly is far removed India. There is no simple or uni-dimensional solution to from the actual stakeholders. It discriminates against lo- these issues. There are, first, a myriad of actors involved: each cal-level solutions found and implemented by stakehold- and every household in India, every private business, and the ers and local communities. It leaves out the intellectual various social, administrative and political aggregations (i.e., talents and energies of civil society, from the communities villages, socio-economic strata within villages, municipali- themselves, and from academics, NGOs and industry. It ties, districts and states). Further, immediate needs and in- further perpetuates a supply-driven approach, rather than centives can be quite different from the long-term needs a demand-driven and needs-oriented approach in addition where sustainability and environmental management are to supply-side solutions. Thus, water allocation, planning crucially important. and management should be progressively moved in two Initially, the leadership in creating the enabling environ- general directions: ment will need to come primarily from government, in con- A public-private sector partnership should be built sultation and working with industry, water user groups, which would include the private sector, civil society NGOs and other civil society representatives. Government groupings, academics, NGOs, industry and other en- is currently the primary, and in many cases the exclusive, tities such as irrigation or village water supply users decision-maker in the water sector. Change will thus need associations. to be initiated by the government sector, but this should be The presently highly centralized decision-making and seen as a short-term need given government's present near- implementation should as far as pos:sible move to- monopoly role. The objective over time should be to increas- wards decentralization, stakeholder participation ingly involve the non-government sector and grassroots and involvement of grassroots organizations. organizations in water allocation, planning and management. These orientations have been built into the various de- This will need progressively building up, but a start can be tailed recommendations made in this report. Fundamen- made immediately through encouraging active involvement tal to the change process will be the creation of public of academics, NGOs, water users groups and industry rep- awareness, transparency of information and two-way flows resentatives. Particular attention should be given to foster- of information, and maximal participation in decision- ing involvement of traditionally marginalized groups which making and implementation by civil society and the vari- have a large stake in water resources issues, such as women ous stakeholders involved. Further, as the change process and the poor. progresses, these orientations are likely to become more The key element in the enabling environment will be to important over time, and additional opportunities should yy establish an "incentive framework that influences the in- be taken as they occur. Once these two-directions are un- dividual actors: households, farmers and firms. In the end, derway, they will build on themselves and act as drivers for such influence will be felt through the direct impact of fi- further change. nancial incentives or regulatory actions actually enforced. A third important orientation is that solutions to wa- These translate the policy, legislation, institutional and tech- ter allocation, planning and management issues need to nical capabilities into impact at the level of the individual. maximally exploit demand management. Traditionally, The incentive framework must also provide the right direc- the response to problems has been sought through reli- tions for the higher organizational aggregates - incentives ance on exploiting additional water sources. However, particularly as such sources are now scarce, a balance must the state, outlining the specific actions intended. These are now be found between making the best use of existing re- the most immediate needs as the absence oiF a policy and ac- sources and harnessing new supplies. Many of the report's tion framework at state levels means there is no basis on recommendations relate to the increased orientation on which to commence reforms. The National Water Policy demand management: technology improvements (achiev- should also be updated. ing higher productivity, water reuse, water conservation, Strengthening the Legislative and Regulatory Frame- etc.); economic incentives to encourage higher water use work. At state levels, a considerable body of legislation needs efficiency and reduce pollution; regulations; comprehen- review and revision and, in some areas, creation: sive basin modeling for optimal water planning and to fa- Amending legislation to enable: creation of the new cilitate dialogue between stakeholders; and public water allocation and sharing institutions; strength- information and education. ened regulatory powers, pollution control measures, Achieving improved water resources allocation, plan- establishment of multi-sectoral water stakeholder as- ning and management will require a multi-faceted ap- sociations, participation of private sector and civil proach. Just as water is not uni-dimensional, its improved society, and new forms of water tarifls, including volu- management requires a comprehensive approach, using metric charging; in combination a number of mechanisms, in the fields Establishing groundwater legislation and a regulatory of: (i) policy, (ii) legislation and regulations, (iii) insti- framework for groundwater management; and tutions, (iv)economic incentives, (v) technology and (vi) Assessing options for defining and making transfer- data, analysis and public information. All reform areas able surface and groundwater right:;. require attention. Economic and regulatory actions cannot At central and inter-state levels, the first priority should be applied in a vacuum. Policy is needed to provide direc- be to amend the River Boards Act. The Act should be tion. Legislation underpins regulation and many price in- amended to give powers to the Central Government to ini- struments. Institutions are needed in order to have capacity tiate establishment of RBOs. RBOs could take many differ- to undertake any of the reform areas. Technical capacity ent forms, ranging from fairly informal structures, to begin and understanding must underpin all actions, and be a basis with, facilitating dialogue and planning between states, to for planning and investment decisions. Of these, economic more formal institutions with executive powers. A second incentives are likely to be the most effective and should be need is to adjust the Inter-State Water Disputes Act to sub- given particular prominence in the reform agenda. stantially streamline Tribunal Award procedures within a Action will thus be needed on a variety of fronts: mandatory time-frame. The adjustments to the Act should Improving the Policy Framework; include provisions that: (i) the center can establish a Tribu- Strengthening the Legislative and Regulatory Frame- nal one year after receipt of a grievance from a riparian state work; if agreement is not reached between concerned riparian Establishing Government and Non-Government In- states, and (ii) following a Tribunal decision, a mechanism stitutions; for effective implementation and monitoring of the Award Introducing Economic Incentives; is established. Technological Improvements; and Establishing Government and Nlon-Government Improving Modeling, Data, Performance and Envi- Institutions. Institutional mechanisms need to be created ronmental Monitoring, and Public Information. or strengthened, in particular at state, grassroots and ba- The detailed recommendations contained in Chapter IV sin levels: are encapsulated in more summary form below. Creating State-level Institutions. The critical gap Improving the Policy Framework. Each state should at state levels needs to be filled through: (i) estab- prepare a State Water Policy responsive to its needs and in lishing a multi-sectoral state-1evc.l institution com- line with the principles discussed in the National Water prised of a State Water Resources Board (SWRB) Policy and recommendations provided in Chapter IV. An and its State Water Planning Organization (SWPO), Action Agenda should also be prepared and discussed within including provisions for environmental capability; (ii) re-organizing the state bulk water supply agency given government's present monopoly role, the lead (usually the Irrigation Department) along river ba- in this process will have to come substantially from sin lines and adjusting its mandate to include a government. Civil society, academia, NGOs, industri- broader role in water resources management; and alists and water user groups should be brought into (iii) creating river basin organizations (RBOs) for decision-making and institutions as quickly as pos- basins or portions of basins within the state. sible. Particular attention should be given to foster- Establishing Grassroots Institutions. Development ing involvement of traditionally marginalized groups of grassroots institutions should be fostered, includ- which have a large stake in water resources issues, such ing capacity building, to implement local-level re- as women and the poor. As non-governmental par- source management initiatives. ticipation is developed through public awareness and Creating Inter-State River Basin Organizations capacity building, and additional responsibilities are (RBOs). For all inter-state basins, riparian states shouldered, the center and state institutions can should seek to form RBOs as a matter of priority. This modify their role accordingly. should be constantly and strongly pursued and en- Introducing Economic Incentives. The incentive encouraged; including provision of incentives, by the vironment needs to be greatly enhanced through: center. These can take a wide variety of forms as dis- Intra-Sectoral. (i) establish meaningful water cussed in Chapter IV. prices for irrigation, urban and rural water supply Strengthening Central Institutions. The Central and sanitation, reflecting the cost of providing ser- Government apparatus, in particular MOWR, vice and the scarcity value of water and charged needs to be more sharply focused to enable it to volumetrically; (ii) increase agricultural power tar- play a more pro-active role. The National Water iffs and charge volumetrically; (iii) tackle distor- Resources Cour~cil(NWRC) and the National Wa- tions in agricultural commodity and input prices ter Board (NWB) need to be strengthened with an and domestic marketing policies; and (iv) establish operational level Technical Committee and a per- pollution taxes and other incentives for environ- manent professional Secretariat or National Water mental and health management. Planning Organization (NWPO).Also, MOWR and Inter-Sectoral. Develop economically-based water its member agencies (e.g., CWC, CGWB and re-allocation systems by: (i) introducing economic NWDA) should establish mechanisms for closer analysis and compensation packages in administra- interaction. tive re-allocations; (ii) developing brokering of Adjusting Central Government's Role. The center's compensated trades; and (iii) piloting and devel- role should include fostering public participation oping formal water markets with appropriate regu- and change through information and public aware- latory mechanisms. ness, and capacity building for local and state-level Inter-State. Encourage commercial water transac- institutions. For state governments, it would provide tions between states, or agreed multi-component (in- financial incentives, appropriate instruments and fa- cluding non-water investments) basin development cilitation of state initiatives and capacity building plans for inter-state river basins enabling mutually through: (i) approval of central-assistance Plan funds beneficial gains. for water investments contingent on state progress Technological Improvements. Implement a major in water resources management reform; (ii) financ- drive in all sectors to: (i) increase water use efficiency; (ii) ing through a River Basin Development Fund of improve productivity of end use; (iii) employ water conser- multi-state basin developments where a RBO and vation, water treatment and water recycling and reuse tech- basin plan exist; and (iii) technical assistance sup- nologies; and (iv) enable transfer and reuse between sectors. port to states for their reform programs. Improving Modeling, Data, Performance and Envi- Building Non-Governmental Participation. This ronmental Monitoring, and Public Information. Develop orientation should underlie all initiatives. Initially, technical capabilities and public information to: (i) prepare river basin plans, state water plans and environmental man- first those issues considered most important and susceptible agement plans; (ii) strengthen hydrological measurement to change. networks and institutions; (iii) establish performance and environmental monitoring systems for water provision ser- C. Getting started vices in ail sectors; (iv) involve stakeholders in all water planning and allocation decision-making; and (v) provide public The Action Plan at Matrix 2 includes a suggested time- information and involve stakeholders in all water planning frame for its implementation. Some actions are particu- and allocation decision-making. larly critical at the beginning, as they provide a foundation for other subsequent steps. This sectio'n provides guidance B.Action plan for implementing the reform on the likely most important start-up actions, at state lev- agenda els and at the center (refer Diagram 2 - "Getting Started"). The Action Plan for implementing the Reform Agenda is at Matrix 2. State-level Actions As discussed above, particularly at the beginning of Establishing a Policy and Action Agenda. The first need the reform process, the primary direction for change must in each state will be to set out a poli~yframework and Ac- come from government itself, though involving civil so- tion Agenda. To this effect, an Interim Water Resources Task ciety in its initiatives. Actions in Matrix 2 are thus cat- Team should be established quickly to assess the situation egorized by the two main government actors: the state in the state and to draft two guiding documents establish- governments ahd the Central Government. These are the ing an agenda for change:I5* main decision-making entities, but their respective roles Prepare a draft State Water Policy. A short concep- are distinct. Of these, the primary actors will need to be tual document, providing an overview, key issues, and the state governments. Most decision-making and actions the future vision for improving management of the occur at state levels and even for inter-state water shar- state's water resources. ing and management, actions by the individual states and Prepare an Action Agenda. A note detailing the spe- cooperation between them are essential for success. The cific short and medium-term actions intended. center, nevertheless, has a crucial role to play as a pro- These documents should be reviewed extensively within vider of guidance, funding and financial leverage, back- the state government, including at political levels. They stopping legislation and dispute resolution mechanisms, should also involve consultation through workshops, the and in fostering public awareness. A major focus of the media, and other procedures with civil society and major Action Plan will be to maximally involve local government constituencies. Although the order of subsequent actions will and civil society, including all stakeholders, NGOs, indus- vary by state, in most cases, the following actions are short- try and the academic community. term needs: The Action Plan at Matrix 2 presents desired actions as Establish Institutional Capability. Although the task a guide for undertaking change at state and central levels. team above will be sufficient for the focused intellec- Particularly at state levels, there will be need to take into actual input required for drafting a State Water Policy count the specific circumstances of the state concerned. No and Action Agenda, permanent capability - the

uniform prescription or blueprint will be appropriate for all SWRB and its SWPO - IS required for steering and circumstances. A reform agenda as bold and comprehensive implementing further actions. as possible would be best. However, progressive changes Create Public Awareness. Implementation of the would still be moves in the right direction. A strategic, but change process will require better understanding of also opportunistic, approach will often be needed, tackling the issues by the general public. A multi-media

'"The state-level TaskTeam would be temporary in nature. Once an institutional capability has been established by the state (i.e., the SWRBISWYO), the Task Team would no longer be needed. Similarly, at central level, the interim Task Team would be phased out as the Technical Committee and NWPO are established. - DiagramZA. Getting Started - State Actions

Starting Actions Early Actions Changesllmpacts

i Establish Institutional Capacity SWRB & SWPO Building

Public Awareness Understanding, Public Participation Draft State Water Increased Productivity, Policy Incentives: Establish Interim Prepare Water Conservation & Water Resources Use Efficiency, TaskTeam Action Improved Water Agenda Allocation

Review Legislation Enabling Legislation

RBO Initiatives for Inter-State Cooperation

basin plans, hydrological data and Investment performance indicators

Conservation

K. ObllcaslH.Qaddumi Diagram2B. Getting Started - Central Government Actions

Starting Actions Early Actions Changesllmpacts

Public Awareness Understanding,

Establish lnte\rim Prepare Support for State Water Resources L Action - Reform Initiatives Initiatives Task Team Agenda

State Reform

Facilitation of

Review and Amend for RBOs and

Allocation, Planning campaign should be launched and sustained over time society and government. At the level of the states, it would to create awareness and understanding of the changes provide technical assistance and create financial instruments required, and concerned civil society should be inte- encouraging change. At the central level, it would make tar- grated in the decision-making process. geted changes in the institutional structure and legislative Review and Establish Economic Incentives and provisions. To get these actions underway, a cross-ministe- Mechanisms. A review should be made of existing in- rial Interim Water Resources Task Team should be established centives for water use and conservation. The review to prepare a short-term Action Agenda for Central should focus on areas particularly in need of change Government's role. The following actions will need to be at and where change can be introduced quickly. Gener- the forefront: ally, the more immediate and short-term changes Public Awareness. A vigorous program to this effect would be in the following areas: (i) adjust (almost al- should be launched, including use of the media, lit- ways increase) water charges in all sectors; (ii) raise erature, workshops and study tours. agricultural power tariffs and switch to metered Guidance and Capacity Building. This will require charging; (iii) prepare and phase in volumetric charg- multi-disciplinary capabilities, and an advisory role ing of water; (iv) correct commodity price and mar- ranging from the general and conceptual to highly ket imbalances distorting regional water use; and (v) specific advisory capability to help states devise and introduce financial incentives for pollution control implement specific actions (e.g., a particular piece of and water reuse and conservation. legislation, how to introduce volumetric charging, fea- Initial Review of State Water Legislation. A review tures for establishing a SWRB or RBO, etc.). The cen- should be undertaken of existing legislation and its ter should also help train and build capacity of adequacy relative to the objectives under the State local-level institutions. Water Policy. Key areas requiring change or new leg- Funding for State Initiatives. A funding provision islation should be identified and this legislation sub- should be provided for ready access by states to fi- sequently prepared. nance initiatives at the state or basin le~e1.l~~This Launch Initiatives for Inter-State Basins. Possibilities could be through a "centrally-sponsored scheme" or will vary depending on the present degree of coopera- other grant-providing mechanism. tion between the concerned riparian States. In all cases, Applying Approvals Leverage. Develop and apply some steps towards further cooperation are possible and in the Plan-approvals process a system for moni- should be identified and undertaken. The short to me- toring state progress in water resources manage- dium-term objective should be to establish RBOs. ment reform. Introduce Technological Improvements. A quick River Basin Development Funding. Provide centrdy- review should be undertaken in all sectors of oppor- sponsored-scheme Plan funding for multi-state river tunities for enhancing productivity, water use effi- basin development where RBOs and basin plans exist. ciency, and water recycling and reuse. Reviewing Existing Legislation and Procedures. Improve Modeling, Data, Performance and Environ- Amendments of the River Boards Act and the Inter- mental Monitoring, and Public Information. Iden- State Water Disputes Act should be a priority for the tify the state-specific actions needed and implement. MOWRINational Parliament. Improving Central Institutions. The short-term Central-level Actions need is to establish or strengthen capacity to handle For the Central Government, actions in the short term the areas above, including making the NWRC more should be to help create awareness of the issues amongst civil operational.

'" For instance, the costs (consultancy, training, equipment, study tours, etc.) related to establishing new state institutions (SWRBISWPO), introducing volumetric charging, monitoring and regulatory apparatus for establishing pollution fees, undertaking basin plans, improving hydrological data, etc. Matrix 2.Action Plan ForThe States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions

Formulate State Water Policies and Action Agenda Establish Interim Water ResourcesTaskTeam Chief Minister or Chief immediate Secretary State Water Policy should include the following: comprehensive approach on a river basin basis Prepare a draft State Water Policy lnterim Water Resources immediate treatment of surface and groundwater as unitary overview of state's water resources situation, key TaskTeam resource issues, future vision and objectives multi-sectoral perspective broad intentions for current and future develop integration of quantity and quality-related aspects ment of state's water resources. full integration of environmental and health aspects integration of pricing and economic incentives Prepare an Action Agenda Interim Water Resources immediate introduction of administrative allocation mechanisms specific short-term actions for improving water Task Team incorporating economic or value-based criteria, as resource management well as promotion of market-oriented approaches, appended to State Water Policy or a separate note together with regulatory mechanisms, to water management much greater emphasis on demand management approaches I 'assured O&M funding and related policies and revenues (water charges) generation technological improvement aspects, including productivity enhancement, water conservation and water reuse intended implementation actions, including core reform areas for legislation, institutions, the incentive environment and technology participatory approach to water resources management private sector participation I Amtnd and Create Legislation Undertake overall review of existing legislation SWRB short term

Enabling legislation will typically be needed for the Amend or create necessary legislation SWRBlstate government medium term state water policies implementation of new or revised institutions and institutional responsibilities regulation of water resources pollution control establishment of water users associations, participation of private sector and civil society

DefineTransferable Surface and Groundwater Rights Assess options for defining and making transferable SWRBlstate government medium term surface and groundwater rights surface water: maintenance of riparian rights coupled with introduction of government administered licensing of transferable water rights groundwater: institution of government- administered permit system for selective groundwater extraction and use, including provision for transferability (as recommended in 1996 Model Bill for groundwater)

Introduce government-administered licensing SWRB, bulk water supply medium to long term of transferable water rights agency & Basin Managers provide transferable bulk water rights to water user groups on pilot basis in selected areas include protective provisions for existing uses; terms and conditions on use; provisions for neces= sary suspension or cancellation of rights with compensation; recording of licenses Matrix 2. (cont.) Action Plan ForThe States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) Ill. Establishing Government and Non-Government institutions Establish a Multi-Sectoral State-level Institution Create a State Water Resources Board (SWRB) Chief Minister or Chief immediate apex body at the level of the state, responsible for core and most senior level state institution for Secretary comprehensive water planning, allocation and analysis multi-sectoral planning and allocation decisions, including water policy, inter-sectoral water allocation, planning of water development pro- I grams, and resolution of water resources issues formal committee, comprised of heads of relevant government departments and agencies connected I with water, supplemented by representatives from water user groups, industry, academia and other stakeholders chaired by a neutral senior party (e.g.. Chief Minister, Chief Secretary, Finance Secretary or Development Commissioner)

Create SWRBf State Water Planning Organization SWRB immediate (SWPO) technical secretariat for SWRB full time professional staffing in areas related to multi-sectoral water resources planning and management senior officer head (Additional Secretary rank1 equivalent or above) to also serve as Member Secretary of SWRB responsible for preparing basin plans for all river basins in the state and a State Water Plan, undertaking studies of water-related issues, preparing environmentai rnandgenient pians by river basin

Establish Environmental Capability SWRB, SWPO & Basin short term create an Environmental Working Group in SWRB Managers create Environmental Unit within SWPO and at basin levels Reorganize along river basin lines and adjust man- Chief Secretary & Secretary s date to include a broader role in water resources of Irrigation Department or responsible for overall basin management, including and overall basin management State bulk water supply surface and groundwater, bulk water supplies to re-organize field staff along river basin lines agency urban, rural and industrial consumers, irrigation and take on additional specialist functions such as drainage services,and flood management hydrology and water resources data absorb staff and responsibilities from other

short to medium term responsible for implementing integrated basin in acutely water scarce river basins with high management at the operational (basin) level stakeholder interest incorporating all governmental and multi-sectoral bringing together various stakeholders, including stakeholders and including private sector interests government and private sector interests (water user groups, industrialists, NGOs, etc.)

Encourage RBO's further gradual development to SWRB & Basin Managers medium term & continuous

Create Inter-State River Basin Organizations (RBOs) Initiate establishment process Riparian States (Chief short to medium term various possible forms - both informal and formal - begin dialogue,even if only on an ad hoc and Ministers, Chief Secretaries. ranging from basin planning and coordination, to informal basis, on key river basins with an aim for SWRB & Basin Managers) water allocation and management of common bulk agreement on an institutional structure and supplies, to monitoring and maintenance of water mandate for RBO quality, and to general operations and hands-on adopt a situation specific approach, evolutionary with respect to structural forms and scope of flexibility regarding the gegree of Central Govern- responsibilities ment involvement and use of legislative provisions

level Institutions and consultancy assistance

Transfer technology (computers, software, etc.), SWPO short term particularly to SWPO and Environmental Units I Matrix 2. (cont.) Action Plan ForThe States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) Ill.Establishing Government and Non-Government Institutions (cont.) Develop and Foster Grassroots Institutions Commence mobilization effort through consultation Basin Managers supported short term with NGOs and stakeholders on a pilot basis in select by SWRBISWPO areas

Provide training and financial and technical support medium term & continuous for capacity building to existing local-level institutions

------~ Promot$I -Public Awareness and Integrate the Private Involve academics, NGOs, industry, water user groups SWRB. SWPO & Basin immediate & continuous Sector and other civil society maximally in decision-making, Managers with particular emphasis on outreach to traditionally marginalized groups such as women and the poor

Inform and involve the public through media SWRB. SWPO & Basin immediate & continuous campaigns, seminars, workshops, publicity, education Managers programs, etc.

IV. Introducing Economic Incentives Intra-Sectoral Allocation and Pricing Establish Water Prices Create a Water Pricing Committee (WPC) Chief Secretary & SWRB immediate These should be accompanied by: to undertake analysis and present recommenda public awareness campaigns, including outreach tions to government programs to water consumers responsible for determining water rates in all sectors

transparent information to water useI- S on water charges, the necessary costs of effective O&M, actual lncrease irrigation prices and charge volumetrically WPC & Irrigation agency short term expenditures, the size of existing subsidies, environ- implement major jump in water charges, with the mental costs, etc. goal of covering at least efficient operations and system improvements, including increasing financial maintenance (O&M) costs in the short-term allocation to maintenance works, rehabilitation and switch from area-crop based charging to volu- modernization of distribution systems; additionally metric charging and bulk sales to water users support agricultural improvements through agri- associations (WUAs) cultural intensification programs Increase urban water prices (both domestic and WPC & municipalities short term industry) and introduce volumetric charges

Increase rural water supply prices WPC & RWSS agency short term Matrix 2. (cont.) Action Plan For The States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) IV. Introducing Economic lncentives (cont.) Intra-Sectoral Allocation and Pricing (cont.) Establish Groundwater Pricing Increase or introduce power tariffs WPC &/or state electricity immediate These should be accompanied by: agency(ies) transparent information to pumpset owners and the lntroduce volumetric charges (i.e., based on power state electricity agency(ies) short to medium term general public on actual costs of power provision. consumption) the size of existing subsidies, environmental costs, etc.

