The country for the first time has tabulated the shadow prices of water for different sectors in terms of productivity of the natural resource.
The pricing would give an idea about the hidden cost of water to produce one kilogram of Basmati premium rice or to manufacture one pair of jeans. For Bangladesh, the costs estimated by the water resources ministry are Tk2.5 in agriculture and Tk1,800 in industries (3 US cents to $21 respectively) per cubic metre (cum).
It means the farming sector uses 1 cum of water to produce crops worth Tk2.5, while industries manufacture products worth Tk1,800 with the same volume of water.
Valuing water can help make decisions for equitable distribution of the natural resource for multiple uses and services, reads the water resources ministry estimation report submitted by the ministry's Centre for Environmental and Geographic Information Services (CEGIS) pointing to the country's vulnerability to climate change which will affect the water security, supply and quality.
The centre carried out the study on "Developing Operational Shadow Prices for Water to Support Informed Policy and Investment Decision Making Process" for the Water Resources Planning Organisation (Warpo), also under the water resources ministry. The final report has been submitted to the ministry recently.
According to the report, the estimated shadow price of water used in agriculture is at Tk2.5 to Tk2.8 per cubic metre (cum) that goes as high as Tk18.78 in case of the Muhuri Irrigation Project.
The world's rice fields consume about 1,350 billion cubic metres of water annually. The water is a mix of rainwater and irrigation water, according to the non-profit organisation Water Footprint Network.
The water resources ministry report says financial value of water varies widely in the industrial sector, depending on the nature of outputs. Cost of water is the highest in power generation – Tk600 to Tk1,800 per cum for gas-based plants.
Average cost of water used in the construction sector is Tk169 per cum. In the food and beverage sector, the shadow price of water in noodles is Tk132 and Tk212 per cum for cereal.
The value of water used in apparel factories is lower compared to other industrial sectors apparently because of the export sector's efforts to bring efficiency in water usage through conserving and recycling. Shadow price of water in readymade garment industry is estimated at Tk77.85 including conservation cost, as per the report.
Freshwater accounts for roughly 2% of total water available on earth and of this little amount, a negligible portion is found in liquid form as rainfall, in wetlands, rivers and underground aquifers.
This very small amount is distributed unevenly, making usable water even scarcer resource, says the ministry's Centre for Environmental and Geographic Information Services (CEGIS), citing the objectives of the estimation.
Long-term plans should include water values
Use of water as an economic resource, despite being treated as important in decision making, is not considered in the planning process, the study team notes.
"Question remains as to how to integrate the use of shadow prices for water in the public investment process" to ensure sustainable investment decisions in key economic sectors and balanced distribution of the scarce natural resource, said the report.
Inclusion of water values should be a part of Bangladesh's long-term development strategies such as the Perspective Plan 2021-41 and aligned to the sustainable development goals, it noted.
However, the study warns against "hastily getting into use of the estimated shadow prices of water" and suggests that the Planning Commission may take a pilot study to reappraise cost benefit analysis of projects that use water as a major input. After the pilot study, the value of water should be taken into cognisance in development project proposal approving guidelines that is being revised now, the CEGIS study stresses.
"Every drop matters" should be the slogan to ensure best practices in reducing waste and ensuring efficient use of water in household, irrigation or industrial purposes, it adds, listing rainwater harvesting, circular use of water, alternative wet and dry method in irrigation, water smart urban development and integrated water resources management among the best practices of valuing water.
The study suggests enforcement of "polluter pay" and "volumetric allocation of water" guidelines for various sectors to reach "zero waste" status in water usage.
Thirsty fashion already reducing H₂O footprint
Fashion is undoubtedly a thirsty industry. According to the Ellen MacArthur Foundation, textile production uses around 9,300 crore cubic metres of water annually – the equivalent to 3.7 crore Olympic swimming pools.
Citing an IFC study, the report says Bangladesh's RMG sector needs 411 crore litres of water daily. Every year 150,000 crore litres of water is used to dye and wash the yarn and clothes of the garment industry. Bangladesh's apparel factory uses 250 litres of water to wash one kg of apparels, whereas the global standard is 60 to 70 litres.
The report cites how Narayanganj-based Fakir Apparels reduced water use by 70% in two years and Mondol Fabrics of Gazipur cut 27% after adopting clean technology. Fakir Apparels had to use 24.96 crore litres of water every month to wash and dye 1,200 tonnes of fabric. Now it needs 6.96 crore litres.
Mondol Fabrics brought down water use to 80 litres per kg of fabric from 120 litres.
DBL Group, one of leading apparel exporters, said it managed to cut its water usage by half by 2016 after investing $80,000 for factory upgradation. "We used to use 120 litres of water to produce a kilogram of clothes. Now we use 60 litres for the same amount of fabric," Mohammed Zahidullah, head of sustainability at the group, told The Business Standard.
Ananta Apparels Managing Director Sharif Zahir said they have reduced water consumption to 55 litres from 250 litres for washing a pair of jeans.
The study suggests tax rebates, direct cash incentives, certification of water efficient industries to promote investment in water conservation and efficiency. "Green adjusted taxation rates should be applied for promoting water efficient financing," the study says.
Charging the buyers for water price not just yet
Khairul Islam, regional director, South Asia of WaterAid, said despite many nations talking about shadow price of water, import and export bills do not include the values.
He, however, said adding the values to the bills would be a major factor in the future.
"Bangladeshi entrepreneurs do not need to charge foreign buyers for water prices now. But it's high time we talked about shadow pricing to raise mass awareness about the value of the natural resource. Both the fashion owners and common people need to be aware of it," he commented.
Md Alamgir Hossain, director (Planning) at Warpo and also the project director of shadow water price project, said they would continue working on the topic aiming at awareness building.
"So far, the government does not have any plan to realise the water values from the entrepreneurs," he commented.
DBL Group official Zahidullah said apparel makers in Dhaka and in some export processing zones now pay some water prices to the government, while setting up tube-wells in Narayanganj and Gazipur requires payment of some fees.
Shahidullah Azim, vice president at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said "If the government levies water prices on us, we the apparel makers will bear the brunt ultimately since buyers always prefer sourcing products at a cheaper rate."
Sharif Zahir said the water price levying could prompt unhealthy competition over supplying items at further cheaper rates among the country's apparel makers.