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Pakistan's Water Economy

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Pakistan's Water Economy 44375 Briscoe • Malik INDIA’S WATER ECONOMY Bracing for a Turbulent Future India faces an unsure water future. Unless fresh policies are adopted and implemented to make water THE WORLD BANK development and management sustainable, India will have neither the means to maintain and build Public Disclosure Authorized new infrastructure, nor the water required for its survival. This report focuses on two basic issues—the major water-related challenges facing India, and the critical measures required to address them. It calls for a reinvigorated set of public water institutions to sustain I water development and management in India. The study: ECONOMY WATER NDIA’S BRACING FOR TURBULANT FUTURE • examines the evolution of water management in India • describes the achievements of the past • analyses the challenges ahead • suggests ways of evolving a sustainable water management system Drawing heavily on background documents by eminent Indian practitioners and policy analysts, Public Disclosure Authorized it explores various options of managing the transition from past practices in a principled and pragmatic manner. The report will be essential for practitioners in the fields of water management, development, and economics. It may prove useful for policymakers, government agencies, NGOs, journalists, and general readers interested in India’s water economy. John Briscoe is currently World Bank Country Director for Brazil. Previously, he was Senior Water PAKISTAN’S Advisor with responsibility for the Bank’s water portfolio both globally and in South Asia. R.P.S. Malik currently works with the Agricultural Economics Research Centre, University of Delhi. He has written extensively on water-related issues. Earlier, he worked for The World Bank, World Resources Public Disclosure Authorized Water Economy Institute, and Afro-Asian Rural Reconstruction Organization. Running Dry THE WORLD BANK John Briscoe • Usman Qamar Agriculture and Rural Development Sector South Asia Region Public Disclosure Authorized ISBN 019568319-6 1 4 9 780195 683196 www.oup.com 2 PAKISTAN’S WATER ECONOMY PAKISTAN’S WATER ECONOMY RUNNING DRY John Briscoe Usman Qamar 1 THE WORLD BANK CURRENCY AND EQUIVALENTS Currency Unit = Pakistan Rupee US$ 1 = PKR 59.73 (8 November 2005) FISCAL YEAR 1 July–30 June ABBREVIATIONS AND ACRONYMS AJK Azad Jammu and Kashmir MTIP Medium Term Investment Plan CAS Country Assistance Strategy NDP National Drainage Program COD Chemical Oxygen Demand NWFP North West Frontier Province DOs Direct Outlets O&M Operation and Maintenance FGW Fresh Groundwater OED Operations Evaluation Department FOs Farmer Organizations OFWM On-Farm Water Management GDP Gross Domestic Product OPP Orangi Pilot Project GoP Government of Pakistan PARC Pakistan Agriculture Research HYV High Yielding Varieties Council IBDF Indus Basin Development Fund PCR Project Completion Report IBDP Indus Basin Development Project PER Public Expenditure Review IBIS Indus Basin Irrigation System PID Provincial Irrigation Department ICR Implementation Completion PIDA Punjab Irrigation and Drainage Report Authority IPCC Intergovernmental Panel on PIM Participatory Irrigation Climate Change Management IRIS Indus River System Authority PMF Probable Maximum Flood IWMI International Water Management PPAR Project Performance Audit Report Institute SCARP Salinity Control and Reclamation IWT Indus Waters Treaty Project KITE Korangi Industrial and Trading SITE Sindh Industrial Trading Estate Estate TDF Tarbela Development Fund KWSB Karachi Water and Sewerage TMA Tehsil Municipal Administration Board WAPDA Water and Power Development LBOD Left Bank Outfall Drain Authority LCC Lower Chenab Canal WSS Water Supply and Sanitation MAF Million Acre Feet WUA Water Users’ Associations Preface PREFACE This Report is the product of eighteen months of (specifically from Ministry of Water and Power, intensive work by The World Bank staff and an Planning Commission, Economic Affairs eminent group of Pakistani and foreign Division, the provinces, and WAPDA). consultants. The Bank team consisted of John The Report was reviewed in detail by The Briscoe and Usman Qamar (World Bank Task World Bank management, and the revised version Team Leaders), Manuel Contijoch (World Bank); endorsed by it. A final round of consultations Don Blackmore (former Chief Executive, Murray- was held in September 2005 with the multi- Darling Commission), and Pervaiz Amir. The stakeholder group, including those who had Report benefited greatly from formal reviews and advised during the early stages of this work. The comments by external reviewers (David Seckler, release of the Report attracted extensive and high- Richard Reidinger, Chris Perry, Saeed Rana, level attention in