Tackle Distortions in Agricultural Commodity and Undertake review of subsidies and marketing policies WPC medium term Input Prices and Domestic Marketing Policies Created for water-related agricultural inputs and outputs at State Levels

Establish Incentives for Pollution Control and Water Review and revise existing state taxes and fines WPC, SWRB & Pollution immediate Conservation relating to pollution Control Board Financial disincentives/penaltiesfor water pollution Financial incentives for pollution control, water Introduce pollution taxes and effluent charges for Pollution Control Board short term conservation and recycling actual amount of pollution emitted based on "Polluter Pays Principle"

lntroduce or review and revise existing state incen- SWRB,WPC & Pollution short to medium term tives for investment in environmental protection and Control Board water recycling and conservation

Install M asures to Guard Social Well-being Create a pricing structure such that necessary quan- WPC & state water supply short term ! tities of safe and reliable drinking water are provided zgencies ,,, , to the poor through multi-tiered (increasing block) rate structures through direct subsidies (i.e.. not relating to water use) for targeted consumers and lor service providers

Rehabilitate and modernize irrigation and drainage state irrigation agency and systems and undertake agricultural extension to agriculture department short to medium term enhance agricultural productivity and incomes

I Matrix 2. (cont.) Action Plan ForThe States And Central Government

packages in administrative allocations

I Develop knowledge base (hydrological data and SWRDC. SWPO & Basin short to medium term I I basin modeling) and disseminate information to all Managers I affected parties

7 Develop Brokering of Compensated Trades Assess where mutually profitablelbeneficial out- SWPO & Basin Managers medium term comes exist and play a catalyzing role in negotia- ting such arrangements

Develop knowledge base and disseminate informa- SWRDC, SWPO & Basin short to medium term tion to all affected parties Managers

Study and Pilot Water Markets Undertake study tours, including users and all water SWPO, irrigation agency short term I using sectors, to assess international experience and other agencies lntroduce water markets on a pilot basis, restricted Basin Managers, concerned medium to long term to select areas with evident need and high stake- agencies & NGOs holder interest, and restricted in scope to formal groups of water users Establish local management unit to facilitate trades, monitor and regulate, and to provide dispute resolution mechanism Monitor and make adjustments as needed for replication Introduce regulations to guard environmental and Basin Managers and concurrently with above social welfare concerned agencies

I Establish institutional, legal (clearly defined and state government, SWRB & concurrently with above I I transferable bulklsectoral water rights), Basin Managers I I administrative and technological mechanisms to I I enable development of formal water markets Matrix 2. (cont.) Action Pla~ForThe States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) IV. Introducing Economic Incentives (cont.) Inte~StateAllocation Mechanisms Improve Inter-State Allocation of Water Introduce economic analysis in administrative state govts with GO1 short term allocations

Develop knowledge base (hydrological data and SWRBs, SWRDCs & medium term basin modeling) and disseminate information to all SWPOs (81inter -state RBOs affected parties where existing)

Develop Multi-Component (including non-water Give due weight to economic criteria in decision- state govts & GO1 (& short to medium term investments) Basin Development Plans making in order identify potential mutual benefits RBOs where existing) from integrated development of inter-state river basins

Develop analytical base to support decision-making, SWPOs (a RBOs where medium term including basin modeling incorporating economic existing) variables

V.Technological Improvements Increase Water Use Efficiency and Improve Rehabilitate and modernize surface irrigation schemes irrigation department, short to medium term Productivity of End Use in all Sectors Undertake leak detection and repairs for domestic UWSS & RWSS agencies short to medium term water supply schemes and improve monitoring and metering

Improve Agricultural Technology Encourage the adoption of technology innovations agriculture departments, short to medium term to maximize productivity (on-farm water manage- WALMls & universities ment, agronomic practices, drip irrigation, diversification, eco-agriculture technologies, watershed management)

Encourage Water Conservation, Recycling, Reuse Encourage effluent treatment, water conservation all agencies medium term and Treatinent programs and water harvesting I Matrix 2. (cant.) Action Plan For The States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) VI. Improving Modeling, Data, Performance and Environmental Monitoring, and Public lnformation Prepare River Basin Plans and Environmental Assess- Prepare comprehensive River Basin Plans for all SWPO (& RBOs where short to medium term ments,supported by Modeling basins or parts of basins in the state existing)

Prepare a State Water Plan SWPO medium term

Prepare Basin Environmental Assessments and SWPO (&RBOs where short to medium term Environmental Assessments of specific environmental existing) issues

Improve basin modeling capability SWRB,SWPO, universities, immediate to short term implement training program including transfer of Basin Managers & NGOs modeling software, provision of computers, selective provision of other facilities (e.g. satellite imagery) identify training institutes including universities and I seek supplementary assistance through twinning arrangements select a few basins for particularly intensive study encourage an inter-active process with high degree of stakeholder involvement

Improve Hydrological Data Establish a State Water Resources Data Center SWRB, then SWRDC short to medium term (SWRDC) to assemble and monitor all quantity and quality- related data from collecting sources in the state, based on river basins or a part thereof lying within the state to develop Geographic lnformation System (GIs) to disseminate data to all bona fide users on a periodic and regular basis, including making it accessible on internet and CD-ROM Expand and improve data measurement msdium to long term assess in each state and river basin existing network of measuring stations expand existing network of measuring stations for surface and groundwater, including water quality Matrix 2. (cont.) Action Plan For The States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame State level actions (cont.) VI. Improving Modeling, Data, Performance and Environmental Monitoring, and Public lnformation (cont.) Establish Performance Monitoring Establish relevant measurement and monitoring SWRB. SWPO & state short term indicators of performance for irrigation,urban water agencies (irrigation, supply and sanitation, and rural water supply and UWSS, RWSS, etc.) sanitation

Issue on a regular and periodic basis reports on SWPO & state water short to medium term performance indicators and make information agencies accessible on internet and on CD-ROM

Improve Environmental Monitoring and Management Establish measurement and monitoring indicators of SWPO, SWRDC, SPCB & short term environmental aspects of water development and others management

Collect, analyze and issue on a regular and periodic SWPO & SPCB short to medium term basis environmental and ecological data and performance indicators and make information accessible on internet and CD-ROM

DataTransparency,Public Information and Public Make data transparent and provide mechanisms for SWPO, SWRDC. & Basin immediate start Involvement ready access by stakeholders and the public to all Managers information and analysis

Provide "outreach" to public through media, seminars, SWRB, SWPO. Basin immediate start workshops, political gatherings, and information Managers & state agencies bulletins to inform and involve the general public in basin planning, environmental issues, and productivity improvements

Actively enlist participation of traditionally more Basin Managers, state immediate start marginal or less vocal groups, such as women, the agencies & SWRB poor and other minority groupings Matrix 2. (cont.) Action Plan For The States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame Central level actions i. improving Policy Framework Formulate Action Agenda Establish cross-ministerial Interim Water Resources MOWRINWB immediate Task Team

National Water Policy should include the following: Prepare an Action Agenda Interim Water Resources immediate to short term comprehensive approach on a river basin basis note articulating specific short-term actions at Task Team treatment of surface and groundwater as unitary central level for improving water resource resource management multi-sectoral perspective integration of quantity and quality-related aspects Update National Water Policy MOWR (consult NWB short to medium term integration of environmental and health aspects & NWRC) 1 integration of pricing and economic' incentives introduction of administrative allocation mechanisms incorporating economic or value-based criteria, as well as promotion of market-oriented approaches, together with regulatory mechanisms, to water management much greater emphasis on demand management approaches 0&M funding and related policies and revenues (water charges) generation technology improvement aspects, including productivity enhancements, water conservation and water reuse intended implementation actions, including core reform areas for legislation, institutions, the incentive environment and technology participatory approach to water resources management private sector participation Matrix 2. (cont.) Action Plan ForThe States And Central Government

Reform Recommendations Components of Reform Responsibility Time Frame Central level actions (cont.) 11. Strengthening Legislative and Regulatory Framework Strengthen Legislative Framework Establish Task Force to assess possible reforms in: MOWR immediate to short term River Boards Act and Inter-State Water Disputes Act surface and groundwater rights other enabling legislation

Facilitate Establishment of River Basin Organizations Amend River Boards Act to give powers to the MOWR short term Central Government to enable the establishment of a RBO

Improve Performance ofTribunal Awards System Enhance effectiveness ofTribunal by: MOWK short term amending Inter-StateWater Disputes Act to enable Central Government to institute aTribunal within one year of a state's request if the concerned riparian states have not reached agreement establishing mandatory time limits for creation of Tribunal, award decision, and state responselrebuttal fixing by law the review ofTribunal Awards at set intervals providing for the establishment of a mechanism for mandatory implementation and monitoring of the Award decision

Ill.Establishing Government and Non-Government Institutions Strengthen the National Water Resources Council Create aTechnical Committee under NWB MOWR short term In order to more effectively: with representation from all states and key GO1 coordinate activities amongst various Central departments Government agencies involved in water chaired by Ministry ofwater Resources promote best practices in water resources meeting on a quarterly basis management Create a National Water Planning Organization MOWRICWC short term discuss inter-state and international water issues (NWPO) Secretariat ofTechnical Committee of NWB adapt CWC's WP&P wing for this purpose staffing on secondment from MOWR. CWC. CGWB. NWDA, MOEF. CPCB and other relevant agencies

I and some additional disciplines Create an Environmental Sub-committee and an MOWRIMOEF & NWPO short term Environmental Cell within NWPO I Matrix 2. (cont.)Action Plan ForThe States And Central Government I Reform Recommendations k\ Components of Reform Responsibility Time Frame Y Central level actions (cont.) I' I 111. Establishing Government and n-Government Institutions (cont.) Restructure Ministry ofwater Resources (MOWR) Create a mechanism for closer interaction between MOWR short term I MOWR and its agencies (CWC, CGWB, NWDA) I Use Approvals Process to Encourage Reforms at Review process for Plan funding and approval of CWCIMOWR & Planning short term State Levels state project proposals to include monitoring of Commission water allocation, planning and management reforms at state levels. Monitoring to include state progress with: establishment of State Water Policy and Action Agenda establishment of SWRB and SWPO establishment of financial incentives for water use productivity and environmental management preparation of intra-state River Basin Action Plan and Basin Environmental Action Plan actions towards creation of an intra-state RBO status of dialogue with other riparian states for inter-state basins degree of initiatives taken by the state to cooperate with other riparian states and to move towards1 establish an inter-state RBO

Provide Financial Assistance for RBOs Provide river basin development funding for invest- Planning Commission/ medium term ment in river basins where riparian states have: MOWR & Ministry a non-contested agreement between riparian states of Finance a jointly issued River Basin Plan for the full basin some form of inter-state RBO ProvideTraining and Technical Assistance to State and Build capacity through: MOWR & its specialist lmmediate start 9 Local-level Institutions awareness creation (e.g. seminars, workshops) agencies providing advisory support disseminating best practices (e.g., study tours) providing specialist training, provision of computers, software, etc. Matrix 2. (cont.) Action Plan For The States And Central Government

Reform Recommendations Components of Reform Responsibiiity Time Frame Central level actions (cont.) IV. Introducing Economic Incentives Improve Environmental Incentives Assess and introduce augmented incentives1 NWPO, MOEF & CPCB short to medium term disincentives for pollution control, water conservation, water recycling and reuse

Tackle Agricultural Pricing and Marketing Policies Dismantle artificial trade barriers between states GO1 medium term and regions and unify commodity pricing policies throughout India

Correct market and infrastructure imbalances GO1 medium term

\ Provide Funding for State Initiatives Develop a centrally-sponsored scheme or grant- MOWR, Planning short to medium term providing mechanism to support state-level Commission & Ministry of initiatives, including: Finance introducing volumetric charging establishing enforceable pollution fees brokering compensated trades piloting or developing water markets

V.Technological Improvements Undertake a Sustained Drive to Encourage Provide technical support. including'financingof state MOWR & Ministry of Short term Technological Improvement initiatives to introduce improved technology to: Agriculture (i) enhance productivity of irrigation systems and (ii) improve related agricultural technology

Improve efficiency of domestic water supply MOUAE & RGNDWM short to medium term schemes, including water treatment and water conservation practices related data from collecting sources, based on river basins, sub-basins or a part thereof, and to disseminate data to bono fide users to develop National Geographic Information System (GIS) to disseminate data to all bono fide users on a periodic and regular basis, including making it accessible on internet and CD-ROM fully networked with SWRDCs

Expand and improve data measurement CWC, CGWB & CPCB medium term

urface and groundwater, including

Expand training program provided by MOWR's NWPO & CTU short to medium term Central Training Unit (CTU) at Pune and identify a network of other training institutes

short to medium term

bulletins to inform and involve the general public

MOWR & agencies short term

ANNEX 1

Boxes on Water Availability and Distribution

Box A I. I. River Basin Water Availability I Average Annual Replenishable Estimated Per Capita Per Capita Catchment Surface Water Groundwater 1991 Available Surface and Area (million Availability Resources Population Surface Wiater Groundwater River Basin hectares) (BCM) (BCM) (millions) (cubic met* (cubic meters) lndus 32.13 73.3 1 26.55 4 1.90 1.749 2383.29 Ganga-Brahmaputra- Meghna System (includes Ganga & Brahmaputra & Barak) 109.76 Ganga 86.15 Brahmaputra & Barak 23.6 1 Godavari 3 1.28 Krishna Cauvery Subernarekha BrahrnanCBaitarni Mahanadi Pennar Mahi Sabarrnati Narrnada Tapi West Flowing Rivers aTapi toTadri 5.59 b.Tadri to Kanyakurnari 5.62 c. Kutch and Saurashtra incl. Luni 32.19 East Flowing Rivers a. Mahanadi to Godavari 8.66 b. Pennar to Kanyakumari 10.0 I Area of Inland Drainage in Rajasthan 6 Minor Rivers draining into Bangladesh and Myanmar 3.63 3 1.OO Source: Indian Water Resources Sociery. 1997. I Algeria 528 Egypt 923 Kenya I I I

.. . .

314 Kuwait 103 Lebanon Oman 892 Saudi Arabia 254

Source:World Resources Institute. 1997. (Adapted for India -WRM Sector Review,World Bank 1998). '

In India,freshwater demand will increase considerably in the coming decades, and a growing number of people will be affected by shortages. Because of high demand, more efficient use of water will not reduce the overall pressure on freshwater resources. In addition to freshwater demand, water availability is likely to change in the future. Global climate change, as indicated by increasing average global temperature and increasing carbon dioxide levels, probably will cause a wider variability in precipitation.According to projections with the Asian-Pacific AIM Model (Morita et al., 1995, in RIVMIUNEP, 1997), the widely expected doubling of atmo- spheric carbon dioxide concentrations in the coming decades will cause half the world area to have higher water discharges, particularly in northern India, northern Russia and northern North America. By contrast, reductions in water discharges will likely be more prevalent in southern India,Africa,WestAsia and China. There is strong evidence that glaciers in the Himalayas are melting and it is expected that within 50 years, most of the glaciers will have disappeared.This change in available snow-melt water, combined with the above predicted increases in rainfall pattern in northern India, will likely cause considerable changes in the annual runoff pattern of the Ganges.There might be less water available during a part of the dry season, affecting irrigated agriculture and food production.At the same time, runoff during the monsoon might strongly increase, causing flooding, loss of property and life, and loss of agricultural production. Better prediction models in the years to come will provide more insight into such possible eventualities.

Source: RRobelus based on Bakkes and van Woerden, 1997. (India -WRM Sector Review.World Bank 1998). ANNEX 2

Boxes on Water-Related Environmental and Health Issues

I BoxA2.I .Waterrelated Environmental and Health Issues in India I

Environmental Sectors and Activities Effect on Sectors and Problem Contributing to Problem Otherwater Users Reduced river flow Irrigated Agriculture, Industry and Domestic Ecology: change or loss of aquatic ecology; Water Users: excessive withdrawal of river water loss of river regenerative capability Fishery: loss of fish and foreclosure of fishing activities Tourism: foreclosure of recreational uses Religion: loss of water for ceremonial use ------Organic pollution of rivers Industry: discharge of untreated industrial effluents Water supply: contamination of water for Domestic Sector: discharge of raw sewage and various uses inadequate disposal of domestic solid waste Tourism: foreclosure of recreational uses Religion: inadequacy of water for ceremonial use Top-soil erosion and river Agriculture: land use techniques leading to soil Agriculture: soil and nutrient loss; loss of siltation erosion irrigation water storage Forestry: deforestation Energy (hydro-power): lsoss of storage capacity and power production Flood control: reduced Rood protection

. Toxic pollution of surface Industry: inadequate disposal of hazardous wastes Domestic water supply: contamination of and ground water and discharge of industrial effluents drinking water Ecology: toxic effects on aquatic organisms and changes in aquatic community structure Nutrients: surface and Agriculture:surface runoff or leaching of nitrogen, Domestic water supply: excess nitrate in groundwater contamination phosphorus applied as fertilizer, and animal wastes drinking water and eutrophication of Sanitation: discharge of raw sewage; infiltration from Energy (hydro-power), irrigation and flood lakes and reservoirs inadequate disposal of domestic solid waste control: impairment of reservoirs due to eutrophication Fishery: loss of fish Ecology: disruption of food chain and propagation of unwanted species Waterborne diseases Urban and Rural Sanitation: discharge of raw sewage Domestic water supply: unsafe drinking and inadequate disposal of domestic solid waste water Education and Health: inadequate education in Health: water-related illness hygiene Water logging and soil Irrigated Agriculture: over-use of water and Agriculture: loss of arable land salinity inadequate drainage Loss of wetlands Urban growth and industrial development in Ecology: loss of biodiversity ecologically sensitive areas Fisheries: destruction of coastal areas and Agricultural expansion loss of mangrove forests for fish breeding Water-related projects Groundwater depletion Irrigated Agriculture: excessive withdrawal of Domestic water supply: inadequate quantity and contamination from groundwater and quality of drinking water saline sea water intrusion Domestic water supply: excessive withdrawal of Agriculture: inadequate !water quantity for groundwater irrigation

I Source: Medeiros and Dave, 1997.(India -WRM Sector Review,World Bank 1998). - - BoxA2.2. Impact of Domestic and Industrial Effluents in Bellandur (Karnataka)

Bellandur cauliflower, greens and other vegetables were once famous in Bangalore.The people in Bellandur used to enjoy the 'tank festival' of a temple in the vast Bellandur tank But all these have become part of one's memory, due to the inundation of the tank by sewage water and industrial effluents.The residents of Bellandur and their cattle have been afflicted by skin diseases after consuming contaminated water drawn from borewells and open wells.The milk from Bellandur cows has become tasteless and the cowdung watery, indicating serious health problems in the cattle.The once popular cattle show has also been discontinued.The centuries-old 950-acre tank, which used to supply drinking water to many villages, has been rendered useless.The tank had also been a major fish rearing center, but aquatic life came to an end 15 years ago with the contamination of water.

1 Source: htt.p://w.indiaserver.~0m!ne~s/thehindu/THB04.html, 22 April 1997. (lndia - WRM Sector Review,World Bank. 1998)

BoxA2.3. Coastal Zones in Indio: Environmental Problems and Management Possibilities

Importance of lndian Coastal Zones According to the UN by the year 2000 about 75 % of the human population of the world will live in a narrow strip, up to 60 km wide, along the shores of the continents. In Asia, 65% of the cities having a population of over 2,5 million inhabitants are located along the coasts. lndia is not unaware of this average: nearly one forth of its population lives within the same distance of the shoreline. In other words, coastal zone ecosystems are some of the most important life support systems of the country. The coastal zones of lndia are highly diverse: all the coastal types identified by the Ramsar Convention are present in the country, representing 50% of the total type of wetlands of the world.The most important shore types are shallow waters, beaches, salt flats, mudflats, cliffs and rocky shores, which represent more than 65% of the area of coastal zones. Mangroves, coral reefs and brackish lagoons cover most of the other 35%. These ecosystems are very productive with productivity values often approaching or exceeding the ones of many agricultural systems.Wood production in mangals, for example, is equal to or better than in some forests with values reaching 2 16 m3lhalyear. Coastal zones have also a high biodiversity value. GOI, aware of the ecological importance of many of these sites, established 7 National Parks in shore areas, representing 8,4% of India's total coastal area. More than 70% of this area was identified as good habitat for migratory species. Nearly 42% is important for the presence of rare species, and 24% registers endemic ones. In addition, 73% of the area has a high ecological value for maintaining biodiversity, in any of its types (genetic, species or ecosystems). But the distribution of these protected areas is not homogeneous, with an important under-representation of sites of high biodiversity value such as the Great Rann in Gujarat, Calimerevedaranayam in the SE coast and the Mahanadi delta and Salt Lakes in the NE coast, among others.

Coastal environmental issues in lndia The loss of total wetlands worldwide is estimated in 50% of those that once existed (Dugan, 1993). No precise information is available about the specific loss of coastal areas in India. However, it is well accepted that this degradation is primarily concentrated in the areas with higher biodiversity importance such as mangroves, coastal wetlands and coral reefs. Pollution and demographic growth pressures are the main causes of this degradation. It has been estimated that 20,000 million litreslday of domestic sewage reach the lndian coasts every day, discharged mostly in untreated conditions due to the k~ckof treatment facilities. Extractive activities such as fisheries, oil & salt production and mining are also generating irreversible impacts in the natural environments. In the lndian Sunderbans,for example, more than 100,000 ha of mangrove land have already been lost. In Gujarat, which concentrates 80% of the national salt production, soil salinization and increases in bromine concentration have also exterminated several has of mangrove forests. In Goa, iron-ore mining generates mineral deposits that acidifies soils and leads to iron oxide deposition in more than 18% of the total coastal land. Pollution by crude and refined oil is also another of the major threats affecting lndian coasts. Some areas of the tanker routes of the Bay of Bengal are more polluted than the Arabian Sea. with oil concentrations ranging from Box A2.3. (cont.) Coastal Zones in India: Environmental Problems and Management Po~ssibilities

0 to 69,75 mglsqm as opposed to concentrations for 0 to 6 mglsqm from the latter. In addition, in the Northern Ocean about 4800 tonnes of floating tar balls with a residence time of 30 to 60 days deposit every year.

The rural potential of lndian coastal zones and coastal management possibilities With the increase of lndian population and the consequent reduction of the per capita arable land, India's rich aquatic coastal resources become more important as potential reserves to sustain population. Up to now, coastal zones of India are hardly seen as areas of high rural production. India's aquaculture is one of the activities with good potential, but it is still in its early phase. Until now, it is mainly a land-based brackish water activity, with a scarce but promising sea-based mariculture. India's high potentiail for this activity relies on having one of therichest shrimp biodiversities in the world, with more than 50 varieties. Since the Fifth FiveYears Plan, GO1 has recognized this potential and started promoting several intensive aquaculture programs. But while this activity gets more support from lndian authorities, its haphazard growth makes it essential to base its policy framework in more environmentally sound principles. Such principles, for example, should select and delimit areas for priority use, outline forbidden coastal zones because of their biodiversity importance, ensure good environmental conditions for farmers, select and develop better genetic varieties, reduce environmental impacts on natural ecosystems and extend skills and ecologically sustainable technologies to producers. Another under-exploited activity in most of the lndian coastal areas is agroforestr)r. Sandy beaches and dunes are good habitats for casuarina, peanut, coconut, mango, cashewnut, maize and vegetable plantations.Agroforestry and tree plantations in coastal zones can also contribute to reduce the immense pressure originated by fodder and fuel-wood collection on mangrove areas. It is estimated that the area available for this activity is more than 100 times the present extension of mangals. Some Joint Forest Management initiatives involving coastal communities by agroforestry have already started in several areas along the western coast, allowing re-conversion of mudflats to mangrove forests and releasing the pressure on them by providing additional resources originated in agroforestry practices. But all of these initiatives are still in a pilot phase and much more still needs to be done to promote the sustainable management of lndian coastal resources and to protect its highly significant biodiversity.

Source: E. Sennhauser (India - WRM Sector Review. World Bank, 1998).

Box A2.4. State-Wise Groundwater Problem Areas from Industrial Pollution

State Problem Area Critical Parameters Andra Pradesh Visakapatnam,Patancheru--Bolaram heavy metals. fluoride, nitrate, bacteriological Bihar Dhanbad nitrate,TDS, conductivity

Delhi (UT) Najafgarh Drain Basin Area heavy metals, bacteriological Kerala Greater Cochin heavy metals, acidity, pesticides, fluoride, iron, bacteriological

Madhya Pradesh Korba, Ratlam-Nagda zinc, iron. fluoride, bacteriological

Orissa Angul-Talcher heavy metals, fluoride, bacteriological

Punjab Mandi Gobindgarh bacteriological

Rajasthan Pali,Jodhpur water not even suitable for agricultural purposes Tamil Nadu North Arcot chromium (from tanneries) Tamil Nadu Manali bacteriological, sodium, nitrate, fluoride

Uttar Pradesh Singrauli chromium, iron. fluoride, bacteriological West Bengal Durgapur, Howrah bacteriological

Source: CPCB, 1995b: MOEF, 1997. (India -WRM Sector Review,World Bank. 1998). BoxA2.5. CPCB Classification of Fresh Water and Primary Quality Criteria

Fresh Water Designated Best Uses Classification Drinking water source without conventional treatment but after disinfection A Outdoor bathing, swimming and water contact sports B Drinking water source with conventional treatment followed by disinfection C Propagation of wildlife and fisheries D Irrigation, industrial cooling and controlled waste disposal E

Classification Quality Criteria A" Bb Cb D E

Dissolved Oxygen (mg/l) 2 6 2 5 24 24 - Biochemical Oxygen Demand - BOD (mgll) < 2 < 3 < 3 - - Total coliform organism. MPNIIOO ml < 50 < 500 < 5000 - - P H 6.5-8.5 6.5-8.5 6.0-9.0 6.5-8.5 6.5-8.5 Free ammonia (as mgNII) - - - < 1.2 - Conductivity mmholcm - - - < 1000 < 2250 Sodium absorption ratio - - - - < 26 Boron (mgllj - - - - < 2

There should be no visible discharge of domestic and industrial waste into ClassA waters.

B and C Class discharges are to be regulacedltreated to ensure maintenance of the stream standards.

Source: CPCB. 1995a. (India -WRM Sector Review,World Bank 1998).

6.5 to 8.5 Colour, hazen units 10.0 Iron (as Fe), mgll 0.3 Manganese, mgll 0. I Chlorides (as CI), mg/l 250.0 Nitrate (as N03), mgll Fluoride (as F), mg/l 0.6 to 1 .2b Arsenic (as As), mgll 0.05 Magnesium (as Mg), mgll 30.0 Phenolic conpounds (as C6h5OH), mg/l 0.00 1 Pesticides Absent Residual free chlorine, mgll 0.2

"The table includes only major parameters. Guidelines for bacteriological quality are not included.

Flouride levels above 1.5 mgll (WHO guideline value) may cause fluorosis; low flouride levels are linked with dental caries.

