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Sunday Dec 31 2000 | Updated 0031 hrs IST 1401 EST
Damn you...

ONE OF the greatest non-events of the year was the shindig over the Narmada dam. Let me begin by asserting that I. I consider them to be part and parcel of central planning: the state’s love of big projects.

Nehru called them the 'temples of modern India' and they formed the cornerstone of his vision of a state allocating scarce resources amongst a vast population.

Since this vision has failed, central planning and big dams should both be done away with. But is this the line of attack that the activists of the 'Narmada Bachao Andolan' are taking? If one goes by the recent writings of their greatest luminary, the novelist Arundhati Roy, the stand of the NBA seems to be very confused.

In an earlier article against the bomb, Roy had lambasted the state and declared herself a sovereign republic. I cheered. But in the latest article, she has now lambasted the market — especially the market for water.

The alternative to the state is the market. Nothing else. The market is based on freedom and property rights. Let us see how a market for water might actually end up making big dams unnecessary and uneconomical.

To begin, examine the paradox: 70 per cent of the Earth is made up of water, but the liquid is scarce almost everywhere in India. On the other hand, the Earth is composed of just a few perecntage points of crude oil, but petrol, diesel, kerosene and aviation fuel are abundant everywhere in the world.

The reason is not difficult to find. The fact is that there is a market for oil, while there is none for water. The state owns all the water; and the state allocates that water. Farmers get it free; urbanites don’t get it at all. Urban water supply bodies are all loss-making.

The urban poor in India pay more for water than their counterparts anywhere in the world because they get their supplies from the water mafia. Water markets are the cure for chronic water shortages. How will water markets work?

The market works on the basis of property rights. The state does not own all the water (or all the land!) in the nation. Water is private property. That is, property rights over the use of water exist among the people.

This includes rights to riparian water along rivers - owned by the native settlers like the Narmada tribals - and it also includes rights to underground water tables.

The latter could be auctioned amongst companies as with an underground oil field; or it could be shared amongst various farmers who operate on the land above. That is, property rights can be split between what lies on the ground, and what lies below it.

Now, we have the basis for a market for water, which works much like the market for crude oil. People own water; people sell water; water has a price; and there are competing suppliers. What are the implications that this paradigm has for the NBA?

Well, it seems the NBA is missing out the crucial question: Whose water is it anyway? The state is compensating tribals for loss of land, but is it paying them for the water, which is theirs, and which the state is taking from them and supplying to those who suffer from water scarcity?

Is there a price being charged for this water? If so, should these tribals not get a share? If these questions are asked — as they would be if crude oil flowed down the Narmada — then the NBA would see that it is this market, and this market alone, that would put an end to big dams forever.

Consider what would happen if river water had a price which had to be paid to those who owned it? This itself would make large dams uneconomical, because they work only when the water is taken away free of cost.

If there were water markets, private firms would probably prefer to use desalination technology, get free salt water from the sea, and sell fresh water to defict areas through pipelines or canals.

In the case of Gujarat, with a huge coastline, this would have enormous implications. It would forever end water scarcity in the state. All this without any dams whatsoever.

Arundhati Roy should therefore reconsider her stand on the market - especially the market for water. Water is, in reality, not as scarce a resource as it is made out to be.

Water is scarce, indeed, precisely because the market does not work - especially in India. Roy is opposed to the state. She cannot also be opposed to the market. There is no third way.

The Washington-based free market think tank, Cato Institute, has brought out a publication entitled `Water Markets’ which explains how property rights are being imaginatively used to solve problems like the use of rivers.

One example looked at a stretch of river having a number of users: farmers for irrigation; transporters for water transportation; fishermen; a recreational water sports company; and a polluting industry / town.

In the scheme outlined, the farmer’s use of water is strictly metered to ensure that he does not draw so much that other property owners’ rights are affected. And the polluter is treated, as under property law, as a trespasser — and fined.

This arrangement allocates water well, preserves rivers and riverine life, allows multiple uses of rivers and also checks polluters by averting what economists call 'the tragedy of the commons'.

At the outset, perhaps, it sounds hard to accept the notion that water users should pay and that water should have a price. But think back. Even in ancient times, you had water carriers who carted water around in animal skins and got paid for it.

Water abundance naturally followed wherever the water carrier went. The film 'Lawrence of Arabia' has a classic scene of Lawrence being challenged by the owner of a desert well.

It is only when there is a market for water that all the technologies developed for water conservation will become economical. When farmers have to pay for water, they will use drip irrigation.

When urbanites have to pay for water, they will harvest rain water to save money. Today, water is simply being wasted because the state is in control, making a complete mess of everything.

Anti-statists like Arundhati Roy should not look at the market as a 'multi-headed gnome called Rumpelstiltskin'. The market offers the only solution to state mismanagement.

The alternative to the state is freedom — and the market is based on freedom. Those who favour water markets are also opposed to statist projects like big dams, and they are also opposed to international lending agencies like the World Bank that have propped up predatory states throughout the Third World.

So there is much in common between people like me and people like Arundhati. But if only the great and celebrated novelist would study a little resource economics. Take study leave like Govindacharya, Arundhati, and then rejoin politics.
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