Pakistan. Details can be found Shams-ul-Mulk, Frank van Steenbergen, Karin on www.worldbank/pakistan. Astrid Siegman, Asif Kazi, Khalid Mohtadullah, As usual, not all reviewers agreed with all that Bert Smedema, Shamshad Gohar, Shahida Jamil, is written in the Report (nor did the authors agree and M.N. Bhutta), and World Bank staff (Keith with all that was suggested by the reviewers!). Pitman, Masood Ahmad, Abid Hasan, Shahzad The product is entirely the responsibility of the Sharjeel, Dale Lautenbach, Vlado Vucetic, Adolfo authors and should not be attributed to the Brizzi, Xiaokai Li, and Alain Locussol). John reviewers. The World Bank would like to W. Wall, the Bank’s Country Director for Pakistan, acknowledge Oxford University Press India’s help provided unstinting support in developing and in editing the Report. disseminating the Report and ensuring that it The financial support provided by Royal resulted in practical actions by both the govern- Netherlands Government for the preparation and ment and The World Bank. printing of this Report through Bank-Netherlands The Report benefited enormously from the Water Partnership Program and Bank-Netherlands encouragement, guidance, and knowledge of Water Support Program for Pakistan is gratefully senior officials of the Government of Pakistan acknowledged. v Contents PAKISTAN’S WATER ECONOMY TABLE OF CONTENTS PREFACE v OVERVIEW AND EXECUTIVE SUMMARY xiii 1. THE PROCESS FOLLOWED 1 2. THE CHALLENGES AND ACHIEVEMENTS OF THE PAST 3 The Challenges 3 The Response—Public Infrastructure 8 The Response—Private Infrastructure 13 The Response—Institutions 17 3. THE CHALLENGES OF THE PRESENT AND 23 THE NECESSARY RESPONSES Adjusting to the Needs of a Changing Pakistan 23 Preparing for Climate Change 26 Adapting to Scarcity: An Imminent ‘Water Gap’ 28 Getting more Product per Drop: The ‘Performance Gap’ 29 Narrowing the ‘Trust Gap’ 36 Maintaining the Resource Base—Groundwater 40 Maintaining the Resource Base—Salinity Management 47 Reversing Large Scale Environmental Degradation 52 Living with Floods 57 Renewing Existing Infrastructure: Addressing the ‘Maintenance Gap’ 60 Investing in Priority New Infrastructure 63 4. WHAT NEEDS TO BE DONE 73 Principles for a Modern Institutional Structure 73 Instruments 74 Unbundling and Competition 75 Regulation 78 Water Entitlements 80 vii Contents Transparency 84 Knowledge 85 Financing 87 What this means for Federal and Provincial Governments 89 5. PRINCIPLED PRAGMATISM AND ‘RULES FOR REFORMERS’ 92 Rule #1: Water is Different 92 Rule #2: Initiate Reform where there is a Powerful Need and 93 Demonstrated Demand for Change Rule #3: Involve those Affected, and Address their Concerns with 94 Understandable Information Rule #4: Reform is Dialectic, not Mechanical 95 Rule #5: It’s Implementation, Stupid 96 Rule #6: Develop a Sequenced, Prioritized List of Reforms 96 Rule #7: Be Patient and Persistent 96 Rule #8: Pick the Low-hanging Fruit First—Nothing Succeeds like Success 96 Rule #9: Keep Your Eye on the Ball—Don’t allow the Best to 97 become the Enemy of the Good Rule #10: There are no Silver Bullets 97 Rule #11: Don’t throw the Baby out with the Bathwater 98 Rule #12: Reforms must Provide Returns for the Politicians 98 who are Willing to make Changes 6. THE EVOLVING ROLE OF THE WORLD BANK 100 What the Bank has Done in the Past 100 Water Resources and Irrigation 100 Hydropower 114 Water Supply and Sanitation 115 The Bank’s New Water Strategy 118 An Indicative World Bank Water Investment Program for 2006–10 118 The Four Pillars 118 The Investment Projects 123 Analytic and Advisory Services 125 Evolving Priorities and the Indicative Bank Water Investment Program 125 BACKGROUND PAPERS IN THE ENCLOSED COMPACT DISC viii Figures, Tables, Boxes FIGURES Figure 1 Pakistan from space xiii Figure 2 The Indus Waters Treaty (1960) xiv Figure 3 Rates of return on investment on infrastructure and management of water resources xiv Figure 4 World’s most water-stressed countries xv Figure 5 Declining per capita availability of water in Pakistan (cubic meters per capita per year) xv Figure 6 Annual canal diversions and ‘escapages to the sea’ xvi Figure 7 The quality (Chemical Oxygen Demand) of urban streams xvi Figure 8 Predicted changes in Indus flows just above Tarbela xvii Figure 9 Storage per capita in different semi-arid countries xix Figure 10 Days of average flow which reservoirs in semi-arid countries can store in different basins xix Figure 11 Storage-additional yield curve for the Indus xix Figure 12 Sedimentation and storage capacity xx Figure 13 Wheat yields per unit of land and water xx Figure 14 Crop production and drought xxii Figure 15 Benefits from Tarbela (1975–98) xxii Figure 16 The effect of Bhakra Dam on different social groups xxiii Figure 17 The development of economically feasible hydropower
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