Source: India -WRM Sector Review,World Bank 1998. Box A2.7. Institutions and their Environment and Wate~relatedPrograms

Environment-Linked Institution Tasks in Environment &Water Programs & Projects Ministry of Environment Develop and implement conservation and protection Environmental Action Program (EAP) and Forests (MOEF) strategies, including pollution monitoring and National River Conservation Plan I environmental appraisal of development projects (NRCD - implementil?gagency) Coordinate environmental management programs with National Natural Resource other ministries and agencies,volunteer organizations, Management System professional bodies, and other groups Proper Management Practices of Disseminate environmental information Municipal Wastes (National Waste Develop national policy planning strategies Management Council is. the Support research on environmental problems implementing agency) Develop environmental education programs to increase Environmental Epidemiological Study national awareness of environmental protection issues Biosphere Reserve Programme and the importance of natural resource preservation Man and Biosphere Prc~gramme and citizen participation National Lake Conservation Plan * Review legislation and formulate additional legal Non-Formal Env. Education and I measures when needed for environmental protection Awareness Campaign) Central Pollution Control Promote cleanliness of streams and wells in different Monitoring of Indian National Aquatic Board (CPCB) areas of the states by prevention, control and abatement Resources (MINARS) of pollution Global Environmental Monitoring Coordinate the activities of the State Boards and System (GEMS) resolve disputes among them River Basin Studies Provide training and technical assistance to State Coastal Ocean Monitoring and Boards, carry out and sponsor research relating to Prediction System problems of polluti6n Action Plan for Pollution Control Organize a mass awareness programme on the of Highly Polluting Industries prevention, control and abatement of pollution (in collaboration with the SPCBs) Collect, compile and publish statistical data relating Zoning Atlas for Siting of Industries to water pollution and its mitigating measures; and Training Programmes disseminate information on water pollution and its Awareness Programme prevention and control Environmental Research Programmes: Development of effluent standards and guidelines Biological Monitoring and Assessment for prevention and control of pollution of Pollution Lay down, modify or annul. in consultation with the Analytical Quality Control (for about state governments concerned, the standards for 60 laboratories) streams and wells Development of Methodology for Monitoring water quality (in collaboration Toxicity Testing with the SPCBs) Standardization of Methods for Analysis (laboratory)

Ministry of Water Resources Advising for prevention and control of floods Environmental Monitolring Committee (MOWR) Promoting the protection of irrigation command areas Monitor implementation of env. safeguards of water resources projects

Central Water Commission Monitoring surface water quality Water Quality Monitoring Programme (cwc) Coordination of the Environmental Monitoring (implemented by the C:WC) Committee constituted by the MOWR Environmental Monitoring Committee

Central Ground Water Advising and promoting ground water management and Ground Water Quality Monitoring Board (CGWB) protection Programme Monitoring ground water level and quality Assessment of Ground Water Carrying out selected surveys on ground water Pollution pollution Development of protection zone maps INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

BoxA2.7. (cont.) Institutions and their Environment and Wate~relatedPrograms

Environment-Linked Institution Tasks in Environment &Water Programs & Projects Planning Commission Formulation of national investment policy and Eighth Five-Year Plan programmes and integration of environmental considerations into economic development Drafting FiveYear Plans for economic growth

State Pollution Control Set up emission standards for local industries based on Implementation of the 1974 Water Boards (SPCBs) the Minimum National Standards and the carrying Act (Prevention Pollution Control) capacity of sites and the 1986 Env. Protection Act, as Issue consent orders allowing discharge of industrial well as Env. Rules and Notifications pollutants to water under these Acts Monitor compliance with discharge consents lssue No Objection Certificates allowing industries to develop a site (depending on the industry an environmental assessment may still be required from the MOEF) Publish statistics on pollution control for the State and disseminate information through lectures, seminars, etc. Monitoring water quality and industrial effluents

State Ground Water Ground water development, management and protection Groundwater quality monitoring Organizations (SGWO) Establishment of standards, fixing norms of regulated exploitation, enforcement and co-ordination Carrying out micro-level studies of ground water

Ministry ofAgriculture (MOA) Conservation and regeneration of watersheds Catchment area treatment Conservation and management of land and soil Soil Conservation in river catchments

Ministry of Rural Areas and Promotion of safe drinking water in rural areas State Sector Minimum Needs Employment (MORAE) Provision of grant assistance for water supply and Programme (Water Supply and sanitation programmes Sanitation) Social Forestry activities Centrally Sponsored Rural Water Supply Programme Centrally Sponsored Rural Sanitation Programme Rajiv Gandhi National DrinkingWater Mission Dovetailing funds of Jawahar Rojgar Yogana for Rural Sanitation

Ministry of Urban Affairs Formulation of policy guidelines on urban water supply State Sector Urban Water Supply and Employment (MOUAE) and sanitation Programme Provision of technical assistance to State govts. or Urban sanitation: where needed Environmental Improvement of Urban Acts as an intermediary in mobilizing external assist- Slums ance in the water supply and sanitation sector and Centrally Sponsored Low Cost routing the assistance through State Plans Sanitation Programme Sponsorship of central schemes for low cost urban Basic Urban services for the Poor. sanitation Sanitation FacilitylNight Shelter to Footpath Dwellers MEGA City Scheme State Sector Sewerage and Sewage Treatment State Sector Urban solid Waste Management Box A2.7. (cont.) Institutions and their Environment and Wate~relatedProgramis

Environment-Linked Institution Tasks in Environment &Water Programs & Projects Ministry of Health and Family Promote safe drinking water and sanitation National Water Supply and Sanitation Welfare Assistance to the States in the implementation of Programme water supply and sanitation schems Rural Health Services through Primary Health Care System Health and Hygiene Education component of various National Diseases Control Programmes

Ministry of Human Resources Education and Awareness National Literacy Mission (adult Promote investigation and research in water pollution education, including hygiene and environment education)

Ministry of Petroleum Protection of mining and oil extraction areas Prevention and control of ~ollution

Ministry of Power (MOP) Prevention and control of pollution in thermal power stations Energy conservation Formulation of nation-wide power policy

Central Electricity Authority Technical and economic clearance of hydro-power stations (CEA) Assessment of hydro-power potential by basin Performance measurement of existing hydro-power stations and maintenance Assessment of water requirements for thermal stations Nation-wide hydro and thermal power planning

Centre for Environmental Develop and carry out nation-wide environmental Participation in the National Env. Education, Ahmedabad education programmes and activities Education Programme in Schools Program on the prepal-ation of exhibition packages and publications Various env. awareness, cam~ainns Env. Education Centre, Madras - Conduct programmes to spread awareness and interest Training Programmes for NGOs among the public, particularly among NGOs, teachers, and, teachers on Integrated youth and children. with the purpose of promoting Watershed Management, EIA, and conservation of nature and natural resources Design of Env. Education Projects

NEERI. National Conduct water related environmental research Environmental Engineering Research Institute

Source: Medeiros and Dave. l997.(lidia -WRM Sector Rwiew.World Bank. 1998). A description of the more important current environment, water and sanitation programs and associated institutions is presented below.

India's Environment Action Program (EAP) The principal objective of EAR coordinated by the MOEF, is improving the provision of environmental services. It provides the framework for major environmental programmes grouped into 7 priority areas. Of the 7 priority areas, five are water-linked: (i) industrial and related pollution and waste reductionlmanagement, particularly hazardous wastes; (ii) afforestation, wasteland development, soil and moisture conservation, ensuring clean water sources; (iii) improving access to clean technologies; (iv) tackling urban environmental issues; and (v) alternative energy (pollution control in thermal power stations).

Surface and Ground Water Quality Monitoring An inland and coastal water quality monitoring programme is being carried out by the Central and State Pollution Control Boards under two major data toilection systems, in order to update the status of the existing water quality vis-a-vis the designated best use. Recently, the monitoring programme included surveys on ground water quality to identrfy critically polluted areas character- ized by industrial activities.The monitoring network consists of 480 stations in inland waters (456 for surface and 24 for ground water sources).The SPCBs routinely collect and analyze the water samples and the data are forwarded to CPCB to process and publish the water quality bulletins and maps. In addition to the aforementioned programme, specific monitoring activities are carried out under the River Action Plans. Under the Ministry of Water Resources, two o~ganizationsare engaged in the monitoring of water quality:the ,which carries out a national network of surface water quality monitoring in 267 stations, and the Central Ground Water Board (CGWB), carrying out the monitoring of groundwater quality in 16,000 wellslstations. Under the CGWB,groundwater pollution issues are tackled by a directorate with its ofice located in Lucknow.

Drinking Water Quality Monitoring Quality control of drinking water is usually the responsibility of the following agencies: State public health [engineering] departments (andlor the water supply and sewerage boards) routinely collect and analyze water samples. If the sample is found contaminated, the department recommends corrective measures to be taken by the concerned agency responsible for operation and maintenance of the water supply system (municipal corporationlmunicipality or gram panchayat in the urban and rural areas, respectively). Samples are taken at the source of water supply, at the tap waters and at the water pumps; Rajiv Gandhi National Drinking Water Mission runs a national drinking water quality programme in rural areas; and surveys may be carried out on an ad hoc basis by metropolitan water and sanitation authorities, universities and other research organizations such as the All India Institute of Hygiene and Public Health (AIIHPH). In collaboration with UNICEF, the AllHPH has conducted several community based water quality surveillance activities in rural areas.

Prevention and Control of Industrial Pollution The SPCBs enforce the provisions of the Water Prevention and Control of Pollution Act. New and existing industries which discharge sewageltrade effluent are required to apply for a permit (consent) from the concerned SPCB in order to obtain a "No Objection Certificate." All industries generating effluent have to provide treatment plants andlor clean technology to satisfy the standards prescribed by the SP.CB. Since a large number of small scale industries are often concentrated in clusters, the GO1 has launched a programme designated Common Effluent Treatment Plants (CETPs), based on the "polluter pays principle" by which the industries themselves have to accept full responsibility to set up, operate and maintain effluent treatment faciliti&.The SPCBs assist the units in mobilization of financial resources (25% subsidy by the central government), acquisition of land and in the technical scrutiny of the proposals of CFTPs. In order to delineate suitable areas for industrial siting and for classification of different categories, a project for the preparation of a District-based Zoning Atlas for Siting Industries has been taken up by the CPCB in collaboration with the SPCBs and other agencies including the National Atlas &Thematic Mapping Organisation (NATMO) and the National Remote Sensing Agency (NRSA).The methodology includes the identification of sensitive zones (unsuitable for industrial development) and other zones Box A2.8. (cont.) Current Environmental and Wate~relatedPrograms in India.

Waste Minimization The central government has recently conceived the idea of Waste Minimization Circles (WMCs) and entrusted the National Pro- ductivity Council with the task of establishing and running WMCs in the country.These circles would consist of an assembly of industrial representatives from the same sector who would work collectively on a regular basis to promote the idea of waste minimization in their respective units. It has been proposed to establish at least I0WMCs in 1996.

Management of Hazardous Wastes In accordance with the rules enacted by the central government, all generators and receivers of hazardous wastes have to obtain the authorization of the SPCBs (for the purpose of collection, reception, treatment, transport, storage and dispo:;al of hazardous wastes).At present, the units generating hazardous wastes are being identified and are in the process of applying for authorization. The SPCBs are starting to take steps for the safe disposal of hazardous wastes.

National River Conservation Plan (NRCP) The National River Conservation Directorate (NRCD, under the MOEF) coordinates the implementation of the schemes under the Ganga,Yamuna and other rivers' Action Plans for the restoration of water quality.The main objective of the NRCP is to improve the water quality of the country's major rivers to desirable standards (designated best use).This programme was initiated in the Ganga river (1 986) and later expanded to theYamuna and Gomti rivers. In the case of the Ganga Action Plan, the programme has focused on the reduction of discharge of organic matter as a first step in the restoration of water quality.The second phase will emphasize interventions to reduce the microbial pollution of the rivers. In 1995, the CPCB identified critically polluted river stretches of 18 major rivers in I0 states covering 46 towns. Under the NRCP, the government plans to support pollution abatement works in the polluted stretches of these rivers.The total implementation period is expected to be 10 years.The programme also includes various water quality monitoring activities,. In the present phase of the NRCP, costs are shared between the Center and participating State governments for capital works.The operation and maintenance costs are expected to be borne by the concerned State government.To date it appears as though the State governments are not assuming these responsibilities.

Wetlands Conservation Programme (WCP) and National Lake Conservation Plan (NLCP) A National Committee on Wetlands, Mangroves and Coral Reefs was created to advise the government on appropriate policies and measures for the conservation and management of wetlands.To date, 22 wetlands have been identified as priorities for conservation and management under the WCP Of the 22 wetlands, four fall within urban areas and require special treatment for pollution control which is dealt with under the NLCP and coordinated by the MOEF. NLCP proposes to augment the on-going WCP by undertaking large scale conservation activities in selected lakes.The program will concentrate initially on major urban lakes that are threatened by the discharge of municipal sewage.The same cost sharing criteria of the NRCP would be applied in the NLCP

Safe Rural Water Supply Under the Rajiv Gandhi National DrinkingWater Mission, special environmental and health problems are addressed through 5 Sub- Missions: (i) control of fluorosis, (ii) control of brackishness, (iii) eradication of guinea worm, (iv) removal of excess iron and (v) scientific source finding and conservation of water and recharging of aquifers.

Low Cost Sanitation Under the sponsorship of the Ministry of Urban Affairs and Employment this is a scheme to convert the country's existing dry latrines into low cost sanitary latrines.

Source: Medeiros and Dave, 1997. (India -WRM Sector Review,World Bank. 1998). BoxA2.9. Using Price Mechanisms for Pollution ControkThe Case of the Dutch Water Boards

Most of the Dutch Water Boards are hundreds of years old.Their traditional function was water management and flood control. mostly of the polders in the western part of the Netherlands (the large rivers are managed by the state). Under the Pollution of Surfacewaters Act enacted in 1970, Dutch Water Boards also became responsible for water quality management (responsibilities delegated by the Provinces to thewater Boards).TheAct provided for water pollution charges to be paid by polluting industries and individual households.This water pollution levy was and is still used to construct, operate and maintain the wastewater treatment plants which are owned by the Water Boards. In 1994, the revenue from these water pollution charges provided revenue of approximately U.S.$ 2.1 billion out of a total of about US.$ 3.7 billion spent on environmental management by public agencies (OECD, Environment Performance Review, 1995).The levy is based on the Chemical Oxygen Demand (COD) waste load (chosen because it is relatively easy and fast to measure and is reliable) and on the total heavy metal waste load (based on composite effluent sampling).The computation is easy and straight-forward. Each Water Board calculates its levy rates by dividing its total annual costs for water quality management by the estimated volume "inhabitant equivalent" (IE) to be discharged."lEs" are the units used for measuring the amount of oxygen-demanding discharges, such that one IE reflects the average amount discharged by one household member (in mgll COD). Only large companies pay the levy according to the actual level of oxygen-demanding substances discharged into the wastewater treatment plant;families and small companies pay a standard amount,which lessens the incentives to control pollution.Additionally, a levy has to be paid for the amount of heavy metals discharged into the wastewater plant.This levy is considerably higher than the levy per IE (likely on the order of U.S.$ 100 per unit of heavy metals discharged). Discharges from the wastewater treatment plant have to comply with effluent standards for the specific water body, which differ by area and depend on the water quality management objectives for the specific water body.The levies are administered across the Netherlands by the Water Boards and rates vary widely. In 1992, the highest was about U.S.$ 60, while the lowest was about US.$ 2 1 per unit COD discharged. Studies have shown that the water effluent charges have been a powerful incentive in reducing the discharge of oxygen- consuming substances measured in terms of COD and heavy metal.These charges have been more effective than the regulatory approaches designed for this same purpose. For example, between 1975 and 1980, discharges of oxygen-consuming substances decreased by 27 percent and the heavy metal effluent load decreased by 50 percent (OECD,Applying Economic Instruments, 1994).The reality has been that companies have dramatically modified their discharges in response to the levies. Based o'n interviews with a number of companies, 74 percent said that the levies provided a strong incentive to reduce their effluent discharges. The costs to achieve the same environmental objective through the conventional "command and control" approach would have been many times higher - likely on the order of six times - than through the application of water pollution charges.The percentage of water effluent treated increased from 5 1 percent in 1980 to 74 percent in 199 I. During that period, wastewater discharges from the manufacturing sector decreased by 80 percent. The height of the levy per IE unit has risen sharply over time to reflect changes in water resources management objectives (a 3 1 to 1 15 percent increase in real terms between 1975 and 1994). On average, the levy rates doubled from about U.S.$ 18 in 1980 to U.S.$ 36 in 1993. Over the years, many industries have found it cheaper to install their own wastewater treatment plant in order to reduce the water pollution levy they were obliged to pay: a rate increase of one percent yielded pollution reduction of 0.5 to one percent.The wastewater treatment plants owned by the Water Boards (around 500 total) treat the wastewater and discharge it into surface water according to certain effluent standards.This system has over time resulted in a considerable improvement in water quality in Dutch inland waters. Presently most industries treat their effluents so efficiently that total water charges collected have decreased substantially.This is one of the reasons why the levy was doubled. Fixed costs of sewage water treatment plants, therefore, have to be distributed over an ever-decreasing number of IEs.The increase in levy rates provides an incentive for yet more companies to begin purifying their wastewater.And so the upward spiral continues. Paradoxically, the success of the pollution control measures has caused revenues for the Dutch Water Boards to shrink.The decline in revenues has been so dramatic that the Water Boards have run into difficulties operating and maintaining their water treatment plants.

US.$ = 2 Dutch Guilder

Source: R. Robelus (India WRM Sector Review,World Bank. 1998). BoxA2.10. Incorporating Requirements ofAquatic Ecology in Water Resources Management: Indian and International Experience

Historically, lndia has tended to overlook the impacts of water resources development on its fragile and unique eco-systems.This is largely due to lack of information and inadequate awareness of the potential environmental risks associated with development activities.There are numerous examples throughout lndia of the ecological degradation resulting from such an approach: Estuarian migratory fish species have virtually disappeared in Krishna, Godavari, Cauvery and Hoogli (since the construction of the Farakka barrage). Rare fresh water dolphins, endemic in the Gangetic basin, are on the verge of extinction. The disruption of river hydrology from overdrawal or the construction of barrages and dams has had a severe negative impact on previously existing species of aquatic life. Fish have been forced to migrate to other parts of river systems or face extinction from lack of water of an adequate quality. Further, reduced flow has increased the exposure and vulnerability of fish to easy preying and over-catch by fishermen. Many rivers are no longer able to receive and assimilate effluents because they have fallen below minimum levels of flow. Consequently, water quality is unacceptable for human consumption, as well as aquatic life. Notwithstanding rapidly increasing and competing water demands in other sectors (agriculture, domestic, industrial, navigation, etc.), these examples highlight the fact that lndia can no longer afford to overlook the significant water requirements of aquatic ecology. lndia may draw inspiration from the many countries which have successfully developed and managed their water resources while protecting the environment:

USA Ohio River: As part of the Ohio Redevelopment (1 954-1 963). several low dams on the Ohio River were replaced with seven large dams to improve navigation and water availability. Further, fish ladders were construcited and waterways opened to allow migration of several fish species that were endangered. Several dams on the Tennessee and Cumberland Rivers were similarly modified. Colorado River: An agreement between the U.S.A. and Mexico was reached to manage water quality on the ~oioradoRiver after the construction of the Boulder dam caused increased salinity and reduced fish catch levels. Columbia River: Dams and Barrages have been provided with fish ladders and waterways in order to allow the migration of salmon and other species. St. Lawrence: Navigation locks were redesigned and managed to prevent the entry of stiny fish and other species which nad harmed the indigenous species of the Great Lakes, specifically Erie and Ontario.

Canada Frazer River: Dams and Barrages have been constructed with appropriate fish ladders and waterways for salmon and other migratory species.

France Loire River: France maintains a national policy to preserve the Loire River in a natural state and has also held an international conference in Orleans on the Loire on "What Future for Large Rivers" to discuss issues related to the protection of aquatic ecology.

S0urce:j.M. Dave (India -WRM Sector Review,World Bank 1998). river basin.The Yamuna river (figure A) has an annual flow of about I0 BCM that is highly skewed seasonally as in the rest of the Ganges basin, with three-quarters of the flow occurring in three monsoon months (figure B).The UpperYamuna basin illustrates many of the problems in inter-sectoral water allocation, with half its land dedicated to agriculture and its urban areas rapidly developing.The water supply is stochastic and has many quality problems upstream of Delhi, primarily from non-point agricultural sources. Near Tajewala, upstream of Delhi, the Western and Eastern Yamuna Canals abstract much of theYamuna water for irrigation in Haryana and Uttar Pradesh respectively, and Delhi water supply is at the receiving end of the drainage especially from the WesternYamuna Canal.The demands on the system are many (domestic, industrial, agricultural, washing, environment, navigation, flood management); the urban water needs of an increasingly populous (figure C) and affluent Delhi are rapidly increasing, exacerbating the stress on limited surface and groundwater resources from competing uses.About half the wastewater from Delhi flows untreated into theyamun;, causing major public health problems. (It has been pointed out that the river is perhaps appropriately named after the sibling of the Hindu god of Death!). The water supply of Delhi comes from the surface and ground waters of theYamuna river basin (2,200 Million Litres per Day) drawn primarily atwazirabad (as a result of negotiations withyamuna basin states), augmented by some water of the Ganges basin (500 MLD) from the Upper Ganga Canal through the Hindon cut and is used primarily for agriculture, domestic and industrial consumption.This results in a domestic water supply allocation of about 225 litres per capita per day, very privileged by Indian standards. However, the high physical losses (more than 20%) from an aging distribution system (parts of which are as much as 120 years old!), and high spatial and temporal variability in supply results in poor service, with most areas receiving low pressure water for less than 6 hrslday.The over 30% of Delhif population that live in slums and unauthorized colonies are particularly affected. In addition to physical losses, the financial losses are high, in terms of water theft (which, together with the physical losses. make the unaccounted for water in Delhi more than 30%) and non-billed and uncollected revenues (leading to about 60% of the water consumed being totally subsidized in effect).Water tariffs in Delhi are low in comparison with other Indian cities such as Bangalore, leading to the "vicious circle" of low tariffs, high subsides, poor cost recovery and poor service (also see India Water Resources

Bema R. 1 BoxA2. I I. (cont.)A River RunsThrourrh It: Delhi and theYarn~unaRiver Basin I

Management sector report on "Urban Water Supply & Sanitation,"World Bank, 1998).The willingness to pay is high in many areas, as the actual cost of the poor service is high although the charges may be low, as the citizens of Delhi invest money in borewells, pumps, sumps, tanks, boiling and filtering the water, buying bottled water or purchasing water from private vendors, and reschedul-

. ing their day's work to collect and store water depending on the vagaries of water availability. The water supply is not only vulnerable to cross-contamination from sewage during distribution, but is vulnerable to upstream non-point agricultural runoff, particularly from Haryana, where the high use of pesticides and fertilizers leave the Delhi water supply contaminated with DDT, Benzene HexaChloride,Aldrin, Dieldrin Heptachlor, endosulfans, Malathion, etc., many of which are persistent organochlorines whose use is banned in developed countries.'rhe water treatment plants (2600 Figure B.Yamuna Flows atTajewala MLD capacity with frequent breakdowns) do not test for nor can remove these compounds without very expensive 1 upgrades. In addition, upstream domestic and industrial dis- I charges, especially from sugar mills, distillerieslbreweries, etc. further pollute the water supply to Delhi.The groundwater is also contaminated with high levels of heavy metals, fluoride, nitrates, and organic loads. Groundwater levels, usually at depths of about 5m in the north-east parts of Delhi and IO-30m in the south and south-west parts, are generally falling, with drops in most parts of about 1-8 m in the last decade. Downstream of Delhi, the city turns from victim to an- I tagonist.The city discharges 70% of the wastewater into the Yamuna (1900 MLD of wastewater from municipal sources and 320 MLD from many of the 125,000 industries in Delhi) through 16 major drains (see figure D), with Najafgarh alone contributing 60% of the wastewater volume and 45% of the BOD load. Sewerage systems are inadequate in collection and the wastewater treatment plants, although theoretically capable of treating over half the wastewater (at less than secondary-level treatment), are severely hampered by operational problems including collection problems, breakdowns and flooding, resulting in inad- Figure C. Population Growth in Delhi equately treated effluent discharge into the Yamuna that, ir? the absence of any freshwater minimum flows in non-mon- I soon months, is practically a sewer downstream of Delhi, classified as unfit even for bathing and animal consumption, with very low dissolved oxygen levels (about 1-1.5 mgll compared with 7-9 nigll upstream of Delhi), and high organic and inorganic loads (BOD loads are 200 tonslday with resulting concentrations of 16- 18 mgll). Fecal coliform levels are extremely high (as shown in figure E).The CPCB estimates average annual values of about 300,000 per I00 ml. at downstream Okhla and values as high as 24 million per 100 ml have been reported - compared with even bathing stan- INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

I BoxA2.I I. (cont.)A River RunsThrounh It: Delhi and theYamuna River Basin I

dards of 500 per 100 ml.This indicates high untreated domestic sewage disposal and high potential for water-borne diseases.This also poses significant public health problems in water supply to downstream villages and towns, such as Agra, before the dilution effect of the Chambal tributary sets in.TheYamunaAction Plan, based on the Ganga Action Plan, focuses on the hardware installation for wastewater treatment, but has also had very limited success in cleaning up the river. Many steps are being taken to address a number of components of this problem, but there is much more that can be done. Water supply is expected to be augmented with planned reservoirs in Uttar Pradesh (Tehri) and Himachal '~radesh(Kishau, Renuka, Lakhwar, Giri), and inter-basin transfers from both the Ganges and the lndus systems. Proposals to harvest rainwater and use traditional and other depressions in the Delhi area for storage and exchanging agricultural water for treated wastewater are also being mooted.There is also major potential for recharging groundwater with the huge monsoon flows to increase sustainable yields and check the dropping water table.Water supply and sewerage infrastructure projects for Delhi are being considered for possible World Bank funding.The Upper Yamuna River Board has recently developed water-sharing agreements among the basin states that may go a long way to reduce the frequent negotiations to adjust ad-hoc allocations. However, the agreements need to take better account of the stochasticity of the water supply and the water quality concerns, including the provision of adequate dilution flows. Nevertheless, it is said that "the solution to pollution is not dilution" and there need to be significant Figure D. Drains around Delhi checks on reducing the pollutant loading from point and non-point sources. This includes augmenting sewage treatment plant capacity for industrial and domestic effluent, provision of public latrines, crematoriums, etc. as well as more W.Yamuna Canal effective legislation and enforcement. The Supreme Court has been very active in closinglre- locating polluting industries, mandating common effluent treatment plants, and stepping up enforcement, but "judicial E.Yamuna Canal (To UP) activism" is no substitute for adequate planning and management and economic approaches. Upstream drain and canal flushing needs to be coordinated with water treatment facilities in Delhi. Solid and liquid water dumping into the DrainVlll Yamuna need to be carefully monitored and restricted.The Delhi water and sewerage agencies need to recover their capital and operating expenditures by restructuring tariffs and increasing management efficiency. The type and intensity of Menalf House > \ fertilizer and pesticide use in upstream agricultural areas Kudsi ~afh~:,[\

Mori Gate > should be evaluated in conjunction with best management Civil Mill > Power House > practices for agricultural lands and catchment protection to Sen Nursing Home > Drain No. 14 > reduce non-point source pollution. Conservation measures Baramulla > Hindon Cut Hindon R. Maharani BaghL > -in all consumptive uses and recycling measures both in in- Kalkaii > / Okhla Dam dustry and domestic uses should be encouraged and the Okhla Nullah >k\ 5 Tughlakabad > c Shahadara Drain possibility of more effective use of treated Wastewater in ag- Agra Canal riculture should be investigated.Although Delhi may appear

(ahpted from Center for Science and Environment) to be an urban area, agriculture still accounts for a majority BoxA2.I I. (cont.)A River RunsThrough It: Delhi and theYamuna River Basin of its water use. Small changes in cropping and land-use patterns, agricultural water use intensities, and spatial and temporal use patterns in Delhi and in the UpperYamuna basin in general, could help significantly alleviate urban water problems.Water resource considerations should be more fully integrated into the Delhi city master-planning process.There is a need for the use of modern, integrated decision support system tools for information management, and modeling and evaluation of options under various hydrological, policy and development scenarios. Research, stakeholder participation and coordinated information-based decision-making for optimal development of the region's water resources also need enhancing. It is oken said that recognition of a problem is half the solution, and general public indifference and apathy to these complex and multi-faceted problems needs to be overcome. Enhancing public awareness and participation in decision-making, implementation, and enforcement is particularly essential, and reflects the notion that "if one is not part of the solution, one is part of the problem." Overall, fragmented responsibilities, overlapping jurisdictions, unclear accountability, enforcement problems, inter-state and inter-sectoral water sharing conflicts, poor information management, communication and dissemination, research and public involvement and a. lack of mainstreaming of water quality and other environmental and public health concerns, are still major problems in implementing any vision of a comprehensive basin-wide management of water resources.There are many tough questions that must be addressed relating to the relative importance of agriculture in the Delhi area given increasing urban demands and the huge amounts of water used in irrigation, the possibilities of innovative inter-sectoral allocation adjustments to higher-value uses. changes in land-use and cropping patterns, tariff increases, groundwater management legislation and environmental and in-stream use concerns. The problems of Delhi and theYamuna are indicative of problems in river basins all over India, where rapidly increasing urban populations, especially in megacities, are competing with traditional irrigation uses.Agriculture still employs two-thirds of the population and the country does have major food security considerations.At the same time, urban areas, that already house about 220 million people and contribute more to India's GDP than agriculture, will soon be home to over half of Figure E. Fecal Colifforms dls of Delhi India's population and their demands on scarce water resources would also be equally legitimate. All this needs a Fecal Coliforms at Okhla serious re-thinking of the country's water resource planning and management strategies to overcome traditional ad-hoc sectoral strategies and ensure more coordinated and integrated development in a river-basin framework within the political realities of administrative boundaries.

