InDepth: World Wide Water Mafia #09: Variability in Legal and Illegal Markets

IC InDepth Team

Mumbai, 30 August 2019

Accountability, equity, and efficiency exhibit diverse levels within both informal and illegal water markets.

These vital aspects, along with water sustainability, also exhibit considerable variations in legal water markets, whether they are governed by private or public entities.

The power dynamics associated with controlling water access, especially when done illicitly, establish intricate webs of dependency, clients, and patronage networks.

This often leads to the accumulation of substantial political capital and influence.

The Legitimacy of Unauthorized Water Supply

Interestingly, in cases where the state falls short in providing an adequate legal water supply, the unauthorized provision of water may paradoxically be perceived as highly legitimate.

This phenomenon underscores the complex interplay between legality, legitimacy, and the practical realities of water access, especially when official channels prove insufficient.

Complex Factors Behind Policy Failure

The roots of policy failure in water management are multi-faceted, beginning with the inherent complexity of these issues.

Water systems, both environmentally and administratively, tend to be intricate and obscure.

Underground aquifers, integral to these systems, are often inadequately understood and measured.

Hydrological connections and dependencies are often hidden, extending across vast areas and even political boundaries.

Decision-makers often lack the necessary scientific and administrative expertise to effectively manage such intricate water systems.

As stated in the 2006 World Bank water report, a high level of non-revenue water (NRW) signifies poorly managed water utilities lacking governance, autonomy, accountability, technical skills, and managerial competence to provide reliable services to the population.

Disruptions and Challenges in Urbanization

Urbanization without proper regulations further compounds the challenges of accountable water governance.

Traditional norms for water use are disrupted, hindering effective management. Even when water authorities are transparent, accountable, knowledgeable, and corruption-free, political constraints often prevent them from raising water prices to promote sustainable consumption.

For instance, in Ireland, the move to increase household water costs triggered widespread protests, making it one of the most contentious austerity measures undertaken during a 7-year, 30 billion euro ($34.5 billion) restructuring.

This conundrum is exacerbated in contexts where rule of law is weak and illegal water markets already exist, potentially driving a surge in demand for illicitly sourced water and further illegal markets.

Challenges in Policing Water: Controversy and Enforcement

The enforcement of water regulations is a formidable challenge, often mired in controversy. Some proponents of water access as a human right vehemently oppose the notion of policing water use.

Globally, the enforcement of water-related rules remains underdeveloped and undervalued. Law enforcement agencies frequently lack the capacity for real-time monitoring and swift action against water-related offenders.

While technology can aid real-time monitoring, prompt law enforcement requires significant resource allocation and reorientation of police priorities, carrying both financial and opportunity costs.

If property rights to water are unclear or complex, determining transgressions can lead to prolonged legal battles, causing justice, enforcement, and water officials to abandon prosecution efforts.

Inadequate Penalties and Enforcement

Penalties for infringing water regulations are often insufficient. In regions like California, suspected water regulation violators frequently escape with a mere warning and a promise to obtain necessary permits, such as those for private wells.

The scarcity of inspections and inspectors undermines the verification of self-reported water usage. For instance, California’s State Water Resources Control Board had a mere 33 personnel dedicated to investigating illegal water diversion in 2014.

While wildlife officials also contribute to the investigation process, their numbers are modest.

Though these figures might be considered meager for a state as vast as California, they remain aspirational for many developing nations.

Recently, California has aimed to enhance penalties for unreasonable water consumption, starting at $1,000 per month and escalating to $40,000 a month for continuous violations over a minimum of 18 months, particularly in the midst of severe drought conditions.

In instances where detection, enforcement, and legal action are intricate and challenging, numerous users find it more cost-effective and simpler to flout the law and occasionally pay fines, rather than comply with regulatory standards.

Diverse Approaches to Penalties

Penalties for water theft exhibit significant diversity across countries. In Jamaica, individuals failing to settle water bills risk losing all their property to the water commission, and water theft can incur fines of up to $250,000. Despite these severe consequences, enforcement remains sporadic, and water theft remains rampant.

In New Zealand, water management authorities typically issue abatement notices against water theft, even though the act is punishable not just by fines, but also by imprisonment.

Similarly, Jordan sanctions water theft and smuggling with potential imprisonment for up to five years, yet eradicating such practices has proven challenging.

In countries like India, Pakistan, and Bangladesh, illegal water pumps, wells, and connections are swiftly reestablished after authorities dismantle them, with such actions being a rarity.

Weak Deterrence through Tougher Penalties

Even stringent penalties do not necessarily deter water theft if prosecution lacks consistency and certainty. A notable example in California underscores this issue.

In 2015, the State Water Resources Control Board imposed unprecedented fines on two Central Valley irrigation agencies for unlawfully extracting river water.

The Byron Bethany Irrigation District faced a $1.5 million penalty for improper water extraction from the Sacramento-San Joaquin River Delta, while the West Side Irrigation District confronted a fine of up to $10,000 for the same violations.

These cases were closely observed as indicators of the state’s commitment to regulate senior water rights holders and combat illegal water sourcing.

However, both cases ultimately fell apart, with the board dismissing them in May 2016.

This collapse raised concerns among those advocating for assigning value to water for sustainability, as it undermined the board’s ability to regulate water use and curb water theft.

On the other hand, proponents of collaborative and conflict-resolution approaches to achieve water sustainability viewed this outcome as foreseeable and positive, aligning with their philosophy of addressing water challenges through cooperation rather than punitive measures.

Privatization of Services and Tax Aversion

In various regions like Brazil, India, Pakistan, Bangladesh, Nigeria, and Kenya, the affluent can sidestep the need for enhanced public services by resorting to private alternatives.

These solutions, including private licenses, pumps, wells, purification devices, and suppliers, offer exclusivity due to their steep costs.

Regrettably, this trend underscores a disheartening reality: the expenses tied to such private options remain lower than the potential tax increase required to fund the much-needed enhancement and expansion of public water and sanitation services.

Middle Class Opposition

The resistance against extending public services to underprivileged and marginalized communities doesn’t solely stem from water mafias with political connections.

In both India and Brazil, the middle class often opposes such extensions, motivated by their reluctance to bear the financial burden through heightened taxes.

Many who have recently ascended to the middle class fear slipping back into poverty due to economic downturns or family illnesses.

Their limited disposable income restrains generosity towards the poor, making them hesitant to allocate their earnings for improved service distribution in slum areas.

If the middle class remains insulated from disease transmission originating in the slums, their incentives to sacrifice income for enhanced public services in these areas are minimal.

Echoes of Historical Patterns

This phenomenon isn’t novel; it mirrors circumstances seen in many colonial cities.

Furthermore, contemporary middle-class individuals in India, Pakistan, Nigeria, Kenya, and elsewhere, grappling with inadequate public services themselves, often retain ties to illicit providers of public goods—such as water mafias.

The ascent into the middle class doesn’t necessarily sever these connections or diminish their demand for unlawful public goods services.

Their purchase of illegally-supplied public goods, including water, exacerbates the scarcity of resources accessible to the impoverished. This dynamic echoes the water dynamics discussed earlier, portraying the interplay between India’s urban middle class and the underprivileged in rural and peri-urban zones.

Next: InDepth: World Wide Water Mafia #10: Systemic Failures of Public Water Distribution

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