Source: N. R. Harshadeep. World Bank (SASEN). Based on a number of sources. including the CPCB. Center'for Science and the Environmen~Delhi White Paper (MOEF) and other papers and ~poru.(lndia- WRM Sector Review.World Bank. 1998). Source: Delhi White Paper. MOEF.

ANNEX 3

Boxes on River Basin Organizations and Institutions

Water, according to the Constitution of India, is as a general rule, a state matter. However, regulation and development of inter- state rivers and river valleys, to the extent to which such regulation and development is in the public interest, as declared by an Act of Parliament, is, under the Constitution, a central government matter. Based on Article 262 of the Constitution, the Parliament passed the Inter-State Water Disputes Act, 1956. The Act defines a water dispute as any dispute between two or more states regarding: (i) the use, distribution or control of the waters of any inter-state river; or (ii) the interpretation of any agreement relating to the use, distribution or control of such waters or the implementation of such agreement; or (iii) the levy of any seigniorage or additional rate or fee by one state on another state because of the construction by the former of any works for the conservation, regulation or ueiliration of the waters of an inter-state river. When one state believes that a water dispute with another state has arisen, or is likely to arise, because its interests in an inter-state river have been, or are likely to be, prejudicially affected by reason of: (i) any executive action or legislation passed or proposed to be passed by the other state; or (ii) failure of the other state to exercise any of its powers, or to implement the terms of any agreement, relating to the use, distribution or control of such waters, such a state may request the central government to refer such a water dispute to a tribunal for adjudication. When the central government is satisfied that the water dispute cannot be settled by negotiations, it shall constitute a water disputes tribunal.The tribunal consists of a chairman and two members to be nominated by the Chief Justice from amongst the judges of the Supreme Court or one of the high Courts.The tribunal may appoint two or more persons as assessors, and shall have the same powers as those vested in a civil court, including the summoning and enforcing attendance of any person and examining him on oath, and requiring the production of any documents and materials. Moreover, the tribunal may require any state to carry out or permit the carrying out of any surveys and investigations as it may deem necessary for the adjudication.The decision of the tribunal may contain directions as to how the expenses of the tribunal would be paid. Differences on any point are to be decided according to the opinion of the majority members of the tribunal.The decision of the tribunal is final and binding on the parties to the dispute, and shall be forwarded to the central government for publication in the Gazette. Neither the Supreme Court nor any other court shall have or exercise jurisdiction in respect of any water dispute which may be referred to a tribunal. If the central government or any of the states believe that any part of the decision of the tribunal requires explanation, or that guidance is needed on any point not originally referred to the tribunal, then within three months of the decision, a request for such clarification or guidance may be referred again to the tribunal for further consideration.The tribunal may forward to the central government a further report giving such explanation or guidance. Once the central government is satisfied that no further reference to the tribunal in the subject water dispute is necessary, then the central gwiernmcn: sh>!l dicsolve the tribunal. --&~--~--. . . .~. . . .. - Box A3. I. (cont.) The Inter-State Water Disputes Act for Establishing Tribunals: Existing Limitations

Observations Although the promulgation of the Act for the establishment of a mechanism for resolving inter-state water disputes is by itself a major achievement, implementation of the Act has thus far raised a number of issues: (i) The Act deals only with procedural issues and does not provide any guidance to, or set any criteria for the tribunal on how to handle the substantive issue of water allocation among the riparian states.The different tribunals thus far constituted (the Krishna, Narmada, Godavari, Ravi and Beas, and Cauvery) have used their own criteria for allocation of water among the riparian states; and in some cases they were guided by the factors enumerated in the International Law Association Helsinki Rules on the Uses of the Waters of International Rivers. (ii) Although the title of the Act is "Inter-State Water Dispute Act,'' the different articles of the Act deal specifically with inter- state rivers, thus excluding groundwater from adjudication, even when groundwater is connected to such inter-state rivers. To underscore this point, most of the tribunals specifically exclude groundwater from these decisions too. (iii) The Act does not establish a time frame for the tribunal for reaching a decision.The Krishna Water DisputesTribunal took about seven years to reach its decision, and the NarmadaWater Disputes Tribunal took about ten years.The negotiations preceding the establishment of the tribunal have also taken a relatively long time, ranging from three to ten years. (iv) Once the tribunal is dissolved, there is no authority with jurisdiction to provide clarifications or guidance on any subsequent controversies or issues related to the decision that may arise. (v) Decisions of the tribunals are subject to review after a certain period of time specified in the decision itself, ranging from 25 to 45 years. As that date approaches, the riparian states would start scrambling to establish claims to their shares through extensive water related works, as is happening in Karnataka, Maharashtra and Andhra Pradesh over the Krishna river.This would result in water grabbing which may not necessarily reflect the actual needs of some of the riparian states. (vi) The Act originally did not include any provisions regarding the establishment of an authority to implement the decision of the tribunal.This lacuna prompted an amendment to the Act in 1980 to authorize the establishment of such an authority when experience pointed towards the need for such body.

Source: S. Salman (India -WRM Sector Review,World Bank 1998). BoxA3.2.The Krishna Water Dispute Tribunal Award

The Krishna water dispute is a good illustration of how water tribunal awards could result in competitive, disjointed investments aimed at establishing claims to water when the awards come up for review. The Krishna river is the second largest river in Southern India, after the Godavari river,As a result of the promulgation of the States Organization Act, 1956, the riparian states to the Krishna river became Maharashtra, Karnataka,Andhra Pradesh, Madhya Pradesh and 0rissa.The dispute over the Krishna river pre-dates the emergence of those states. The Krishna-Godavari Commission that was set up in 196 1 could not provide any recommendations regarding allocation of the Krishna water among the riparian states because of the absence of reliable data on the actual water use and needs of such riparian states.The absence of such data was partly due to the reorganization of those states a few years before the commission was established.The negotiations led by the central government could not provide an acceptable solution either.As a result, the central government constituted the Krishna Water Dispute Tribunal on April 10, 1 969, and referred the dispute to this Tribunal, in accordance with the provisions of the Inter-State Water Disputes Act, 1956.The Tribunal issued its decision on May 27th. 1976, seven years after its constitution. However, arrival at that decision was facilitated by a number of agreements that the riparian states reached in the interim. TheTribunal defined the Krishna river to include the main stream of the Krishna river, all its tributaries and all other streams contributing water'direct~~or indirectly to the Krishna river.TheTribunal determined that the 75% dependable flow of the Krishna river was 2060 thousand million cubic feet of water (TMC), and declared that this amount was available for distribution between the states of Maharashtra, Karnataka and Andhra Pradesh. Karnataka was awarded 560 TMC, Maharashtra 700 TMC, and Andhra Pradesh 800TMC.TheTribunal declared that those states are free to make use of the underground water within their respective state territories in the Krishna river basin. In addition, the Final Order of the Tribunal superseded six agreements concluded between 1892 and 1946 between the predecessor states to the current riparian states. The Order of theTribunal gave Andhra Pradesh the right to use in any water year (June I to May 3 1) any remaining water that may be flowing in the Krishna river, but this would not give Andhra Pradesh any prescriptive right or interest over such water.The Order states that failure by one state to use its share in one water year for whatever reason precludes that state from claiming that un-utilized water in any subsequent year. However, the Order goes on to state that such failure should not be taken to constitute forfeiture or abandonment by such state of its share of water in an-j subsequent water year, nor shall it constitute an increase to the share of any other state. The Order may be reviewed or revised by a competent authority any time after May 3 1, 2000. However, such review or revision shall not, as far as possible, disturb any utilization that may have been undertaken by any state within the limits of the allocation made to such state under the 0rder.This clause, establishing a date for review of the Order, in addition to the clause giving Andhra Pradesh the right to use any remaining water, formed the basis for the on-going scramble for the Krishna water by Maharashtra,Andhra Pradesh and Karnataka, and provided the perverse incentive for massive disjointed investments.The incentives confronting the states are to utilize as much water as possible before the set date for review of the Award, in order to establish favorable realities on the ground for the upcoming review.

Source: S. Salman (India - WRM Sector Review.World Bank 1998). Various basin level planning and development institutions have been established in lndia after independence.The first such attempt was the establishment of the BamodarValley Corporation (DVC) modeled after theTennesseeValley Authority (TVA).The DVC is headed by a Chairman appointed by GOI.Two members of the Corporation are also appointed by GOI. The original mandate of the DVC included the construction and operation of irrigation facilities, water supply, drainage, hydro-electric and thermal power generation, flood control, navigation, afforestation, control of soil erosion, public health, agricultural, industrial, economic and general well-being in the Damcdar Valley. The Damodar Valley Project envisaged by the planners, was a multi-purpose project comprising eight dams and one diversion barrage to provide flood regulation potential, generation of 200 MW of hydroelectric power and the provision of irrigation facilities for a command area of 308,000 hectares.The construction of the planned project did not materialize as the upper riparian state, Bihar, in consultation with GO!, decided to take up only four of the eight proposed dams in the first stage of development (due to cost consideration: and in order to test efficacy of the dams in flood protection).At present,four dams are under the control of DVC and the diversion barrage is under the control and operation of West Bengal (the DVC having transferred to West Bengal this responsibility). Bihar has built orie dam, after consulting and obtaining permission from the DVC, and is operating this independently, primarily for industrial water supply. Hence, the flood regulation planned in the original project has not fully materialised. The irrigation facilities are operated by the State ID ofWest Bengal.The DVC has a much diminished role in the management of the DamodarValley (operating the dams for hydropower and irrigation but not being involved in the distribution network). This is largely due to DVC's inability to garner full cooperation from Bihar because it did not fulfill its envisaged role to Bihar's satisfac:ion.The history of DVC clearly shows that unless the riparian States perceive a benefit and are thus willing to cooperate, a river-basin mechanism cannot be successfully implemented.

Ganga Flood Control Board (GFCB) and Ganga Flood Control Commission (GFCC) The Ganga Flood Control Board was set up in 1972 by a 601 resolution, and the Ganga Flood Control Commission was set up as per Clause 5 of the resolution to undertake specific works in the Ganga Basin and for assisting the Ganga Flood Control Board.The Commission is headed by a Chairman and two full-time members from GO1 and part-time members from the States of Bihar, Uttar Pradesh, West Bengal, Madhya Pradesh, Central Water Commission (CWC), Central Water and Power Research Station (CWPRS), Ministry of Surface Transport, Railway Board and Chief Engineers of all co-basin States - Haryana, Himachal Pradesh, Rajasthan and National Capitai Territory of Delhi. Problems arising from flood erosion and waterlogging in the States of Bihar, Haryana; Hirnachal Pradesh, Madhya Pradesh, Uttar Pradesh, West Bengal and Delhi are dealt with by the GFCC.The administrative cost of GFCC is borne by GOI. Implementation of schemes is the responsibility of the appropriate riparian State.The GFCC has prepared master plans for 23 river systems of Ganga Basin.The commission has also prepared feasibility studies for three flood management schemes such as the Buxar-Koelwar embankment scheme andTamluk and Ghea Kunti basin drainage schemes. In addition, the Commission has undertaken performance evaluation studies for various flood management schemes.

Brahmaputra Board The Brahmaputra Board was set up in 1980 to prepare a master plan for flood control in the BrahmaputraValley, taking into account the overall development and utilization of the water resources of the valley for irrigation, hydropower, navigation and other beneficial purposes.The Board is a corporate body with perpetual succession, is headed by a Chairman appointed by GOI, and has one member each from the States of Assam, Meghalaya, Nagaland, Manipur,Tripura, Mizoram and Arunachal Pradesh. In addition, members from GO1 ministries dealing with agriculture, irrigation, finance, power and transport, members from the Central Water Commission, Central Electricity Authority, Geological Survey of India, and lndia Meteorological department are resources for various uses; (ii) preparation of detailed designs and cost estimates for proposed projects; and (iii) construction, maintenance and operation of multi-purpose projects with the approval of GQI.The BB has prepared Master Plan Part-l for the main stem of the Brahmaputra, Part-ll for the Barak sub-basin, and Part-Ill for nine tributaries of the Brahmaputra and six rivers of the State of Tripura. Further works are in progress for the preparation of master plans and for surveys and investigations for the preparation of feasibility studies for a few multi-purpose projects and drainage schemes such as Pagladiya, Tipaimukh, Subansiri, Dihang, Lohit and Kulsi.The Board' is also setting up the North Eastern Hydraulic and Allied Research Institute at Guwahati.

Bhakra-Beas Management Board The Bhakra-Beas Management Board (BBMB) was constituted through an executive order in accordance with Section 79 of the Punjab Reorganization Act 1966 to regulate the supply of the Sutlej, Ravi and Beas rivers to the States of Punjab, Haryana, Rajasthan and the National Capital Territory of Delhi. The BBMB is responsible for distributing power from the Bhakra- Nangal and Beas projects to the States of Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Union Territory of Chandigarh and Delhi when required.The Board is headed by a Chairman appointed by GO1 with members from co-basin States, and including the Central Water Commission and the Central Groundwater Board.The BBMB is responsible for the operation and maintenance of the projects under its jurisdiction and to allocate water for irrigation based on inflows to the reservoirs according to a predetermined percentage share for each of the co-basin States. Power distribution is carried out by BBMB in consultation with beneficiary States.

UpperYamuna River Board The UpperYamuna River Board (UYRB) was constituted for allocating available flows among co-basin States within the overall framework of the Memorandum Of Understanding (MOU) signed by the Chief Ministers of the co-basin States.The MOU takes into account irrigation and drinking water needs of all co-basin States.The Board is hea~dedby the Member, Water Planning & Projects, Central Water Commission, and has members from the co-basin States of Haryana, Uttar Pradesh, Rajasthan, Himachal Pradesh and National Capital Territory of Delhi.The budget requirements of the Board are met by the CO-basinStates in equal share.The UYRB decisions can be submitted to the UpperYamuna Review Committee headed by the Union Ministry of Water Resources with Chief Ministers of all co-basin States as members for review.The decision of the review committee is final and binding on all co-basin States.The functions of the Board include: (i) regulation and supply of water from all storages and barrages up to and including Okhla Barrage; (ii) maintenance of minimum flows; (iii) monitoring of return flow quantities from Delhi after allowing for consumptive use (municipal and industrial); and (iv) providing coordination for maintenance of water quality, conservation, etc.

Other Organizations Apart from the above, Betwa River Board is in charge of Rajghat dam across Betwa, Bansagar Control Board is in charge of Bansagar dam across Sone, and Mahi Control Board is in charge of Mahi Bajajsagar project across Mahi.The Narmada Con- trol Authority is in charge of overseeing the implementation of the award of the Narmada Water Dispute Tribunal for planning and management of the river-basin including storage apportionment, regulation and control of Narmada waters, and sharing of power benefits from Sardar Sarover Project.

Source: Burchi and Singh, 1997 (India- WRM Sector Review,World Bank. 1998). INTER-SECTORAL WATER ALLOCATION, PLANNING AKD MANAGEMENT

Box A3.4. River Basin Organizations: international Experience and India's DVC Experience

River basins have so far played a limited role in the shaping of India's government water resources administration, both intra- state and inter-state.The DamodarValley Corporation (DVC) is the only inter-state statutory river basin institution in existence.At intra-state level, plans are reportedly afoot in Gujarat state to create a river basin organization for the Sabarmati River, on a pilot basis. In addition, special-purpose river boards are provided for by the River Boards Act, 1956 to address inter-state management issues. The Act provides for the establishment by the central government, on the advice of state governments or on its own motion, of River Boards.These boards are to advise the interested governments regarding the regulation and development of inter-state rivers and, in particular, to advise on the coordination of states activities with a view to resolving conflicts among them and to maximizing results in respect of measures for the conservation, control and utilization of the concerned river.To date, however, these provisions have never been utilized and no river board has ever been constituted under that Act. India's first attempt at basin level planning and development was the establishment of the DamodarValley Corporation (DVC). The DVC was created in 1948 by an act of the Indian Parliament as a joint undertaking, based on agreement between the central government and the states - then provinces - of Bihar and West Bengal which share the river and, together with the central government, provide funding for a number of flood control, hydropower and irrigation development projects.The Corporation is closely controlled by the central government, which appoints and removes its three directors and issues binding policy directions. Furthermore. the central government appoints the secretary - who is the Corporation's chief executive officer - and the financial adviser. Control by the states is exercised through examination of the budget, estimates, and annual report which DVC is required to submit to the central and state legislatures.The remit of the Corporation extends to the mainstream of the Damodar River and its tributaries.The Corporation is charged with development of irrigation, water supply, drainage and hydropower; flood control, navigation improvement, afforestation and soil erosion; and, in general, improvement of economic and social conditions.To carry out these tasks the Corporation can build and operate irrigation works, construct dams and regulate the generation, supply and transmission of power. The river basin has attracted considerable attention in many countries as a unit of special-purpose government administration. In some countries, such as notably France and Spain, but also, more recently, staly and the Czech Republic, the entire Government water resources administration has been patterned along river basin lines.That is, the river basin - or groups of river basins - has been elected as the basis for delimiting the territorial scope of jurisdiction of units of special-purpose government, and for consolidating under these some or all of the functions of government in the management and development of water resources. Mexico also is moving fast in this direction. In Holland, institutions of equivalent scope are patterned instead along 'hater systems," which sometimes coincide with sub-basins. Elsewhere, river basin institutions have been created in specific areas of the country and in response to specific problems, such as in Germany. The mandate, scope of authority and legal status of these institutions vary considerably. The Spanish Confederociones 1 Hidrogrhficas are units of special-purpose government water administration with water resources planning, waterworks construction, water resources administration and law enforcement functions at the river basin level.They have corporate status under public law, and are subject to oversight by the Ministry of Public Works.The French Agences de Peau (drainage-based Water 1 Agencies) are also units of special-purpose government water administration, with the status of public institutions operating under the aegis of the Environment Ministry.They have planning and funding authority with regard to water development and pollution control projects.The French system also consists of as many Comites de bassin (Basin Committees) as there are Agences de I'eau, I consisting of users and local and central Government officials, with policy-making functions.The Czech River Basin Agencies have I been converted in January 1994 into public limited companies, with all the equity owned by the State.They function as units of 1 special-purpose Government water administration, with authority to regulate water abstractions and wastewater disposal.The German river basin entities are associations - technically, bodies of self-government - under public law, with a variety of functions ranging from land drainage and provision of water supplies to the public, to wastewater treatment and management of water levels.The mandate of the Italian Autorita di bocino (Basin Authorities), instead, is restricted to the formation of basin plans, and to overseeing their implementation.TheseAuthorities do not have legal personality of their own.The Mexican Basin Councils have a comparable remit. However, they also serve as a forum to negotiate specific tasks and responsibilities for river basin plan Box A3.4. (cont.) River Basin Organizations: International Experience and India's DVC Experience execution and financing by Government and the water users.The Dutch Water Boards are functional public bodies, established by the Provinces, responsible for the management of water resources at the local level. In particular, they have flood control, land drainage and general water management tasks. Water users' participation in decision-making is central to most of the river basin institutions reviewed above.This is evidenced by the direct representation of users' interests in the membership structure of the organs of the institutions concerned. Italy's Basin Authorities are an exception, however, for membership in their internal organs is made up exclusively of nominated central and state Government officials. Financial independence from the National Treasuries is a feature and a goal of the basin entities -those, that is, which have an operational remit.The French Water Agencies and their programmes are funded from the proceeds of the collection of water charges levied by the Agencies on water users and on waste dischargers.The Czech River Basin Agencies cover their own administrative costs and the cost of the programmes they administer through the levying of water abstraction and wastewater disposal charges, which are paid into a National Environment Fund.The proceeds from the collection o:f water charges, from the sale of professional services and from the rental of property, in addition to appropriations from the national budget constitute the financial base of Spain's River Basin Agencies.The budget of Germany's river basin entities, which are in the nature of associations, is funded from the payments made by the associations' membership. Likewise, the financial base of the Dutch Water Boards comes from pollution fees and the direct payment of property taxes to the said Boards by eligible residents. In India's federal constitutional circumstances, the river basin approach to the management of inter-state rivers, however attractive, is made difficult by the provisions in the Constitution which have assigned the bulk of water management functions and responsibilities to t>e states, with carefully circumscribed powers vesting in the Union Government and Legislature with specific regard to inter-state rivers.As a result of the constitutional changes which have occurred since its creation in 1948, the Damodar Valley Corporation-type option could only be pursued nowadays through harmonized state legislation, or through unilateral Union legislation adopted under the carefully-circumscribed residuary authority vested in the Union Legislature in regard to the "regulation and development of inter-state rivers." However, it is doubtful if a Union initiative to create by statute a DVC-type institution would stand scrutiny by the Courts and survive the narrow test of the relevant constitutional provisions. This apparently formidable formal difficulty might be circumvented if a different kind of river basin institution than the DVC were pursued through a Union legislature initiative. If the remit of possible inter-state river basin institutions for lndia is to consist of the coordination and harmonization of states' water resources plans and programmes, useful inspiration can be drawn from Italy's Basin Authorities and from Mexico's Basin Councils. Both countries have a federal power structure in which the Centre plays a dominant role, like in lndia (refer also to the Australian Murray-Darling basin experience at Box A3.5, which also has had to contend with a strongly federated structure). Both kinds of river basin institutions were created as hosts to a structured basin planning process, in which the interests of different governmental stakeholders could be reconciled and coordinated. In addition, both kinds of institutions oversee the implementation of the plan, without engaging in actual implementation. However, whereas in the Italian model the users' interests have no direct representation in the internal structure of the river basin institutions, in the Mexican model they do - although such representation is marginal compared to the Government's. Since India's political and constitutional circumstances are not conducive to a full-scale re-designing of the map of the country's inter-state government water administration along river basin lines, it is surmised that: The purposes of coordination and harmonization of states' plans and programmes affecting the water resources of inter-state rivers can best be achieved by a structured basin planning process, and the purposes of basin planning can best be served by a river basin institution. In addition to hosting the planning function, such an institution could oversee the implementation of the river basin plan, without engaging in actual implementation activities.The question of users' representation in the inzernal structure of the river basin institutions should be addressed taking into account the level of maturity of users' representative groupings.Where there is an established tradition of users' participation in decision-making, or where such can be created, as will typically be the case, direct representation of users' interests is strongly desirable.

Source: Burchi and Singh. 1997. (India -WRM Sector Review.World Bank. 1998). INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

BoxA3.5. River Basin Management: Murray-Darling Basin Experience,Australia

The Murray Darling Basin covers more than a million square kilometers - virtually all of inland south-eastern Australia, and approximately one-seventh of the whole continent. It is the nation's most important agricultural region and is vital to the nation's economy. More than twenty major rivers flow through the basin comprising the states of New South Wales,Victoria, Queensland and South Australia. Attempts to coordinate the management and development of the Murray-Darling Basin's resources started as early as 1863 and there followed a period of prosperous river trade as steamers plied the Murray, Murrumbidgee and Darling Rivers. In the 1880's with the first large scale diversions from the Murray for irrigation, it became clear that cross-border measures for the management of water resources were needed. The new demands on water supplies provoked conflict betweeti irrigation and navigation interests on the river.The most downstream state, South Australia, in particular, stood to lose as it relied heavily on the paddle-steamer trade, as well as depending on the Murray for its water supply. Under the River Murray Agreement signed in January 19 17, the River Murray Commission was formed consisting of Commis- sioners from New South Wales, South Australia,Victoria and the Commonwealth.The Commission was responsible for the construction and operation of storages, weirs and locks for sharing, economic use and development of the basin's resources. For six decades the Commissionf tasks concentrated primarily on water quantity. However, in the late 1960's the Commission conducted a detailed program of salinity investigations in the Murray valley. It became clear that the two upper states, New South Wales and Victoria, were contributing to salinity, pesticide and herbicide pollution problems, and the consequences of these were largely being "paid for" in the lower river state of South Australia through severely degraded water quality.

A Broader View In 1982 the Commissionf role was broadened in recognition of the fact that water management should encompass issues of water quality. It was becoming obvious that successful management of the Basin's river systems directly related to endruse throughout the catchment. Further amendments to the Agreement in 1984 enhanced the environmental responsibilities of the Commission, reflecting increasing community concerns about salinity, the need for a whole-catchment approach to river management, and the recognition that natural resources issues in the Basin required coordinated action by all the Governments involved.This eventually resulted in the formation of the Murray-Darling Basin Ministerial Council and Commission with a charter to plan and coordinate natural resources management programs throughout the whole Basin. The Murray-Darling Basin Ministerial Council was established in 1985 under the Murray-Darling Basin Agree- ment and consists of state and federal Ministers for land, water and environment. In 199 I. Queensland, the most upstream state, agreed to join New South Wales,Victoria, South Australia and the Commonwealth in this agreement.The role of the Ministerial Council is to set policy and define broad directions for the management of natural resources in the basin. Its general objective as set out in its charter is to promote and coordinate effective planningand management for the equitable. efficient and sustainable use of land, water and environmental resources of the Murray-Darling Basin (refer to diagram on organizational structure, appended). Its specific goals are to maintain, and improve where possible, water quality for all beneficial uses, to control and prevent land degradation, to rehabilitate land resources where possible to ensure their sustainable utilization, and to conserve the natural e$i- ronment of the basin while maintaining or improving sustainability of the valuable agricultural development in the basin. Under the agreement, the Council constituted a Community Advisory Committee comprised of representatives from regional and special interest groups from the basin to provide independent advice on the views of the basin's communities regarding natural resource management issues. Community involvement in natural resources management issues is a particularly strong feature of the way the basin is managed. The Murray-Darling Basin Commission is the executive arm of the Ministerial Council advising it on issues of environmental management throughout the Basin. It is an autonomous organization with equal responsibilities to each of the Box A3.5. (cont.) River Basin Management: Murray-Darling Basin Experience. Australlia contributing Governments. It comprises two Commissioners from each of the Governments, normally the heads of departments concerning land, water and the environment. It is charged with equitably and efficiently managing and distributing the water resources of the River Murray, in accordance with the Agreement, to obtain the highest achievable quality and efficiency of use of such resources; and providing advice to the Council to achieve the sustainabie long-term use of the water, land and environmental resources of the Basin. The Commission's effectiveness stems from it's ability to develop to a high degree, the cooperation and support of the participating governments. Rather than basing decisions on the needs sf individual States, it bases them on the interests of the Basin as a whole. The major challenge of the Commission continues to be the development and implementation of coordinated action by Basin users to reverse resource degradation in the Basin.The Commission has been very effective in achieving this through working with State and Commonwealth government departments to co-ordinate, accelerate and standardize existing land, water and environmental management programs within the Basin. It also initiates on-ground actions with strong community involvement and ownership. Priority is given to issues which require joint government action or common action by two or more parties.The Commission is very successful in focusing on actions by individual States which could affect other parts of the Basin.. Environmental responsibilities of the Commission include action to preserve native fish and the riverine environment and coordinating the management of wetlands on the River Murray floodplain.The Commission is also involved in the coordination of vegetation management and carrying out groundwater and salinity modeiing.The strong community involvement in natural resources management issues stems from highly developed and closely managed community educational programs about the natural resources of the Basin. Cap on Water Use Within the Basin. More recently in 1996, the Ministerial Council took a decision, following an audit of water use in the basin, that in order to balance the needs between consumptive use and instream uses of water in the rivers of the Murray-Darling system, diversions must be capped and an immediate moratorium introduced on further increases in diversions, while the precise details of the Cap on future diversions and its implementation be worked out.There are two primary objectives driving the introduction of the cap.The first is to maintain and where appropriate, improve existing flow regimes in the waterways of the basin to protect and enhance the riverine environment, and secondly to achieve sustainable consumptive use by developing and managing the water resources of the basin to lneet ecoiogical, commercial and social needs.

The Future The Murray-Darling Basin Initiative is unique.The inter-government Mii7isterial Coljncil has powers outside those of any of the individual governments which it comprises. Its achievements in cross-border environmental management to datl are testament to an unprecedented degree of cooperation and commitment within political and bureaucratic circies and the community.This demonstrates the potential for successful cooperative, integrated laild and water management.The Natural Resources Managemen,t Strategy has been greeted enthusiastically by landhoiders as it provides a practical mechanism for implementing the principles of sustainable development in the form of specific on-ground projects. It is becoming widely recognized that the ethic of sustainability is integral to successful land management, and that conservation values are an essential part of the wise use of natural resources. It will also continue to fulfill its crucial, traditional role of water resource assessment. planning and management within the basin.

Source: G. Spencer. J. Briscoe and S. Rajagopal (India - WRM Sector Review,World Bank. 1998).

Note:A diagram on rhe organizational structure of the Murray-Darling is appended. BoxA3.5. (cont.) River Basin Management: Murray-Darling Basin Experience,Australia

Murray-Darling Basin Ministerial Council Ministers holding land, water and environment portfolios from each participating government (C'wealth, NSW, SA, VIC, QLD)

Murray-Darling Basin Commission 2 Commissioners 1 2 Deputy Commissioners I representing each participating Government (senior executives from land, water and environment Agencies) & lndependent President

- ~ ( Technical Support. . I Council Secretariat 1 Community Advisory Committee (39 Staff) 25 regional representatives I I Natural Resource Administration ' Secretariat (3 Staff) Management Management and Finance 1 v I Coordinating Committee Land rend Water Environment Management

Specialist Intergovernment Working Groups Established as required

I I lndependent Consultants 1

Principal Government P Commonwealth New South Wales South Australia Victoria

Dept of Primary Dept of Primary Dept of Water Dept of Primary Dept of Agriculture lndustries lndustries and Energy Resources lndustries Dept of Dept of Dept of the Arts, Dept Conservation & Dept of Environmen Conservation & Environment & Sport. Environment Land Management & Land Management Natural Resources Heritage & Territories Environment Engineering & Water Rural Water Water Resources Protection Authority Supply Dept Corporation Commission NSW Fisheries NSW Agricukure

I Community

1 Source: Ci.Spencer,j. Briscoe and S. Raiagopal (India -WRM Sector Review,World Bank, ,998) complex surface-groundwater interaction and the potential of aquifers to serve as multi-year storage, emphasizes the need to manage groundwater aquifers under a comprehensive management framework. In the event of international aquifers the need for joint management is therefore inevitable, as in most situations it is unlikely that parties will be able to manage an aquifer in a sustainable manner operating on the aquifer independently. In the Palestinian-Israeli context the shared moun- tain aquifers (one in the north, one in the east flowing towards the Jordan River and one in the west flowing towards the Mediterranean) provide Israel with approximately 35 percent of its total annual consumption.The western shared aquifer, in addition, to being Israel's major multi-year storage of high-quality water, provides virtually the total consumption of the Pales- tinians on the West Bank.This situation was recognized by the two parties in the interim agreement signed in September 1995, whereby a Joint Water Commission (JWC) was set up for co-ordination of management and protection of water re- sourceslwastewater systems, resolution of disputes, and monitoring and exchange of information.To supervise and enforce the agreement, Joint Supervision and Enforcement Teams (JSET) were to be established. In addition, the agreement also included provisions for water purchases by one side from the other. Presently both parties have a central water management

Authority.The JWC and JSETs have not yet become fully effective in their intended roles, but the process being used to build institutions is of interest. Towards a flexible sequential institution building approach, Feitelson and Haddad (1 998a&b) have proposed a possible structure for such joint management of the aquifer. By showing that all joint management options are essentially dynamic, sequential processes, attention is focused on the need to initiate early confidence building measures for later integration with subsequent steps.The management of an aquifer in a sustainable manner requires that many actions be undertaken with regard to several issues.These include the monitoring of the aquifer (qualitative and quantitative), controlling and supervising activities in the recharge area, prioritizing and regulating withdrawals from the aquifer, research and investigation~,promotion of programs and measures designated to protect the aquifer, and crisis management. Some of the relevant tasks are data collection and analysis, pollution control, assured wastewater treatment and re-use, risk management and facilitation of water transfers. Each of these issue areas can be a basis for a joint water management structure. An evaluation of nineteen possible structures (e.g., monitoring of water resourceslwater extraction, crises management, wastewater issues, and enforcement of activity) showed four major thrusts that joint management institutions may take over time, i.e., aquifer protection, crisis management, economically based institutions and integrative-comprehensive structures. In the case of aquifer protection a proposal for a two-level institutional structure is advanced. In addition to a governing body, a number of specific units are proposed at a lower technical level to carry out professional tasks.The most important induce- ment to make joint management a potential win-win situation is the joint interest all parties have in maintaining the water quality of the aquifer and its storage capacity. Four or five stages can be identified in the sequence leading up to most resource protection structures.These include aspects such as qualitative and quantitative monitoring of the aquifer, wastewater issues, capacity to set standards, and research coordination.The institutional structure would involve decision makers and mediators at the top followed by the Aquifer Protection Commission (APC), to be composed of high ranking representatives of the main interests (water, health, environment) from the different parties.The APC would have the ultimate responsibility for protecting the aquifer.To help the APC in its work, several joint technical units would need to be set up. In addition, joint inspection teams may be desirable, to assure compliance with the agreed upon acti0ns.A research coordination unit may be established for a long term continuous research program to improve and guide the protection efforts. Finally, a drilling licensing element is needed to prevent over-pumping, and consequent salinization.The fourth level of the JWM structure includes field teams of both sides, and the different local and regional authorities and water utilities or units. For crisis management (spilling of toxic material, discovery of hazardous materials in drinking water coming from certain wells and natural events such as droirghts), a joint monitoring and data sharing system, a decision making mechanism that can declare a crisis situation, enforcement and conflict-resolution mechanisms, and drought management should be set up,followed by feedback mechanisms to learn from each crisis and allow for adjustments.The central body in a JWMcrisis management structure would be a Water Crisis Board, a body that would be assisted by several joint technical units. The economic structures envisioned would include structures intended to facilitate trading of water allocations and utilities, thus opening the way for private sector involvement in management of the aquifer and in funding the programs.The first step towards an economic-based structure is the establishment of a joint monitoring system followed by trading and/or pricing mechanisms.The institutional structure of an economically based JWM system would include a board of directors (in the case of a utility) or an aquifer management commission that would set the trading rules and govern the structure.This body would be composed of top officials of both sides, representing water, environment, health and economic development interests, as well as (perhaps) some consumer or local authorities' representatives.The third element in these systems are the local authorities that supply the water

The goal of an integrative structure is to cover all the aspects of aquifer management comprehensively, so as to assure the best result from an aquifer management perspective, and to assure its long range sustainability. Mechanisms for resolving disagree- ments, crises management, re-allocation mechanisms, financing instruments and a joint water project management capacity need to be built-up in this structure in stages.At a later stage, a comprehensive regulatory capacity and enforcement unit should be set up. The aquifer supervisory commission may eventually assume the role of a governing board for the JWM structure, and may take on the responsibility re-apportioning water if circumstances require. This approach allows decision makers to embark upon a cooperative route without committing themselves in advance to a fully integrative structure.This approach may, thus, provide the flexibility to include elements from other routes in response to changing circumstances, without compromising previous achievements. A question that may be posed in the context of this Water Resources Management review is whether the inclusion of a neutral third party (e.g., GO1 in the case of aquifers shared between Indian states) might further facilitate progress towards coordinated management of the shared aquifers. In the case of the Israeli and Palestinian aquifers, actual achievements in improved water resources management between the two bilateral parties is still quite limited.

Source: E.V. Jagannathan based on Feitelson and Haddad. 1993a&b.(lndia - WRM Sector Review.World Bank 1998). Efficient allocation, planning and management of water resources in India depends on substantial changes and up-grading of institutional capabilities in water related departments at state levels. In India's federal structure, the state is the key administrative unit. Hence, it is at the state level where policylinstitutional changes make greatest impact on the optimal utilization of scarce water resources. Under the World Bank assisted Water Resources Consolidation Projects (WRCPs) in Tamil Nadu and Orissa, under implementation since 1994 and 1995, state capacity upgrading in water resources management is being implemented in all functional areas, including in water allocation, planning and management discussed here. In these states, improved planning and management of water resources is being attempted on a holistic and multi-sectoral basis by the natural hydrological unit, the river basin, incorporating ground as well as surface water, and including environmental aspects in addition to quantity considerations. In the case of Orissa, the Orissa Irrigation Department (OID) has been the lead agency for irrigation development in the state. It was increasingly recognized that the OID, while it had considerable achievement in construction of civil works, had to shift its focus towards the challenges of complex water management. In 1996, as a part of the institutional reorganization under the WRCP, the Department of Water Resources (DOWR) was created. A reorganization was carried out to: (i) broaden the responsibility of DOWR to include basin planning; (ii) create a Water Resources Board (WRB) headed by the Chief Secre- tary to act as the State's highest authority for guiding and taking multi-sectoral decisions regarding water planning and allocation; (iii) create specialized line units for each key functional responsibility of DOWR; (iv) decentralize DOWR management along river basin lines including substantial transfer of decision making to regional basin managers; and (v) involve farmers in irrigation system operation and maintenance decisions and turn over responsibilities of O&M irrigation to farmers.The WRB ensures inter-departmental co-ordination of a wide spectrum of departments within the state that are involved in water planning, management and development.An Orissa Water Planning Organization (OWPO) has also been created headed by a Chief Engineer, to be the nodal unit responsible for all phases of multi-sectoral basin planning and the technical Secretariat of the WRB.A Hydrometry and Data Center has also been established.The work of OWPO is significantly underway and will result in preparation of multi-sectoral basin plans for all of the river basins in the state, followed by an integrated State Water Plan. OWPO is also sponsoring various workshops on water and environmental issues. In the case of Tamil Nadu, a Water Resources Control and Review Council (WRCRC), chaired by the Chief Minister, has been created to make decisions on water planning and a1location.A specialist Water Resources Organiza- tion (WRO) has been created through bifurcation of PWD, and the WRO has been reorganized around functional specialization and decentralized along river basin lines.The state's water management is now under four Basin Managers, supported by WRO's various technical units.The Institute of Water Studies (IWS) has had its mandate adjusted to serve as the state's water planning organization. IWS has been charged with preparation of basin plans and environmental plans,and an overall state water plan. IWS, through its technical committee, contains representation and expertise from all water using sectors.The IWS also serves as Secretariat of the WRCRC.A Ground and Surface Water Resources Data Center has also been created. Piloting is also underway for creation of intra-state RBOs involving stakeholders (refer BoxA3.8). and includes development of an interactive basin model in theTamil language as a decision support system (refer Box A7.3). The following organigrams highlight the inter-sectoral water resources management aspects that were built into the WRCP institutional reorganizations.The ongoing process now in both states is to build the technical capabilities of OWPOI IWS and basin manager's offices, and to complete the basin plans. In both states, the WRBIWRCRC still need to evolve as functionally dynamic multi sectoral entities.

Source: E.V.Jagdnnathan. K. Oblitas, and K. Eisenstadr (India -WRM Sector Review,World Bank. 1998). Nmj B Chimpala

Land Acquiririon md Economic Rehabilitation demand aspects of water but also an interactive decision-making framework.This requires mutually-complementary initiatives for the establishment of formal institutions for stakeholder participation and the development of river basin analysis and modeling techniques. Stakeholders include any group or agency that is responsible for, can contribute towards, or is affected by water resources policies. On the demand side, this would include farmers, industrialists, domestic water users, in-stream water users, and those involved with hydropower generation and inland water transport, etc. who have to be consulted in an effective manner for a more efficient and equitable utilization of scarce water resources. The objective is to promote a consensus-building approach, through a mutually agreed give-and-take basis for optimal planning, allocation and management of basin water resources.The attempt is to progressively localize dtcision-making under a basin committee and to bring stakeholders and market mechanisms into the process of water allocation and management. Vaigai basin was chosen for pilot experimentation under the on-going World Bank assisted Tamil Nadu Water Resources Consolidation Project (WRCP). It is convenient for piloting because of its relatively discrete size, the fact that it is primarily an intra-state basin (with the exception of one reservoir), presence of multiple stakeholders, amd inter-regional and inter-sectoral conflicts over scarce water supplies. Irrigation is highly developed with 67,000 ha under surface irrigation, and with 95% of agricultural area under paddy.The demand for drinking water supply, especially for the urban area of Madurai (population 1.2 million) is acute. Industrial requirements for water is expected to increase over five-fold by 2020. A large number of private wells extract groundwater without incentive for saving due to free supply of electricity to pumpsets resulting in declining groundwater table. Environmental problems include some effluent disposal from Madurai's municipal areas and inclustrial plants and saline water intrusion near the coast.The stakeholders in the basin include farmers, industries, domestic water consumers, livestock, washermen and various central,state and local governmental organizations and NGOs.They have to operate in a highly regulated environment with no formal water rights and fragmented and overlapping decision-making responsibilities. In Tamil Nadu, there were no Basin Committees to begin with, not even for discussion between concerned government departments. In two initially exclusive government meetings in MayIJune, 1996, arranged by the basin manager of WRO, GOTN, with participation by the representatives of various government agencies - such as Collector, Madurai;Tamilnadu Water Supply and Sewerage Board (WAD); Madurai Corporation; Pollution Control Board, Agriculture and Forest Department - it was decided to initiate an inter-sectoral dialogue with thevaigai stakeholders with a view to devise realistic plans to optimize the benefits from the basin. After these initial stakeholder meetings, the THANNI model (refer Box A9.3) structure was developed as a medium for a user-friendly dialogue with the stakeholders.The model has the capability to quantitatively reflect the possible interventions, both structural and non-structural, and their consequences so as to bring out immediately (i.e., during the discussion) the impact of the concern of various stakeholders and the trade-off possibilities. Subsequently, in the stakeholders' meetings held at Madurai on October 18, 1996, and on November 13, 1996, the model was presented.A large number of basin farmer representatives, NGOs, industry representatives, municipal corporation, pollution control board, washermen community, etc. were present as well as the relevant government representatives. The preliminary model was made operational based on the data collected from the Vaigai basin for all the related sectors. It was then presented in the stakeholders meeting held at Madurai on January 24. 1998. This was the first interaction of the stakeholders on the model tailored specifically to thevaigai basin. It evoked considerable debate on sub-sectoral issues, indicating the usefulness of such decision support systems to serve as a focal point for discussi0n.A Select Committee of Stakeholders consisting of leading stakeholders, NGOs and the representatives from the GOTN has been suggested for more focused interaction on improving the model so as to discuss model outputs for various identified scenarios in interpretation value for the various stakeho1ders.A gradual transfer from looking from compartmentalized sub-sector location- specific concerns of the stakeholders towards an understanding of the impact of a proposed activitylactivities in a sub-sector on other sub-sectol-s of the river basin is discernible. Possibly, this will lead towards emergence of a basin plan acceptable to all after evaluating the relative trade-offs.There is still much to be done, but this is perceived to be the beginning of a new form of stakeholder interaction for collective decision-making.

Source: E.V.Jagannathan and N. Harshadeep based on work by the Inter-sectoral Water Allocation team (led by S. Rajagopal) of the India -WRM Sectorwork Program (World Bank, 1998) and adapted from Oblitas, Rogers and Harshadeep. 1996.(lndia -WRM Sector Review,World Bank 1998).

Government of West Bengal's environmental policy (see table below).The environmental web illustrates conceptually the various types of institutions that exist, or could be established, with state, market or civil society functions over certain aspects of environmental management.To date, these three sectors' spheres of action have not worked collaboratively or with a common purpose. Encourdging co-operation and co-ordination will result in better policies and better implementation of those po1icies.A focal point of the Strengthening Institutions and Resources Strategy developed under Calcutta's Environmental Management Strategy, is to ANNEX 4

Boxes on Economics and Pricing

The function takes the form Q = (R2=.499, t -3.45). The price coefficient in the demand function indicates that irrigators are sensitive to the price of water (as shown in the following figure), thereby influencing their allocation decisions. The groundwater prices are mostly on an hourly basis, though payment by season and number of irrigation events is also reported. While the observed hourly prices are in the lower range of Rs. 3-6 in Andhra Pradesh,Tamil Nadu, and Uttar Pradesh, they are in the higher range of Rs. 25-45 {US$ = Rs. 12.97) in Gujarat where groundwater markets are more organised and competitive.The seasonal payment takes the form of a 'water rent' and it varies from one-third in Tamil Nadu to 50-66 percent of buyers' crop output in Gujarat (Saleth. 1997).

Price (Rslcubic rn)

Source:Dinar and Salerh. 1997 (India -WRM Sector Review,World Bank 1998).

I I "Orange" or "Green" according to their pollution potential, and by their gross fixed assets, as a proxy for pollution amount within each class of industries.The following figure presents the fee structure for the different "colored" industries and for a variety of gross fixed assets values.

500.0-1000.0

El 3000.0-4000.0

Source: Dinar and Saleth. 1997 (India -WRM Sector Review,World Bank 1998). 6.9 million in ten years. Neighboring municipalities with a population of 1.2 million are expected to grow to about 2 million in the next decade.Water to these 5.6 million people (and 2 million more that commute daily for work:) is supplied, at present, from mainly two sources by the Calcutta Municipal Corporation (CMC): 220 million gallons per day (MGD) per capita from the Hoogly River (222 gallons= I m3), and 25 MGD per capita from public ground water wells. Ground water quality is not satrsfac- tory and the supply will terminate in the next century.Additional ground water from an unknown number of private tubewells is also pumped in the area. CMC does not face water scarcity, but rather it is concerned with the poor performance of the 60-1 50 years old conveyance system, which has a 35% unaccounted for water rate, high energy and other O&M cost.'As a consequence, parts of the metropolitan area do not get the sufficient supply, which is calculated at 49 gallons per day per capita. Present annual electricity cost of supplying the 330 million m3 is 200 million Rs and other O&M costs are 300 million Rs.The variable cost of water supply by CMC is therefore 1.5 Rslm3.Additional revenue is provided by a share of property tax. Of the 175.000 residential connections, only 25,000 are charged at present directly a flat rate per annum for water use. Collection of water charges are only 80 million Rslyear. Rates differentiate between the connection velocity (Ferule), and the type of customers. Residential connections with 25 mm ferule pay 780 Rslyear, connections of 20 mm ferule pay 480 Rslyear (Rates for 15 mm and 10 mm ferule sizes are 120 and 28 RslYear, respectively, and are not being collected.) The 10,000 commercial and industry connections pay 24,000 Rsljear. Short- and long-term plans for the next 10 years will increase the surface pumping and filtering capacity to 380 MGU and improve the efficiency of the conveyance system.This will only provide for the population growth needs, but not for additional water per capita. Investment is estimated at 3 billion Rs.-The investment in the conveyance system is expected to result also in an annual saving of 100 million Rs in electricity and in an additional O&M saving of 100 million Rs.A new water tariff structure, which is being now established, incorporates 4 components that jointly will represent the volume of water that potentially can be used by the user.The tariff components are: the ferule, the pressure in the supply segment leading to the users intake, the distance of the user's intake from the supply junction, and the height of the user's intake compared to the supply junction. It is expected that the pseudo-volumetric tariff will provide incentives for users to request replacements of ferules (to a lower diameter) if they feel they use less water than potentially can be provided to them by their existing ferule. Charges for water are expected to triple compared to the 780 Rslyear being paid at present. Implementation of the new tariff is planned in two stages. First, a cost recovery rate of 80% is planned for several years, followed by a 100% cost recovery from thereafter. The Re: ublic of South Africa's (RSA) water management policies focused, in the past, mainly on water supply.This implied the creation of complex water conveyance infrastructures that transferred water along and among basins, as well as provided water to several sub-sectors (e.g., irrigation, urban uses, power, mining, and others).The "New RSA" is facing major decisions in the water sector in light of recent economic, political, social, and demographic changes. Water use is expected to increase due to several reasons, including expansion of supply to communities that did not have access to adequate water services in the past, and increased consumption due to population growth and improved standard of 1iving.This will bring consumption of water to a point where the existing water system will not be able to supply, if demand is not managed properly. TheVaal River Basin is one of the major water supply regions in the country. Its contributes about 60% of the nation's GDP and contains nearly 40% of RSA's urban population.The pattern of water consumption in the Vaal Basin, similar to that of RSA, is 24% urban, 16% industrial, and 44% agriculture.The total consumption of water in theVaal Basin exceeds the available water of the basin, and is, therefore, amended by inter-basin transfers.To amend the increased need for water in theVaal Basin, additional inter- basin (and international) water transfers have been initiated, with a substantial increase in the bulk supply cost.The figure below I depicts the cost associated with developing new water resources for theVaal Basin. The cost per unit of bulk water, as can be seen in the figure, is expected to reach the very high value of 1.60 Randim3 (I US$=3.5 Rand).With the completion of the two phases of Lesotho Highland Water Project Phase A and B (LHWP), the total supply of 3868 million m3 wi;l still fall short of the expected need.Additional projects that have been evaluated recently, would result in the cost of additional 3000 million m3 to reach, in the margin, a value of 2.40 Randim3. To cope with the increasing gap of water availability over space and time, and the soaring cost of closing this gap, the government of the RSA is considering a change in its water pricing policy. It is acknowledged that the faster the demand grows in theVaal Basin, the sooner these more expensive alternatives will need to be developed.The present pricing practice in RSA does not reflect the value of the investment nor does it take into account the economic value of water. It basically uses an accounting principle of "writing down" the value of assets by the amounts paid off, therefore, in some projects, the cost of water reaches a very low unrealistic value. In addition, the pricing policy has not placed a cosdvalue on water itself.The current bulk water pricing formula comprises three parts: (i) an operating cost which includes full O&M allocated on an annual basis per m3; (ii) Capital cost based on historic depreciated average cost per m3; and (iii) a levy (for LHWP) for projected loan services, allocated over ail urban and industrial consumers. The debate in RSA is over a water pricing policy that will enable it to: (i) fund investments for new water resources without mortgaging future generations; (ii) induce water conservation and pollution-reduction by sending appropriate economic signals;and (iii) be based on equitable considerations, taking into account sectors, income groups, and geographic areas. Moving away from the existing pricing system, several alternatives have been considered. I Source: Dinar, 1994.(Adapted for India -WRM Sector Review,World Bank 1998).

Tueeia Vaal - I Bloemhof ) I

Cumulative Volume (Million cubic meters per year) Although grown on only 2 percent of India's agricultural land, sugarcane, and its by-products (sugar, molasses, gur, and khandsari, the last two being indigenous sweeteners) are an important sector of the economy, accounting for nearly 2 percent of the country's GD!? Being an extremely water intensive crop, sugarcane cultivation significantly affects water use in many parts of the c0untry.A recent Bank studp that analyzed the sugarcane industry in the states of Maharashtra and Uttar Pradesh where 60 percent of India's sugarcane is grown, found that government policies in the sugar sector have seriously distorted regional production and cropping patterns, and mis-allocated resources including irrigation water. Of the two states, Maharashtra is extremely water-short, but domestic sugar policies have contributed to a rapid increase in sugarcane cultivation in the state. Between 1968-1996 sugarcane production in Maharashtra grew at a trend rate of 4.4 percent per annum compared to a rratiorral average of 3.1 percent per annum.The rapid growth in Maharashtra has had an effect on water use in the state. By one estimate as much as 76 percent of irrigation water in Maharashtra is being used for sugarcane cultivation which occupies only 3 percent of the cultivated area in the state. Current policies distorting regional production patterns include licensing of sugar mills, government subsidies to cooperative mills, and a dual market for sugar. In addition, state advised minimum prices for sugarcane and large subsidies on fertilizer, power and water distort cropping patterns nationally, encouraging sugarcane relative to other crops. Licensing and Capital Subsidies. Licensing policies to establish new sugar mills or expand existing capacity have favored cooperative mills, and mills in Maharashtra in particular since the state encourages only cooperatives in the sugar sector.Apart from the licensing bias, cooperative mills also receive large capital subsidies from the state government,which are not available to the private milling sector that is dominant in Uttar Pradesh.These policies have led to a rapid growth in the number of sugar mills in Maharashtra, encouraged shifts to sugarcane cultivation, and skewed water use in the state. Dual Market System. Under the dual market system, 40 percent of sugar mills' output has to be sold to the government at below market prices (the "levy" system), but gur and khandsari producers are exempt.This policy provides a greater disincentive to sugar mills vis-i-vis gur and khandsari producers in Uttar Pradesh compared to Maharashtra.The presence of a large gur and khandsari sector (which is not subjected to a levy) increases the competition that mills in Uttar Pradesh face when buying sugarcane from farmers. Maharashtra mills do not face this competition for sugarcane supplies because there are a negligible number of gur and khandsari units in the state. Sugarcane Pricing. Unlike other important crops such as rice and wheat, the minimum support price announced by GOI for sugarcane is not the minimum price at which mills have to buy from farmers. States are free to announce significantly higher State Advised Prices (SAPs) which establish the actual minimum prices that mills must pay to growers.The process of determining SAPs is subject to considerable political intervention and prices are often set above competitive levels, contributing to a shift from other crops to sugarcane. Subsidies on fertilizer, power and water further accentuate the shift as, relative to other crops. sugarcane uses much more of these inputs, particularly in Maharashtra.

*'India's Sugar Industry: Priorities and Reforms." (Forthcoming 1998). Sourh Asia Rural Development UnitTheWorld Bank

Source: Deepak Ahluwalia, Benoit Blarel, and Dina Umali-Deininger (Adapted for India - WRM Sector Review.World Bank. 1998). INTER-SECTORAL WATER ALLOCATION,PLANNING AND MANAGEMENT

generated by indirect pricing policies of water-related inputs and outputs.The water-related items in the 1995 agricultural policy of the Government of Karnataka (refer table "Karnataka's Agricultural Policy" can be used to demonstrate the mis-application of economic tools which has created an environment of conflicting incentives. For example, while some of the policy instruments (such as investment in water-efficient technologies) attempt to encourage conservation of scarce water, other policy instruments (such as subsidies for sugarcane production) eliminate the positive effect. The effect of crop pricing policy can be seen by considering Karnataka's agricultural policy.Although on the one hand incentives are provided for water-saving irrigation technologies, such as sprinkler and drip irrigation, on the other hand subsidies are provided for rice and sugarcane production which, by encouraging cultivation, could increase water usage. Farmers respond to crop prices by adjusting cropping patterns to market (or administrative procurement) signals, and, therefore, crop prices indirectly affect water use efficiency in agriculture. For example, in an attempt to explain the 1995196 unexpected decline in foodgrain production in India (Raghavan, 1996). weather conditions have been blamed for a 4.4%. 2.1 % and 8.1 % decline in wheat rice,and other pulses yields. However, about 600,000 hectares formerly under wheat production were switched to other crops in 1995196, indicating that,"the price signals, as reflected by the lower procurement prices of grains, also played a major role in the changed cropping patterns."

Source: Dinar and Saleth, 1997. (India - WRM Sector Review,World Bank, 1998).

Relaxation from power cut. For 5 years for new units from the date of commercial production.

Subsidy for bio-fertilizers. For cereal crops, 50% subsidy to farmers on "S'brands, not exceeding Rs. 151ha.

Subsidized pesticide distribution Distribution at 25% of cost.

Assistance limited to Rs. 6001ha.

Subsidy for rice production Assistance for rainfed rice production and Basmati rice production, limited to Rs. 600lha.

Subsidy for sprinklers Sprinkler sets to small and marginal farmers and farm area up to 2 ha and a subsidy up to Rs. 1 0.0001set.

Subsidy for drip irrigation equipment Subsidy on drip irrigation (minimum subsidy Rs. 14,200 and maximum subsidy Rs. 60,000).

Sugarcane production Rs. 2,200lha as seed subsidy and Rs. 5001ha as transportation subsidy.

Fertilizer concession price scheme to A concession of Rs. 340lton for single super phosphate, and Rs. 435 to Rs. 999lton for all farmers complex fertilizers.

Source: Government of Karnaraka, 1995. The mobility of water, in addition to oftentimes inadequate water-related information, make it difficult to establish well- defined (exclusive and enforceable) property rights which are necessary for a water market to function efficiently. Closely related to this, water use often involves externalities or third party effects. For example, the pollution or extraction of water upstream may reduce both the quality and quantity of water downstream. Similarly, over-exploitation of groundwater may not only reduce water levels but also lead to salt-water intrusion and contamination in other parts of the aquifer.Therefore, government interventionlregulation, including the use of economic tools, may be nqcessary to ensure that consumption of water does not decrease or subtract from another's potential use (i.e., subtractability). * Large capital outlays and long periods before payoff characterize many water projectslir~vestments,making it difficult to attract private investors.Additionally, water projectslinfrastructure often exhibit increasing returns to scale and are, therefore, prone to natural monopolies. Without government intervention there may be under-investment in water and monopoly pricinglover-pricing. However, as conditions change, such disincentives to private investment may diminish. For example, developments in tube well technology have reduced the economies of scale in tubewell irrigation and, therefore, one of the main constraints to private investment. Many water investments produce joint or complementary products, such as recreation, power, flood control, and irrigation. Some water services, such as flood control, are also public good in nature. In other words, it is impossible or unfeasible to exclude potential users from benefiting from the service and the benefits generated by the service do not decrease, even as consumption of the service increases. Such goods will tend to be under-provided by the private sector and therefore public intervention is required to ensure appropriate levels.

The unique characteristic of water - that it is essential for life - in addition to environmental concerns warrant judicious use of government intervention to temper market outcomes which may be socially undesirable.

Source: H. Qaddurni.Adapted from World Bank, 1993b. (India - WRM Sector Review,World Bank, 1998).

ANNEX 5

Boxes on Water Rights and - Water Markets

Surface Water Rights In India, the State's paramount rights were born out of Government-spearheaded and sponsored irrigation development and have served well their original purpose. However, they have not, so far, been carried as far as overhauling riparianism and replacing it with a Government-administered mechanism to allocate user-type rights in natural surface waters.As a result, until a new system emerges to replace riparianism, nothing prevents the courts from entertaining litigation among riparians who have the means to engage in court battles, and riparians of means may feel tempted to test in the courts instances where the Government exercises its paramount rights in connection with government-assisted irrigation projects. This legal limbo stands in contrast to trends world-wide. Common law riparianism has been done away with by virtually all the Eastern states of the United States of America, where it used to hold sway. It has been done away with altogether as recently as 1995 by Jamaica and in 1989 by the Australian state ofvictoria, which has vested in the state a superior "right to the use, flow and control" of all waters in that state for the common good. It has been radically modified even in England and Wales, the very cradle of riparianism, in 1963. Its demise has been accepted as one of the lead principles which will govern the drafting of new water management legislation for South Africa. In all these countries, common law riparianism has been replaced by a statutory system of Government-administered permits for the abstraction and use of water.As a result, no one can claim a right to abstract and use water on the basis of ownership or possession of riparian land or - as in England and Wales - on that basis only.

Groundwater Rights Bold steps have been taken by many countries to live up to similar challenges concerning groundwater ownership that India faces -though such challenges are surely on a less dramatic scale than India's in quantitative terms. In ehe early 1980's the Legislatures of the American arid states of Arizona and New Mexico went as far as replacing the common law rule of absolute ownership of groundwater with a government-administered permit system of groundwater extraction. So did the Legislature of the Australian state of Victoria with the 1989 Water Act. In England and Wales, instead, government-administered licensing requirements have been superimposed on the enjoyment of riparian rights in groundwater under the 1963 Water Act.The same trend can be observed in countries belonging to the Civil Law tradition.The Spanish Legislature passed in 1985 legislation whereby all hitherto private groundwater resources became the public property of the State. Concern for the long-term sustainability of the nation's groundwater resources, in particular, prompted Italy's Parliament to pass in 1994 legislation vesting in the State all private water resources, including, in particular, groundwater. Legislation which effectively curtails such significant attributes of land ownership as the right to sink a well and to extract groundwater from beneath one's own land could be construed as a taking of constitutionally protected property rights and be challenged before the courts of law.The above-mentioned Arizona and the New Mexico statutes suffered such challenge and survived scrutiny by the courts intact, as did the Spanish Water Act's groundwater provisions.

Source: Burchi and Singh. 1997. (India -WRM Sector Review,World Bank 1998). In instituting a new water rights system,good-faith, unchallenged reliance on one's riparianlproperty rights need not be disturbed, nor should the law bring about unnecessary disruption of established water usages and use patterns. In England and Wales special provisions of a transitional nature were put in place, whereby riparian abstractions in progress at the time the new legislation came I into force were guaranteed and protected through the instrument of a "licence of right."As a result, all riparian abstractors had to file for a licence within a one-year deadline from the coming into force of the new statute to have their rights confirmed, limited however to the amounts of water they could show they had actually been abstracting in the preceding five years. Similar provisions can be found in Jamaica's 1995 Water Resources Act.Additionally, in England and Wales groundwater extractions in progress at the time the new legislation came into force were treated and protected in the same manner as surface water abstractions. Under Spain's 1985 and Italy's 1994 legislation, dispossessed groundwater owners have been granted, on request, user rights, limited to the quantities of water actually extracted from existing wells. In Spain, such user rights are restricted in duration to 50 years from the time of the grant by Government. Another important feature of the licensing systems in effect in other countries is that licensing requirements are generally waived in respect of water abstractions, and groundwater extractions made to satisfy the immediate domestic and para-domestic requirements of the abstractor's household. Shallow wells and low-yielding wells also tend to be exempted from the scope of licensing requirements.The rationale is that recording and monitoring of these abstractions would be an impossible task, and an unnecessary one in view of the limited impact which "minor" abstractions and extractions are assumed to have on the relevant water systems.

Source: Burchi and Singh, 1997. (Ind~a-WRM Sector Rev~ew,WorldBank, 1998).

Water markets can be an effective mechanism for improving water resource efficiency by facilitating the transfer of water to its highest-valued use.Additionally, by providing compensation for water sales, water markets induce water conservation, including the adoption of water-saving technologies. However, because of the special characteristics of water (refer Box A4.1 O), a number of preconditions are necessary to ensure that water markets are efficient, equitable and sustainable. Institutional, and as needed, legislative, arrangements must be created to establish tradeable water rights that are separate

Appropriate administrative arrangements must be established. In India, water rights and water markets might be more feasible on a group basis, such as for a WUA as a whole.The WUA could engage in water transactions as a group, with trading within, the WUA based on informal or semi-informal arrangements between the WUA members. A management unit which involves stakeholders must be established to monitor and regulate implementation of the trades. - Devices for volumetric measurement and flexible infrastructure must be in place which allow the sellers to transfer water to the buyers (e.g., for irrigation, adjustable gates and interconnecting canals). A regulatory framework must be provided to protect the environment, health and third parties, all of which may be dam- aged by water trades due to the externalities associated with water use (e.g., minimum flow, downstream users). Dispute resolution mechanisms must exist to deal with conflicts over water rights and third party interests. Equity considerations must be taken into account in the design of water rights (e.g., by giving priority to certain uses) and in their initial distribution. Impact on women and marginal groups (scheduled castes and tribes,landless, etc.) needs to be assessed carefully, and special organizational management and monitoring features introduced to ensure equal participation and full benefits.

Source: H. Qaddumi. Adapted from Biswas, 1997. (India -WRM Semr Review.World Bank 1998). Box A5.4. Opportunities for EstablishingWater Rights and a Groundwater District: The Case of Chennai

Future water quantity and qualit! requirements for Chennai (formerly Madras) are a pressing issue for water resource planners. The supply situation will improve dramatically over the next few years with the addition of 958 MCMIyear of diverted Krishna River water. Even with the Krishna water augmentation, however, there is a substantial and ever-increasing gap between the demand for, and supply of, water.Additional surface water supplies will be very expensive and difficult to come by.The capacity for providing Chennai with a low-cost supply of high quality water to meet demand would need to rely upon the effective inter- sectoral re-allocation of irrigation water to urban and industrial uses. In terms of resource quality, the major issues involve avoiding groundwater overdraft, and subsequent saline intrusion, and the implementation of land use planning and industrial zoning to prevent industrial, non-degradable contamination of the various aquifers on which the city residents depend. Existing public awareness and concern about aquifer management in Chennai have greatly assisted Metrowater, the city's supplier, in innovatively addressing these issues through its effective use of the Madras Groundwater Act.

Krishna water is a very beneficial resource for Chennai City - a huge quantity of water of high reliability at relatively low cost (about Rs 2.0lcubic meter).This increase notwithstanding. Metrowater needs to be concerned about securing additional sources of water to satisfy demand projections. Given that regional surface waters are fully allocated, that groundwater is being mined in 30% of the region, that subsequent allocations from the Krishna River are unlikely, and that the cost of bringing additional water from outside the drainage basin is prohibitively high, the cost-effective option is the inter-sectoral re-allocation of irrigation water. Irrigation accounts for 87% of abstractions from both the nearby Araniar-Kusaithaliayar (A-K) aquifer, and the surface waters surrounding the city. Two options for the noted inter-sectoral allocation exist for Chennai; the use of irrigation water from Chembarambakkam Tank (a historic and currently functioning irrigation tank west of the city), and from the A-K aquifer.There are some precedents in India for the purchase of irrigation rights. In this region, an important precedent is that farmers' rights were bought out at the Redhill Reservoir in the 1960s.The Tank is a particularly attractive option for Metrowater, because it is designed to serve as the reservoir for the diverted Krishna water.Therefore, it provides a natural point for augmenting supply where no additional distribution expenses will be incurred.TheTank is a preferred low-cost option, but can only provide an additionai 27 MCMIyear of water. The sustainable yield of the A-K is not known with certainty, but an estimate from a major hydrogeological study of the aquifer by the UWDP places it in the range of 400-500 MCMIyear. As in all other parts of the world, the value of water for irrigated foodcrops is a fraction of the value for urban and domestic purposes. Rough calculations suggest that the value of water in irrigation in Tamil Nadu is less than Rs 0.51cubic meter. Even if Metrowater had to pay several times this amount, it could obtain additional wa.ter from the Tank and the A-K at a unit cost of around Rs 1.70 and Rs 2.0lcubic meter respectively, which is less than, or comparable to, the cost of Krishna water. In comparing these costs, it shoulb be noted that residents and industries of Madras have long paid vendors b~etweenRs 25 and Rs 45lcubic meter of water. The "quantity challenge" is, accordingly, to manage the voluntary transfer of a large portion of the A-K water from relatively low-value irrigation uses to the much higher-value domestic and industrial uses. Using a set of conservative assumptions and taking several factors into account (the value of irrigated agriculture, the fact that farmers would only sell or lease their water if they made a substantial profit, and the fact thac a part of the water applied to fields returns to the aquifer), it is unlikely that Metrowater would have to pay more than Rs 2.0 for each additional cubic meter of water delivered to the city.The logic behind transferringA-K water from irrigation to urban uses has long been rec0gnised.A LIN groundwater team previously raised the issue in 1988 and recommended in their final report that "consideration should be given to the feasibility of buying water from farmers." This suggestion was pilot tested in 1996 when Metrowater started purchasing small quantities of water (on a temporary basis) from farmers in the A-K aquifer, and injecting this water into their distribution system. In the view of Metrowater management, there are few impediments to simply purchasing customary water rights from farmers who are willing to sell. Currently, work is intended under the World Bank's Third Madras Urban Water Project. The project will upgrade the hydrogeological data for the A-K and specify mechanisms for organizing a formal water market. International experience with water markets in recent years, have provided major advances in both the understanding and practice of the use of "water markets" for voluntarily transferring water from low-value to high-value uses. In terms of understanding, in recent years it has become apparent that informal water markets are, in fact, ubiquitous, sophisticated and widespread. Of particular relevance is the fact that one of the largest, most complex and best-operated of these informal water markets is in India (in Gujarat). In terms of practice, formal, managed water markets have come into use in a number of countries (e.g., Chile, USA,Australia).These experiences show that markets offer a practical, tested alternative for the voluntary re- allocation of water.They also suggest that an approach to the sustainable and efficient management of the A-K aquifer would include: (i) the establishment of a tradable water rights system; (ii) land use planning and industrial zoning; and (iii) the establishment of a groundwater management district. Implementation would, however, need to be carefully designed and implemented. In particular, implementation would need to ensure monitoring and regulatory features to guard against overdraft, and management to ensure social equity and assured benefits for all participating farmers. Demand for water in Chennai will soon outpace supply.With few supplemental water resources available for exploitation, Chennai needs to begin looking at alternative measures to provide for its demands.The potential for voluntary inter-sectoral transfer of water to urban uses from irrigation provide a promising, low-cost alternative to other proposed options: intensive sewage recycling, bulk transfers from outside the region, or desalinization of sea water.

Source: K. Eisenstadt and K. Oblitas. Based on Briscoe, 1996. (India - WRM Sector Review,World Bank. 1998). BoxA5.5. Economic Scope and Institutional Constraints for Inter-Sectoral Water Alllocation: The Case of Hyderabad - As India is approaching fast its water supply limits, the economic value of water is increasing at a phenomenal rate. Since the value of water differs across uses, there is obvious scope for socially optimal inter-sectoral allocation. Unfortunately, serious institutional constraints - ranging from the absence of transferable water entitlements for uses and users, to inefficient intra-sectoral policies including uneconomic water pricing - remain as obstacles for realising the socially optimal inter-sectoral allocation.This can be demonstrated by considering the case of Hyderabad water supply system. Like most cities in India, Hyderabad has a number of technically feasible supply augmentation options.Among these options, some are within its present supply systems (intra-sectoral) and some are outside the supply systems (inter-sectoral).The table below gives the unit cost of alternative water supply options in Hyderabad (I996). The range of the unit costs (Rs. 0.55 to 62.50lcum) defines the feasible economic range for various forms of water transfers (i.e., inter-household within urban areas, inter-sectoral between irrigation and urban uses, and inter-basin or inter- regional between river basins and states). Since both the actual water charge paid by consumers (Rs. 3.62lcum under average pricing and Rs. 3.94lcum under marginal pricing) and the actual supply cost of metro water (Rs. 5.58Icum) are substantially higher than the cost of water diversion from irrigation (Rs. 2.95 to 3.50/cum), there can be a mutually beneficial inter- sectoral water exchange to be carried out either by private parties or by the metro water undertaking. Similarly, the vast unit cost differential between groundwater supply used by a group of households and the same by an individual househol~d (options I and 9 in Table) indicates, in fact, the economic scope for joint supply arrangements as well as inter-househol~d water sharing within a given locality. Unfortunately, the economic potential for both these intra and inter-sectoral water transfers could not be realized due to (a) legal and institutional constraints and (b) inefficient intra-sectoral price policies. Inter-sectoral water transfers-undertaken either on public account or through private initiatives-involve legal questions like water rights and organizational issues like the development of mechanisms for establishing inter-sectoral water allocation and resolving water conflicts. For irrigation water transfers undertaken by private parties, besides the above two macro issues, there are also micro problems like movement restriction beyond canal command and legalized opposition for groundwater sales to urban areas. More iml- portantly, as long as water charges across sectors remain low and subsidized, inter-sectoral water transfers, though still possible, cannot be socially optimal.Therefore, the intra-sectoral policy question of setting prices right also forms a part of 1 the institutional setting for inter-sectoral allocation.

Source: Saleth and Dinar, 1997. (India- WRM Sector Review.World Bank 1998).

No. Supply Augmentation Option Cost (Rslcum) I Groundwater from own Wells (flats) 0.55 2 Municipal Water Connections (flats) 1.23 to 1.53 I 3 Groundwater Diversion from Irrigation 2.95 I 4 Strengthening and Rehabilitation Scheme 3.06 5 Surface Water Diversion from Irrigation 3.50 6 WaterTvansfers from Godavari and Krishna Rivers 2.29 to 4.40 7 Average Municipal Water Charge 3.62 to 3.94 8 Actual Supply Cost of Water 5.58 9 Groundwater from own Wells (Individual House) 6.6 1 10 Water Supply through MetroTankers 20.00 I I Water Supply throygh PrivateTankers 3 1.25 to 62.50 water demand and supply both within and across groundwater basins, change the cropping pattern, rejuvenate the local economic activity, and enhance the productivity and value of water.They can also create conditions for water markets especially during water

Unlike the surface water transfers, however, groundwater transfers over long distance are extremely costly in view of pumping costs as well as those involved in constructing and maintaining underground cement pipelines. Nevertheless, these kinds of private groundwater transfers occur widely in many parts of India prompted by private economic gains often disproportionate to the economic costs. If we go by the social benefits in terms of improved employment, income, and productivity, these transfers are highly viable economic propositions. A very close field observations made in a village (Royappan Patti) located in the Cumbum Valley, Periyar-Vaigai Basin, Madurai districtTamil Nadu revealed certain important aspects.This village, like most others in this valley, has three farming systems (the canal command with an exclusive focus on paddy, the groundwater areas centred on banana, coconut and grapes, and the rainfed system) running parallel to the Periyar canal between the river and the foothills of the western ghats.While the intensive water use led to the wells in the groundwater region to have an average depth of about 30 m (some of them have also become dry), the well construction in the rainfed region is marred by well failure and excessive installation costs due to rocky substrates.Water scarcity in the groundwater region is the main factor for a large scale shift from banana to coconut and grapes during the past I0 years here. Excellent soil and economic opportunity from high value crops have prompted many private farmers to undertake ground water transfers both from the canal commands as well as from the foothills south of the village where an earthen-cum-masonry dam across the Shanmuga River with a storage capacity of 2.25 million m3 is currently under construction. (Although the water from this dam is planned to be moved 25 km north of the village by cement lined channel, the storage will recharge the groundwater aquifer in this region.) Today, there are I0 private groundwater transfer pipelines - 4 from the wells in the private farms in the canal command and 6 from the wells located in the private farms on the Shanmuga River banks. All these transfers involve a 12 HP pump of 30 m3lhour delivery capacity, running on an average 8 hourslday (depending upon power availability per day which is normally limited to 4 hours in the day and 4 hours in the night).Although power cost is currently zero (due to the economically and environmentally highly costly policy of free electricity for farming in Tamil Nadu), maintenance and investment costs are very high. Each of the water transfer pipes has an average length of 3 to 4 km, and costs between Rs. 50,000 and 200,000. Each of these transfer projects irrigates on an average 20 ha of land, either inisolation or in conjunction with local wells (which are very few with marginal water yield). Since most of the water transfers are used to irrigate the rainfed area close to the foothills, land productivity (and hence, water productivity) has increased tremendously mainly due to crop pattern changes and land use intensity.The lands used earlier for raising crops like groundnut, pulses, and coarse cereals under rainfed conditions are now under high value crops like banana. grapes, and coconut.As a result, income per ha has increased I0 to 20 times during the past few years. (While the incomelha from rainfed crops can hardly exceed Rs. 1 0,0001ha/year, the incomelha from grapes and coconut reaches 100,000 to 200,0001halyear.) More importantly, the intensive year-round cultivation due to groundwater transfers has also increased employment, at least by three times, and reduced seasonality in farm employment. These water transfers initiated by well-to-do large farmers using mostly their own capital (some farmers have also obtained bank loans) also benefit smaller farms in the vicinity through periodic water markets (i.e., during water scarce times) operating under two arrangements: one involves the sale of water at Rs. 201hour and the other involves a long-term arrangement. Under the latter arrangement, the buyer has to deposit a refundable amount of Rs. 10,000lacre with the seller who, in turn, supplies water in lieu of interest payment (since the monthly interest in the village varies from 2 to I0 percent,water payment amounts to Rs. 2400 to I 2OOlacrelyear.This higher amount is not a problem as the buyer also grows high value crops like banana.). Notably, since these water marketing activities occur essentially in scarce water periods, they remain latent in periods with better rainfall and water Box A5.7. California Drought Water Bank

A water bank is an institution that offers to buy and sell water, under some set of rules regarding prices and quantities, in a given service area.Water banks can mark up water prices to cover transaction costs and to compensate the area of origin.There are several examples of efficient and equitable transfer of water by water banks, of which the California drought water bank of 199 1- 92 is one. After five years of continuous drought, an emergency drought water bank (DWB) was established in California, following appropriate legislation (to allow for transfer of water rights).The aim of the DWB was to enable transfer of water from agriculture in northern California to urban, municipal, and agricultural sectors in southern California.The principles of the DWB were: Voluntary transfers Protection of fish and wildlife Protection of ground water basins Efficient use of water in receiving areas Protection of present water right holders. In 199 I, the purchase price by the DWB was set to $125/acre-foot (I acre foot = 1235 m3) and the sale price by the DWB was set to $175/acre-foot.As a result, more than 300 transactions were recorded.The DWB bought B20,000 acre-feet, and sold 389,952 acre-feet, mainly to urban and industrial users (32%), and to agricultural users (16%).The difference (quantity not sold) was used for the environment (20% of the total) and for recharge (32% of the total); part was also lost in the system.The value of water purchased by DWB was $102,500,000 and the sale value was $68.24 1,600. Direct and indirect effects of the DWB in 199 1-92 were analyzed by Howitt et al. (1 992), and Archibald and Renwick (1 997), and include increased income in receiving areas. Negative indirect effects were noted on soils, wetlands,and third party effects in the form of unemployment in the selling areas.

Source: Dinar, Rosegrant and Meinzen-Dick. 1997. (Adapted for India -WRM Secmr Review,World Bank, 1998). ownership. Water rights are defined as permanent (from unexhausted sources) or contingent (from surplus water), and as consumptive or non-consumptive. Rights can be obtained by petition to the government or they can be established based on historical use; they can also, of course, be purchased from the owner. In practice, the second of these methods has been used the most to establish water rights, because the government's 1 966 expropriation of all water rights has necessitated establishment or re-establishment of those rights since the National Water Code was passed. The most frequent transaction in Chile's water markets is the "renting" of water between neighboring farmers with different water requirements.This can also be termed a"spot market" in which the owner sells a portion of his or her water, usually over a brief period (perhaps even hours), sometimes without fulfilling formal, legal requirements.Although the volume of sales may not be metered, the buyer and seller have good information on the amount exchanged. Compensation may be in kind or in some other form of monetary or non-monetary benefit. The formal buying and selling of water-use rights in Chile requires legal sanction and registration.Although the law defines water use rights as a volume of flow per unit of time (24 literslsec), in practice rights are a share of stream flows, since variability renders the volumetricltime specification impractical. Use rights are required for groundwater exploitation; these rights prohibit the user from other withdrawals within the area specified in the right.There is a system in place for challenging the granting of water rights and for resolving disputes related to them. Prices for water rights are left to the buyers and sellers. In a study covering over 700 shares of water in four river valleys in Chile, Hearne and Easter (1 995) found that for both intra- and inter-sectoral transactions, "market transfer of water-use rights does produce substantial economic gains-from-trade," in the two valleys where transactions were numerous. In the ElquiValley, for example, net gains from trade were calculated to be in the range of US$5.99 and US$ 1,642.00, with an average of US $826.00 per share of water traded, depending on the type of trading sectors. In the Limari valley the net gains-from-trade were calculated to be in the range of US$ 1.65 and US$ 2.85 with an average of US$ 2.40 per cubic meter. In the LimariValley, one share equals, on the average, 4880 m3lyear, so that the average gains from trade in the Limari Valley are US$ 1 1,700 per share.There were some instances of high financial but low economic gains to society from some inter-sectoral trading.

Source: Dinar, Rosegrant and Meinzen-Dick 1997. (Adapted for India -WRM Sector Review,World Bank, 1998). ANNEX 6

Boxes on Technology

minimum flow in rivers

Provision of suitable fish ladders.

Change of hydraulics of the river to provide fish and dolphins passage in low flow zones.

(ii) primary sewage treatment; and where feasible, secondarylbiological sewage treatment - activated sludge, oxidation ditches, anaerobic treatment, etc.

Areas without sewerage andlor infested with open defecation: (i) in urban areas, if funds are available and financial management is feasible, construct sewerage, interception and diversion) and implement aforementioned options; (ii) in urban or rural areas.conversion of dry latrines into low cost sanitary latrines; (iii) toilets for those who don't have any; (iv) septic tanks.

Sludge waters from urban and rural areas (domestic wastewater without excreta): recycling for agriculture; use in aquaculture.

Clean technologies: water conservation, waste minimization; non- polluting technologies, segregation of lines; etc.

Increasing efforts for implementation of end-of-pipe treatments.

Hazardous waste treatment, minimization. recycling and safe disposal.

Prevention of pollution from inappropriate industrial occupation: zoning for siting of industries.

tillage, contour farming, delayed seed bed preparation, strip cropping); ground cover techniques (conservation cover. conservation cropping sequence, critical area planting).

Treatment practices to retain eroded sedimentr: hydraulic check dams; terraces, grassed waterways, flow diversions, fcker strips, sediment basins, field borders; and stream ecologr to control stream bank erosion. Pesticide management: pesticide control programmes are attractive because reduced pesticide use results in reduced operation costs.They require adequate measures that provide the necessary technical information, educate the users, and provide appropriate regulatory control. Use of IPM.

Efficient use of water for irrigation (water conservation practices) to prevent groundwater contamination.

(waterborne diseases)

Use of pond water for bathing and washing: (i) increase the provision of water supply facilities (tubewells) and educate villagers to reduce the use of contaminated pond water (today villagers prefer to use pond water rather than walk a long distance for a safe and protected source); (ii) treatment of pond water with low cost technologies (slow sand filter, horizontal roughing filter, etc.); (iii) educational campaigns to make villagers aware of the necessity of sanitary protection of ponds and reducing their pollution.

Continue with the preparation and implementation of management action plans for the conservation of the 22 wetlands that have been identified in the country for intensive conservation and management purposes.

Source: Medeiros and Dave. 1997. (India -WRM Sector Review.World Bank, 1998). Box A6.2. Integrated Wetland System for Wastewater Treatment and Reuse

Rural communities see domestic wastewater as a potential source of input for fisheries andlor irrigated agricultural production. In the State of West Bengal, a number of wastewater treatment and resource recovery projects are being implemented, based on lessons from the world's largest fisheries and agriculture production zone using city wastewater (the east Calcutta wetlands). A unified programme has been developed involving the local people, the village panchayat and the implementing authority (CMWSA) in wastewater conservation. In this approach, local village authorities (panchayats) are Formally invited to share management responsibilities.They are made responsible for choosing an appropriate licensee who will be responsible for pisiculture production in admissible water areas.The licensee is expected to pay an annual fee to the sanitation authority responsible for project management. The traditional practice in Calcutta of using sewage in fisheries and agriculture was developed by the local fish producers and farmers over a century ago.The wetlands production options include pisiculture,agriculture, horticulture and animal husbandry. In the new projects implemented under the Ganga Action Plan, pond areas are designed using the same guidelines applied in the construction of stabilisation ponds (anaerobic,facultative and maturation). However, introducing culture fish in the admissible water areas improves system efficiency. Concerning the food quality, initial tests on the fish and vegetables indicate their adequacy for human consumption; however, further evaluation would be necessary particularly in zones where industrial effluents containing toxic wastes are mixed in the sewage.The effluent from the fish ponds is being used in the agricultural fields to grow paddy providing a satisfactory yield and has brought significantly increased livelihood for the local farmers.The cost and availability of land represent the limiting factors to this approach. However, expenditures are less than 3 million rupees per million litres of wastewater per day (including cost of land). In fact, choosing a wetland option will be easier for the cities with low-lying riparian coastal lands.The land in these areas is generally the cheapest and in most cases used to produce only one crop per year. It has been possible to engage the farmers in the wetland project for a continuous source of income that can even be more than the amount earned by them before the implementation of the project.

Source: Ghosh. 1995 & 1996.(Adapted for India- WRM Sector Review.World Bank. 1998). Maharashtraa The Government of Maharashtra has created an industrial park (Thane-Belapur) aiming to provide adequate infrastructure and to reduce potential hazardous effects on citizens in the urban area.The park, with a capacity of 3,000 industries, in 1996 had nearly 2,000 small and medium scale units.The park is managed by the industries, which initiated a project for constructing a Common Effluent Treatment Plant (CETP) to be run by an association of user industries. Some of the large scale industries in the park have their own treatment and disposal faci1ities.A~of 1996, there were 1902 industries that joined the new CETPAssociation (CETPA). Of those industries, 1,543 are considered non-polluting (NP), 3 16 small scale polluting (SCP) and 43 medium scale polluting (MSP). The treatment plant has a capacity of 12,000 m3lday with the capability to expand. Industries are required to have "in-plant" treatment of their effluents in order to use the central treatment facility.The industries are monitored by CETPA, and for those industries that meet the standards they pay only 50% of the treatment O&M costs.The estimated investment cost of the plant is Rs 25.2 million of which Rs 3.5 million were contributed by the Central Government, Rs 3.5 million by the State Government and Rs 18.7 million by the members. CEPTA members contribute to the fixed investment fee according to the following criteria: NP industries pay 2,500 Rs, SCP 30,000 Rs and MSP pay 2 10,000 Rs. Effluent volume is not monitored but a general average of 75% of water supplied (being discharged as effluent) and the organic load (COD) are accepted as a basis for calculation to cover O&M cost.Average O&M cost of the plant is I0 Rslm3.Treatment cost bill is expected to be collected with the water supply bill.

Andhra Pradeshb In Patancheru, Andhra Pradesh, there are 71 highly polluting chemical industries which have constructed 7500 m3/day capacity CETP at a cost of Rs.78.6 million.Their contribution of total cost was Rs.40 million, Central and State grants represented an additional Rs.8.9 million, and the rest was provided as a loan from financial institutions. Presently, the industries are paying charges of Rs.3.901kg of COD (organic load) and Rs.2.301m3 (hydraulic load).The plant receives 1,300-1,500 m3lday of highly concentrated effluent from member industries scattered in the area.The gross monthly income is about Rs. 1.5 million while the corresponding O&M cost is around Rs.325,OOOImonth.The resulting monthly "profit" of Rs. 1.175 million per month will be used to upgrade the system because COD and dissolved solids in effluent are much higher than design-assumption resulting in very poor performance of the treatment process.The CETP project was cleared by the State Government in this design flaw.The initiative in this case was good but technical capacity seems to be needed in order to prevent other such projects.

Tamil Naduc Seven CETP (clusters of tanneries) are in full operation inTamil Nadu. In 1995,forty CETP systems were proposed in the following sectors (most are under construction and some have already completed the worlts): 13 CETP for tanneries (53 1 beneficiaries industries; cost of project: Rs 406 million); 24 for textile & dyeing units (1 847 beneficiaries; cost of project: Rs 646 million); one CETP for 93 hotels and lodges (cost of project: Rs 13 million); one CETP for sago industries (76 beneficiaries; cost of project: Rs 40 million); and one incinerator for hospital wastes (58 beneficiaries; cost of project: Rs 0.4 million).To prevent implementation problems due to poor project design,the SPCB requires the clearance of CETP projects by the IIT or Anna University. Presently, 32% of industries which contribute to more the 50% of the polluting loads into the rivers of the State have effluent treatment plants.

Sources: 'CETPAssociation (Thane-Belapur). Second Annual Report 95-96. brnission visit to Paancheru CETP (interview with Mr. Sivacgander. Plant Manager) 'Tamil Nadu PCB:Annual Report 94-95 and data given by senior officers during mission visit to the Board.

Source: Medeiros and Dave, 1997. (India - WRM Sector Review,World Bank, 1998). ANNEX 7

Boxes on Basin Modeling and Planning

water quality water quality water quality

MunicipallStateWater Supply and Sewerage Authorities

State Public Health Departments X

(*) In the case of drink~ngwater supply and sanitation,these examples demonstrate possible overlapping institutions and do not necessarily include all of them.

Source: Medeiros and Dave, 1997. (India WRM Sector Review,World Bank 1998).

Box A7.2. Some Axioms for Good Basin Planning (Knowledge Driven - Knowledge Management) I

Without data and information about a river basin's resources, non-sustainable and inequitable development decisions are inevitable. Without quality simulation models and decision support systems, less than optimal decisions will occur even if good data and information are available. Without well-trained and knowledgeable staff, poor decisions will occur even if the information and technology is adequate. Without fully transparent data available to the public, decision-makers may make unsuitable decisions, unacceptable to the public. Without full involvement of stakeholders and the general public, decisions will not be owned by the public and implementation will have little chance of success. Source: S. Rajagopal (India - WRM Sector Review.World Bank 1998). I Box A7.3. Modeling for Stakeholder Participati0n:TheTHANNl model for thevaigai Basin

TheVaigai river basin in Tamil Nadu (figure I) is considered a very "water-short" basin, i.e., the current (and projected) supplies of surface and groundwater are not deemed sufficient to meet current (and projected) demands in the basin.The 7000 km2 basin is also the site of the first major inter-basin transfer project in India, with a tunnel, built as part of the Periyar-Vaigai project in 1895, diverting waters from the Periyar river in Kerala under a contentious 999-year agreement between Kerala and Tamil Nadu. The western and north-western parts of the basin receive heavy rainfall during both the SE and NW monsoons, with an average rainfall of 850mm over the basin.The landuse (figure 2) is predominantly agricultural (consuming about 3800 MCM of water annually), with Paddy as the primary crop.There are significant water-sharing conflicts within agriculture itself, with the various agricultural areas (figure I) competing for scarce water supplies. Increasing urban water demands (figure 3) are placing additional stresses on the limited water resources and threaten its quality The intricate network of thousands of traditional storage tanks faces major structural and siltation rehabilitation concerns. The issues in thevaigai basin are many: I) Multiple Stakeholders: water uses include agricultural, domestic, industrial, livestock, hydropower, in-stream uses (including washing clothes), etc. In addition, there are multiple institutions involved in various (often overlapping) aspects of basin planning and management -Water Resources Organization (former Public Works Department), Institute for Water Stud- ies (IWS), water user organizations and collectives (formal and informal), NGOs, Forestry department, State Pollution Con- trol Board, District Collectors, urban water supply board, etc. 2) UpstreamlDownstream Conflicts:After construction of the Vaigai Dam and the rehabilitation and extension of two main canal irrigation systems, downstream farmers in the traditional irrigation areas of the basin hardly get their "share" of the Vaigai basin waters and rely almost solely on traditional tank irrigation systems.

Figure I .The Vaigai River Basin (indicating agricultural areas) both for domestic and industrial purposes, and is becoming a major factor in water allocation. In addition, there are demands from the tens of thousands of Dhobis (washermen) who demand minimum flows throughout the year in particular stretches; and also livestock, environmental and other in-stream demands. The future poses major challenges for the timing and allocation of water for the various water users and for the development of a cooperative framework to make decisions involving stakeholder participation.This also indicates the primary problem in addressing inter-sectoral water conflicts - that they are invariably inextricably entangled with inter-regional allocation, information access, institutional capacity, stakeholder participation, decision-making approaches, agricultural policy, water quality management and other concerns. All this calls for a holistic river basin management approach to planning and management. In any water conflict situation, it is important to analyze various alternative scenarios of the future and determine where the tradeoffs are major and where minor changes in policies, agricultural cropping patterns, etc. can result in "win-win" situations. For this purpose, the World Bank, in conjunction with the Institute for Water Studies, Chennai (formed as part of the Water Resources Consolidation Project [WRCP] in Tamil Nadu), has developed the THANNI' (Tools for the Holistic Analysis of Natural Network Information) decision support system (DSS).This DSS has two major components - an Information System (figure 4) to help organize basic hydrologic, agricultural, urban and other information about the basin; and an Optimization Model that maximizes the benefits from water use subject to a variety of hydrological, economic, legal and policy constraints. Both the infor- Forests &Wetlands mation system and model have been made in a flexible manner to allow for consideration of different scenarios, data updates, model reformulation and further analysis. The THANNI DSS uses a variety of popular software, such as EXCEL spreadsheets and the GAMS optimization package to create an interactive graphical interface for ease of input and output The interface has also been converted into Tamil for greater communication

The optimization model helps give greater insight into the physical and conceptual interconnections in the basin and the inter-sectoral and inter-regional tradeoffs involved in the consideration of various "hardware" (infrastructure) and "software" (policy) options for basin management. Cur- rently, the model as formulated is a monthly model for the chosen planning year.The decision variables are the inter-sectoral water allocation, cropping pattern, flows in the 1996 2010 2020 Figure 4. Schematic Input Interface

Figure 5. Recent Stakeholder Meeting system, reservoir operation, etc. The objectives are to maximize water use benefits subject to constraints on area available, meeting crop water requirements, meeting in-stream water use requirements, etc. The interactive model can be optimized for each scenario considered. The results (e.g. flows, water allocation, benefits from use, hydropower generation, shadow prices, etc.) can be shown as tables, schematics and graphs.THANNI gives decision-makers an additional tool for policy and scenario analysis and gives stakeholders a focal point for discussions.These should be augmented with expert opinion, views, policies, and other tools such as Geographic Information Systems, and simulation, water quality, stochastic models, etc. as appropriate. The THANNI system has been developed after an initial set of stakeholder meetings (figure 5) and interviews (involving participation from various government, NGO and private groups and individuals such as farmers, industrialists, drinking water board, pollution control board, forestry department, washermen, decision-makers, etc.) to gauge the issues involved. An initial information system and model were then quickly formulated (in parallel with training sessions for the IWS) using nodal and conceptual schematics to synthesize the available information, reports and studies that had been conducted on the basin supplies, demands (figure 6) and options and to begin to address the issues of concern.The model has been used to illustrate use in promoting more optimal water allocations among users (figure 7), cropping patterns, water pricing, water trades, optimal canal lining to reduce losses, etc.Thus, it can keep track of multiple-objective water resources decisions in an economic framework and help answer a variety of important questions facing decision-makers and stakeholders. For example, what changes in crops or area cropped are required upstream to divert increasing quantities of water for drinking purposes in Madurai? Can minor changes in reservoir releases or croppin_gpatterns- accommodate in-stream requirements for washing?What are the benefits in each scenario - by sector, Ghgian, by district?What may be optimal allocations or flows in the system to meet urban demands in 2020?Would an additional reservoi~rhelp? Does it help to increase field application efficiency by lining canals vs. basin efficiency of water use? Can agricultural policy constraints (such as a minimum rice crop) be met?What difference could high-yielding varieties of crops that require different temporal patterns of water supply make in this situation? How much hydropower can be produced? Recently, the modeling was extended and interfaces converted partially into Tamil to increase communication potential.The

response and resulting discussions were very positive (the use of local language fonts adds significantly to the use of such models). There appears to be considerable interest in pursuing such approaches for intenc- tive river-basin planning further in the Vaigai Basin and in other basins in the state and country. Next steps will include stakeholder groups working to further develop THANNI and use it in a facilitating role for participatory water resources decision-making. In the future, there is tremendous potential for water user associations, other stakeholders and Box A7.3. (cont.) Modeling for Stakeholder Participation:The THANNI Model for thevaigai Basin decision-makers to use models such as THANNI to provide a new interactive paradigm for coordinated and cooperative decision-making, for quick analyses of options and tradeoffs, to determine relevance of various issues to each stakeholder, to act as a guide to data collection, etc. It is imperative that we make the best use of available information and appropriate information technology to assist in cooperative and rational decision making to use our limited water supplies wisely and efficiently and to resolve inter-regional and inter-sectoral water conflicts that will become increasingly important in the future.

Source: N.R. Harshadeep,World Bank (SASEN). (India - WRM Sector Review,World Banlc 1998).

Theword "Thanni" means water in Tamil.The model was developed primarily by a team including Dr. N. Harshadeep and Mr. E.V.]agannathan (The World Bank), Prof. F? Rogers (Harvard University), Mr. S. Rajagopal (FAONVorld Bank) and a team from the Institute for Water Studies (coordinated by Mr. Pasumalaithevan) as part of the inter-sectoral water allocation component of the India Water Resources Management Work (Task Managers: K. Oblitas and C.Wood.The World Bank) and the Tamil Nadu Water Resources Consolidation Project.

Figure 7. Sample Model Output Interface (indicates optimal water allocation on partial demand schematic) demands on water.Traditiona1 large uses such as irrigation are now competing with rapidly rising demands for domestic use, industry, hydropower, recreational, fisheries, in-stream water uses, environment, etc., in addition to flood management. Even non- consumptive uses such as hydropower generation do contribute to scarcity as the timing of the releases for hydropower may conflict with water demands downstream. In addition, water quality concerns are now becoming serious considerations along with traditional concerns about water quantity alone.This has led to the often limited supply of freshwater being threatened by alarm- ingly increasing levels of pollution - both from urban point sources such as domestic sewage and industrial effluent and from non- point sources such as agricultural runoff of pesticides, herbicides and fertilizers.Additional sources of water (e.g. through additional storages such as reservoirs, long-distance or inter-basin transfers, desalination, etc.) are becoming more expensive to develop just as burgeoning populations with increasing affluence are demanding more water. These problems are compounded by losses that are physical (due to leaky conveyance systems, although this has to be analyzed in terms of basin efficiency not just limited field efficiency measures), financial (due to improper pricing, billing and collection and hence inadequate capital and O&M cost recovery with resulting poor quality of service) and economic (due to water not being allocated to its highest value use) in nature.The imbalance of water supply and demand results in water scarcity in certain areas and time periods. Economics, the science of managing scarce resources, helps provide a useful conceptual framework to manage this scarcity. A river basin is a useful reference area for management of water resources,taking a corr~prehensiveaccount of all the supply (precipitation, storage, inter-basin transfers, surface and ground water and their variation) and demands (including spatial, temporal and sectoral variations). It is important to consider all the supplies and demands in a comprehensive and an economic framework, including the estimation of the benefits from various uses of water and the costs of water extraction, treatment, supply, collection and disposal, in order to optimize water management. In addition to economic objectives and technical and physical constraints, there may be a number of additional social, environmental, legal, policy, and other objectives and constraints that have to be taken into account in optimizing water management in a river basin. Of course, although a river basin is a convenient area for analysis of options, administrations responsible for decision-making often have boundaries that criss-cross watershed boundaries.These overlapping administrative and hydrological units have to be factored into any analysis of options, while assessing the additional benefits of cooperation and the sectoral and regional trade-offs. The tools which are available to policy makers include a number of hardware (e.g. construction-related) and software (e.g. policy-related) options, both on the supply-side and demand-side as shown in Table I. These tools must be considered in an integrated manner In any river basin. For example, one could manage increasing urban needs by bullding reservoirs to tap any surplus water in the river system, Increase sustainable pumping of groundwater, inter-basin transfers, or reducing urban demand by promoting conservation and recy- cl~ng,or by re-allocation from agriculture, or by some combination thereof. The exact nature of options chosen to manage the water scarcity (which is largely an economic concept) depends Box A7.4. (cont.) Inter-Sectoral Water Resources Planning and Management in a River Basin Context on many factors including the relative costs and sustainable benefits of each option, social and political acceptability, and ease of implementation. A com#ehensive view of the conjunctive use of surface and groundwater supplies to meet spatially, temporally and sectorally varying demands of water using this portfolio of available hardware and software tools, needs a thorough analytical framework. The rapid advances in computer hardware and software and information systems and modeling methodologies are now making possible a suite of complex, flexible and user-friendly tools.These can aid more comprehensive analysis of water resources planning and management options.These Decision Support Systems (DSS) usually have components of information systems to help collect, organize, analyze, display and map information of interest to decision makers and models to help use this information for decision-making.

Figure 2. River Basin Schedule The information systems can take advantage of recent advances in Geographic Information Systems (GIS) and interactive databases, spreadsheets, documents and the Internet to create useful thematic maps and overlays, perform interactive spatial analyses, and interact with models.The data that would be useful include any information that would affect water resources decision-making.This includes information (historical, current and trends) relating to precip~tation,groundwater, reservoirs, other hydrology, land-use, agriculture, demography, municipal demands, industry, hydropower, in-stream water requirements and minimum flows, other uses, water quality, and on the costs, effectiveness and requirements of the hardware and software management options available to policy makers. The models, that are the simplifications of reality necessary to make decisions, can be used for long-term planning or for short- and medium-term operation and management of existing systems.These models can be simulation models which perform a variety of "what-if'bnalyrss or optimization models that attempt to maximize one or a set of objectives subject to a variety of technical, resource and policy constraints. Modern tools have enabled the construction, execution and use of complex, interactive models on increasingly powerful and ubiquitous personal computers and have paved the way to use the best available knowledge for routine decision-making, test various hypotheses and set short, medium, and long-term strategies for water resources management. Model sensitivity and scenario analyses can yield a great deal of information on how sensitive the results are to assumptions and uncertainties in the data. A judicious combination of the development of information systems and models is necessary to get a quick overview of the current knowledge of a basin, its issues, problems, and options.These systems can be developed in stages at increasing levels of sophistication, and even a limited initial effort in any river basin is usually extremely useful to focus attention on issues of relevance, get a feel for which issues may be irrelevant, narrow down options and identify trade-offs, sensitivities and data gaps. Of course, there is no one information management system or model that is always applicable to all basins; they have to be necessarily customized using the tools and data available for the purpose intended.Water resources decision-making is an evolving process, technically and institutionally. Rarely are such decisions made at one-time and one-place by one-group for one-purpose. There is a need to have flexible and interactive systems in place to adapt to evolving needs, information, options, and decision- making structures. In India, where water resources management is fragmented across a variety of agencies with overlapping jurisdictions at the national, state and local levels, there are many problems in the collection, use and dissemination of information for coordinated, information-based decision-making.The general lack of strong institutions at river basin level have also led to the lack of comprehensive analysis of options at the river basin level, especially in the case of river basins shared across one or more states.

Dams ICanals Conveyance and Use Efficiency Inter-Basin Transfers Conservation Desalination Plants Recycling Process Changes

Water (Re)allocationI Negotiations I Agreements /Water Markets PricingI Subsidies Cropping Patterns Reservoir Releases I Pumping Patterns Re-allocation /Water Markets Institutions 1 Public Awareness Well-designed decision support systems help in adapting to evolving institutional mechanisms and structures while trying to make the best use of current knowledge, determining and prioritizing data gaps and enhancing the development of creative solutions from a larger stakeholder community. These systems, if properly designed and implemented, also have the capability to adapt to changing data, modeling techniques, and decision-making frameworks.They are ideally suited as public information systems and in the new paradigm of interactive stakeholder participation in decision-making (also see Box on the THANNI Model for the Vaigai Basin) and in serving as focal points for information on a river basin.This would be essential to coordinate programs and information flow across departments, agencies and organizations, and to take advantage of the increasing openness in data sharing and access to promote more information-based decision-making and public participation.

Source: N.R. Harshadeep.The World Bank (SASEN).

(India -WRM Sector Review,World Bank 1998).

Decision Support Systems

Information Systems nteraction Models I . Geographic Information Sysrems . Optimization/Simulation Interactive Spreadsheets r . DeterministidScochastic Databases OperationlManagementlPlanning Inrernet Other Documents

Disciplines Actors ... Public Policy, Hydrology, Engineering, ... Governmen~Academic,NGO's. Economics. Environment Ecololgy, International Institutions. Research, Law, Politics ... Consultants. General Public, Other Stakeholders ... ANNEX 8

Brainstorming Session on Improving Inter-Sectoral Water Allocation, Planning and Management

New Delhi November 1 8,1997

Brainstorming Session to discuss the preliminary draft report on Inter-Sectoral Water Allocation, Planning and Management was held at the World Bank (Delhi office) and Awas chaired by Mr. Arun Kumar (Secretary, Ministry of Water Resources). On the basis of the review comments at the session, the draft report was subsequently revised and issued in final draft on 27 March 1998 for the National Workshop held May 12-13,1998 (refer Annex 9). Present at the Brainstorming Session were the following:

Name Designation

Government Participants

Arun Kumar Secretary, MOWR

Z. Hasan Chairman, CWC (MOWR)

B.N. Navalawala Advisor I&CAD, Planning Commission

Krishna Singah Advisor. Planning Commission

Malti Sinha Additional Secretary, Ministry of Environment and Forests (MOEF)

D.K. Chadha Chairman, CGWB (MOWR)

R.S. Pathak Senior Joint Commissioner, Policy & Planning (MOWR)

A.K. Malhotra Director, Ministry of Agriculture

B.S. Minhas Joint Secretary, Urban Development

I.N. Sinha Former EIC cum Special Secretary, Govt. of Bihar A.D. Mohile Chairman. Brahmaputra Board

Dhurbaiyoti Ghosh Govt. of West Bengal

S.P. Kaushish Chief Engineer, Central Board of Irrigation and Power (CBIP) A.Vaidyanathan Professor, Madras Institute of Development Studies Water Legislation Specialist, Former Member Law Commission

Retd. Dean SES & Professor Emeritus, JawaharlalNehru University

K. Palanisami Profesor,Tamil Nadu Agricultural Universiry (Coimbatore)

B.R. Sharma Assistant Director (WM), Indian Council of Agricultural Research

Operations Advisor,World Bank, New Delhi

Keith Oblitas Principle Operations Officer, SASRD

Christina Wood Economist, SASRD

Senior Water Resources Engineer. New Delhi

Halla Qaddumi EnvironmentallNaturaI Resources Economist, Consultant

N.K. Bandyopadhyay Irrigation Engineer, New Delhi ANNEX 9

Proceedmgs of the National Workshop on Inter-Sectoral Water Allocation, Planning and Management

May 12-1 3,1998 Mussoorie lndia -WaterResources Management Sector Review Workshop Sponsored by: Ministry of Water Resources, GO1 World Bank

Inter-sectoral water allocation, planning and management Workshop programme

I2 May 1998 09:0049:05 Welcome Address by Mr. B.S. Ahuja, Commissioner (PP). Ministry of Water Resources (MOWR), Government of lndia (GOI) Opening Remarks by GO1 (Mr.Arun Kumar, Secretary, MOWR) and by World Bank (Ms. Christina Wood) Report Presentation by Mr. K. Oblitas and Mr. S. Rajagopal, World Bank Remarks by Mr. Z. Hasan, Chairman of the CWC and of the GO1 Sub-committee Coffee Break Plenary Discussion Session Lunch Break Break-out Session Discussions: Group I : Policies, Strategies and Legislation Group 2: Institutional Arrangements Group 3: Inter-sectoral Perspectives,Allocation Principles and Mechanisms, and Economic and other Instruments Group 4:Technology, the Environment and Public Awareness Coffee Break Break-out Session Discussions (cont.) Re-assemble Presentation of Decision Support System by Mr. N. R. Harshadeep and Mr. S. Rajagopal Cultural Programme (Odissi Dance) Dinner I lntercsectoral water allocation, planning and management Workshop programme (cont.)

13 May 1998 09:OO- 10:45 Case Study Presentations: Murray Darling Basin,Australia, by Mr. G. Spencer Dutch Water Boards by Mr. R. Robelus and Ms. H. Qaddumi 1 0:45- 1 l :OO Coffee Break I I 100- I I :45 Group I : Plenary Presentation. and Discussion (Chairman: Z. Hasan, Rapporteur: C.Umamaheswari Rao) 1 1 :45- 1 2:30 Group 2: Plenary Presentation and Discussion (Chairman:Arun Kumar, Rapporteur: B.J. Parmar) 12:3O-13:15 Group 3: Plenary Presentation and Discussion (Chairman: B.N. Navalwala, R~pporteur:R.K. Gupta) 13:15-14:OO Group 4: Plenary Presentation and Discussion (Chairman: R.K. Parashar, Rapporteur: Paritosh C.Tyagi) 14:OO-15:OO Lunch Break 15:OO-16: 15 Case Study Presentations: Tamil Nadu Institutional Arrangements by Mr. G. G. Subramanian, Engineer in Chief, Water Resources Organization, GOTN - Orissa Institutional Arrangements by MI: 6. t? Das,Advisor, Department of Water Resources, GOO 16: 15-1 6:30 Concluding Remarks by GO1 (Mr.Arun Kumar) and World Bank (Mr. K. Oblitas and Mr. S. Rajagopal)

List of Participants

Name Designation Central Government Participants Arun Kumar Secretary, MOWR Z Hasan Chairman, CWC (MOWR) B.N. Navalawala Adviser I&CAD, Planning Commission D.K. Chadha Chairman, CGWB, MOWR R. K. Parashar Commissioner (P), MOWR B.S.Ahuja Commissioner, Policy & Planning (MOWR) R.S. Pathak Senior Joint Commissioner, Policy & Planning (MOWR) Ravinder Singh Chief Engineer, BPMO. CWC S.K. Jain Additional Industrial Adviser, Ministry of Industry Raajiv Yaduvash~ Jornt Secretary, Urban Development M.M. Rawal Director, Central Electricity Authority S.R. Shukla Adviser, CP HEEO, Ministry of Urban Affairs & Employment Shrawan Nigam Economic Adviser, Ministry of Industry R.M. Naik Member (Tech.) IWAI, Ministry of SurfaceTransport N. Kittu Officer on Special Duty, Rajiv Gandhi National DrinkingWater Mission PushpaThottan Dy. Secretary, Ministry of Environment and Forests State Government Participants S.R. Sharma Chief Secretary, Pondicherry Dr. Sundeep Khanna Principal Secretary, Industries Dept., Madhya Pradesh B.J. Parmar Secretary, Water Resources, Gujarat P.G.D. Chakrabarti Secretary, Urban Development. Kashmir Virendra Nath Secretary, PWD (Public Health), Haryana A.K. Sarkar Secretary, Irrigation &Waterways Department,West Bengal P.K. Duarah Secretary, Public Health and Environment Department.Assam List of Participants (cont.)

Name Designation State Government Participants (cont.) F! Neog Secretary, Irrigation Dept,Assam Deepak Gupta Secretary,Water Resources, Bihar Avinash K. Srivastm Secretary, Irrigation Department, Uttar Pradesh S.K.Varma Secretary,Water Resources Department, Madhya Pradesh Bhale Rao Commissioner and Secretary CAD,Andhra Pradesh Arun Arya Additional Commissioner/Special Secretary, Rural Development, U.F! M.L.Tayal CommissionerlSecretary,Industry & Environment, Haryana Roshan Sunkaria Additional Secretary, Irrigation & Power, Punjab Pradeep K. Deb Secretary, Irrigation, Rajasthan Ashok Sampatram Secretary, CAD &WU Department, Rajasthan V.K. Singh Additional Secretary, Industry, Punjab C. Umamaheswari Rao Joint Secretary, IECARAndhra Pradesh T.S. Madan M.D., Punjab Water Supply and Sewerage Board Chandigarh RM. Sagane Member Secretary (Tech). Maharashtra Jeevan Pradhikaran B.P. Das Chief Advisor (P), Departmentwater Resources, Orissa S.V. Sodal Chief Engineer &Joint Secretary. Irrigation. Maharashtra R.K. Gupta Chief Engineer, Inv. D&R, Rajasthan , Abhigya Chauhan Chief Engineer, Irrigation & Public Health, Shimla B.M. Batish Executive Engineer. IFC Deptartment Govt. of NCT H.S. Dev Sup. Engineer. Public Health Monitoring, Patiala G.M. Singh Chief Engineer,Water Resourcesllrrigation Department. Punjab N. Hasan Director, Groundwater Department. Uttar Pradesh P.K. Basu Chief Engineer, Irrigation &Waterways Department,West Bengal G. Ganapathi Subramanian Engineer-in-chief.Water Resources Organization,Tamil Nadu ED. Sharma Chief Engineer, (Yamuna). Irrigation, Dehradun A.A.Jawalekar Chief Engineer. IRRI, Maharashtra Academics & NGO Participants Vasant G. Upadhye (Bapu) Chairman. Samraj Parivartan Kendra, Nasik Dr. 8.0. Sundaresan Ex. Director NEERI, Retd.Vice Chancellor, University of Madras S.R. Kshirsagar Director & Hon. Editor Indian Water Works Association. Mumbai Bhant Singh Retd.Vice Chancellor, University of Roorkee, J.M. Dave Retd. Dean SES & Prof. Emeritus. jawaharlal Nehru University Vishal Narain Research Assoc. Resources & Devlp.,Tata Energy Research Institute M. Dinesh Kumar Coordinator,Vikram Sarabhai Centre for Devlp. Interaction, Gujarat Meera Mehta Senior Urban Finance Adviser, Consultant, New Delhi Girish Vaidya Slum and Pavement Dwellers' Assoc. Resource Centre, Maharashtra Alice Jacob Water Legislation Specialist Former Member Law Commission Paritosh C.Tyagi Individual Consultant. Noida World Bank Keith Oblitas Principal Operations Officer, SASRD Christina Wood Economist SASRD S. Rajagopal Senior Water Resources Engineer, New Delhi Halla Qaddumi EnvironmentallNawral Resources Economist. Consultant E.V. Jagannathan IrrigationNVater Resources Engineer, New Delhi N.R. Harshadeep Environmental Specialist S.Asia Region -Geoff Spencer Senior Water Resources Engineer, SASRD Robert Robelus Environmental Assessment Specialist, LWNHD It was clarified by theworld Bank representative that the intention of the Bank was not to bring water into the concurrent list.This assumption was agreed to by all the members. Some of the state government representatives have expressed serious reservation on any suo-mot0 power to the central government to establish river board organisations or appoint tribunals. However, whenever a tribunal gives an award and suggests for creation of an authority for its implementation, this could be considered. In addition, if the states concerned come to an agreed settlement on an authority to be created for managing the river basin and monitoring the activities, such an authority could be set up. A realistic and reasonable time frame is considered necessary for the tribunal to give the final award. The participants have felt that monitoring the water quality and quantity is an important aspect to be considered. On the aspect of the quality management, it was recommended that the Central Pollution Control Board and State Pollution Con- trol Board should come out with periodical reports on the water quality of the rivers which should be published and formally sent to the state governments and the authorities concerned for corrective action. On the aspect of a National Planning Organisation,the participants have recommended for such a body to be created either separately or part of CWC.The states representatives have also agreed to have a state planning organisation wherever such an organisation does not exist.This state level body would feed information to the National Planning Organisation for integrating the river basin development plans. = On the surface water rights to be considered as marketableltradeable rights by the individuals, detailed discussions have taken place. Several members have pointed out the immense complexity involved in coming out with such proposals at this juncture and have expressed that it is not feasible to implement the same now. However, such an idea could be experi- mented with the Water Users'Associationsl0rganisations.Thegroup accordingly recommends this. On the environmental concerns, the suggestion to have specific allocation of water to meet the environmental needs is found to be difficult to implement. However, the group felt that while updating the National Water Policy these aspects could be suitably addressed. For implementing the various aspects of the National Water Policy which the group recommended to be essentially advisory in nature, the various aspects could be provided with details so that, in turn, the state will use this as a guide for draftinglupdating their own State Water Policies. The group recommended for establishing a cross-ministerial task team by the central government. * On the groundwater aspect, after detailed discussions, it was felt that for the time being the states should be followed up with tolconsider the model bill already circulated to them. Further aspects on this could be examined after the bills are passed by the respective state legislatures. On the aspect of introduction of administrative allocation mechanisms, incorporating economic or value-based criteria, the phrase "market-oriented approach" is deleted. Similarly, the demand-based approach is to be re-written as supply and demand based approach. On utilising the technology for conservation of water, it was suggested that a model guideline could be ~re~aredfor use by the state, either for bringing in legislation or for utilising the same for suitably amending the existing acts for ensuring water conservation. The participants have also felt that a suitable mechanism has to be instituted for exchanging of data on water quality and quantity and provide public access to the same. It was also recommended by the group that in addition to the existing acts, fiscal incentives and disincentives could be considered for controlling pollution. While updating the National Water Policy, the O&M aspects are also to be appropriately considered so that there is an assurance that O&M charges are allocated to the desired degree for maintaining the assets after the same are created. It was also suggested that while considering the inter-sectoral water allocation, the requirements of hydropower also have to be considered besides the other uses. While preparing the plans either at the state level or the river basin level, the potential available for development of hydropower could also be considered. by the group.As far as the institutional arrangements are concerned, the draft report in this regard covers the institutional mechanisms on page 24 to 3 1 (of the March 27, 1998 draft report).The group discussed in detail the institutional mechanisms suggested in the draft report and the para wise observations are as under:

There are institutions for Water Allocation and Planning Management etc. in some form or the other in different states therefore, instead of stating 'Absence of Necessary' lnstitutions it is suggested that it should read as 'Inadequacies in' institutions.

State Level lnstitutions

After discussions it was unanimously agreed by the group that this para needs to be redrafted because of the fact that the state irrigation departments have arrangements for irrigation demand, domestic water demand and industrial demand etc. to be met with from the available water resources. Of course,the main emphasis of irrigation department remains to provide irrigation to the command area.

The draft report indicates that Maharashtra is establishing a state intersectoral water committee. It was indicated by one member from Maharashtra that lntersectoral water authority has already been established under chairmanship of Chief Minister of

Local Level lnstitutions

3. I9 and 3.20 It was desired that 'Water Users Association' should be included in the grass root level institution at the local level.

Interstate lnstitutions

The chairman indicated that River Board Act of 1956 has not been used so far in the country.Therefore the reasons therefor necessity or the otherwise of the Act and ways and means to make it more effective need to be examined.

Union Level Institution After lot of discussions the group decided that MOWR should be the nodal ministry for union level institutions. However,for this purpose MOEF should also be covered under this and all the institutions dealing with water like CWC, CGWB, NWDA, CBIP, Indian Water Resources Society, CWPRI, CTU and NIH should be coordinated by MOWR for better inter-sectoral water allocation, planning & management.

Except for the above observations, the group feels, the draft report for the "Institutional Arrangements" is acceptable. In particular, group endorses the creation of SWRB, and SWPO as the secretariat to service SWRB with inter alia environmental management capabilities. River Basin Organisations in each state in the larger basins, sub-basin level organisations and at the village (Grass Root) level, Water Users Associations, NGO etc., which together represent the entire sub basin and basin.The RBO will function under SWRBISWPO. For imparting training to the staff as well as stakeholders appropriate institutions at State as well as appropriate lower levels, depending upon the size and population of the state. It was also recommended that in case of inter-state river basins, a neutral technical organisation may be set up which can prepare optimum, basin-wise plans, which can then be used to correlate and try to match the total basin plan with the summation1 integration of individual state-wise basin plans.

*All paragraph numbers c~tedby the Group refer to the March 27,1998 draft report Recommendations Of Group 3: Intersectoral Perspectives,Allocation Principles And Mechanisms, And Economic And Other Instruments

Following are the proposed changes and additions to Matrix 2 of the March 27, 1998 draft Report.These are confined to the section "Introducing Economic Incentives" at the state level (i.e., Part A: State level Actions). Recommendations in the existing matrix that are not covered here have been generally accepted by Group 3.

IntraSectoral Allocation & Pricing

Establishing Water Prices Water Charges - The cost of bulk supply will reflect the full cost of development and supply of water (capital and O&M costs);The water price charged to customer groups may be set at any amount to cover from O&M to full capital costs, considering the affordability of the customer groups - Chargeable O&M costs should be based on efficient operations and on the basis of cost of physical works, of maintenance, and the efficient level of staff - O&M charges in excess of efficient level should be absorbed by the state - For the O&M charges, the basis could be the latest Finance Commission recommendation The water pricing structure should promote efficient water use in all sectors

Establishing Groundwater Prices The GO1 has already issued an ordinance that the power price should reflect full costs of supply plus 3% return (on assets) Center and state power regulatory authorities are to be established to monitor power sector pricing Power tariff for groundwater extraction should promote groundwater utilization on a sustainable basis, and the charges should be based on power consumption

Agricultural Pricing and Marketing Policies Distortions in agricultural commodity and input prices and domestic marketing policies should be addressed at Central level

Incentives for Water Pollution Control and Conservation Introduce or review and revise existing state incentives for investment in environmental protection and water recycling and conservation in the short to medium-term

Measures to Guard Social Well-Being Pricing should be such that minimum quantities of safe and reliable drinking water are provided at affordable rates (increasing block rate pricing structures)

IntercSectoral Allocation

Improve Administrative Allocation of Water In line with perspective basin plans, sector-wise water allocation should be determined and notified as a water right and publicized to the basin population Each sector should plan for and utilize water efficiently within its stipulated allocation and be held to this allocation by the basin organization The basin authority should maintain sector-wise water accounts and release these for public information

Develop Brokering of Compensated Trades For any inter-sectoral adjustments, the basin authority would take into account the views of the affected users and would arrange for due compensation to the sector surrendering a portion of its water allocation Recommendations Of Group 3: Inter-Sectoral Perspectives,Allocation Principles And Mechanisms, And Economic And Other Instruments (cont.)

Study and Pilot Water Markets Study tours by users and all water using sectors to assess international experience sh~ouldbe undertaken Establish institutional, legal (clearly defined and transferable sectorallbulk water rights), administrative and technological mechanisms to enable development of formal water markets

Inter-State Allocation Mechanisms

Improve Inte~StateAllocation of Water After allocation of inter-state river waters, a State may make available surplus water to a needy basin State in return for financial compensation

Develop Multi-Component (including non-water investments) Basin Developmer~tPlans Due weight to economic criteria should be given to decision-making in order to identify potential mutual benefits from integrated development of inter-state river basins

Recommendations Of Group 4:Technical, Environment And Public Awareness

The Group defined that in keeping with the subject of the Conference, only those technical aspects would be discussed that touch upon to inter-sectoral aspects or are of common concern to all sectors. It recognized that er~vironmentalaspects would cut across all sectors and that allocation would include the return flows and transfer of water from one sector to another.Views expressed on the various topics are as below.

Technical Aspects I. Basin-wise assessment of qualig of water resources should be made along with their quantiv. 2. Advantage of the experience of the Hydrology Project should be taken in improving, the collection, collation, analysis, pro- cessing and dissemination of data. 3. Data should be made easily accessible on internet or on CD-ROM. 4. State Water Resources Data Centers (SWRDC) or basin-wise water resources data Centre may be established with the assistance of National Informatics Centre (NIC).The data Centre should have capabilig to analyze, model and predict the quality and quantity of water resources using a geographical information system (CIS) platform. 5. River basin modeling should be used as a decision support system. Until river basin organisations are established, such modeling may be carried out through the agencies of the Ministry ofwater Resources. 6. Efforts must be directed towards conservation of water.The water resources that can thus be spared should be diverted to needy sectors. 7. Technological improvement in effluent treatment should be directed to make the effluent fit for recycling within the same sector or reuse in another sector. 8. Special attention needs to be paid to watershed planning and rainwater harvesting. 9. Inter-basin transfer may be necessary in some cases.Technical aspects of inter-basin transfer need tools for holistic analysis. INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT

Environmental Aspects I. Add performance indicators for environmental aspects. 2. Develop data-base on environmental and ecological aspects. 3. Consideration of environmental aspect should be implicit in any sub-sectorallinter-sectoral analysis. 4. Environmental, ecological and social needs should be met by maintaining a minimum flow in a stream. Such needs may include assimilation of treated effluent, sustenance of fisheries and aquatic life for meeting socio-economic requirements, maintaining biodiversity and special social requirements. Studies should be taken up to assess such needs. 5. Navigation facility should be restored where it has ceased or deteriorated and further improved if there is need to do so and should be suitably dovetailed with minimum flow requirement. 6. Uncontrolled dumping of solid waste emanating from municipal areas, industries, hospital etc. should be prevented through development of a planned mechanism. 7. Environmental units should be established to assist the river basin Organisations, state water planning Organisations and state water resources data centers. Other state Organisations dealing with land and water, such as WALMI and IMTI, should be strengthened in their capability to deal with environmental aspects. 8. Pollution of water resources from non-point sources needs to be minimized. Such sources may include the application of chemical fertilizers and insecticides.An action plan for education and training should be developed for the purpose through agriculture extension programmes and WALMI. 9. Existing regulatory mechanisms for protection of the ground water needs to be reviewed and strengthened as necessary. 10. Industrial pollution should be assessed by pollution load rather than the number of industrial units that have not established the facility for pollution control.There also appears a need to firm up statistics related to industrial pollution. I 1. The performance of common effluent treatment plants (CETP) established in the country should be evaluated.Such evaluation should be reflected in the future planninglimplementation. 12. Special attention is needed for environmental assessment and protection of lakes, estuaries and wetlands. 13. In all water projects, provision should be made for the preparation of environment management plan (EMP) and the budget

14. The procedure for environmental clearance of projects should be made quick and transparent. 15. A mechanism should be developed for resolving problems arising out of inter-state transfer of polluted water.

Public Awareness I. Position regarding availability or scarcity of water should be made widely known to local people. 2. Access to information regarding sectoral allocations should be encouraged. 3. Awareness should be generated about the mutual benefits from the proposed water projects. Up front consultation should be made with the stakeholders from the project planning stage. 4. Meetings should be organised with stakeholders and all relevant information should be provided to them to dispel the fear of the unknown from their minds. 5. NGOs and social groups should be activated. REFERENCES

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