Water: Not a gift from God

The reason why the economic value of water has not been determined is the widespread belief that water is “a gift of God”, a Today Public Policy Institute report says. But how can this change? 

Tilling the fields – agriculture is a major user of water but contributes only two per cent to Malta’s GDP, raising questions about its future
Tilling the fields – agriculture is a major user of water but contributes only two per cent to Malta’s GDP, raising questions about its future

The Maltese are living a paradox. Our tap water comes in the form of a mixture of reverse osmosis (RO) water and ground water, carefully blended to ensure that it conforms to the highest EU standards regulating drinking water, but still few people drink it. 

What starts as first class water, created at significant economic and environmental cost, ends up being used as second class water – water used for all purposes except drinking.

This is a major economic irrationality, say World Bank expert Lee Roberts, hydrologist Marco Cremona, and retired Royal Dutch Shell geologist Gordon Knox, authors of the TPPI report ‘Why Malta’s National Water Plan Requires an Analytical Policy Framework’.

“It may be that this is inescapable, but no known effort has been made to analyse whether there are strategies to resolve this paradox,” say the scientists, who argue that a national water plan cannot be enacted without sound policies based on proper studies. 

Malta is importing 900 million cubic metres equivalent of ‘virtual’ or embedded water: the amount of water consumed in other countries to produce food and goods that Malta purchases from overseas. This volume is around ten times the total amount of water consumed in Malta from local sources, including water retained in soil, ground water, desalination, some rainwater harvesting, and limited reuse of treated effluent.

Malta’s heavy reliance on virtual water of foreign origin underlines the scarcity of Malta’s water, higher than many other countries. Even among water-stressed countries, Malta’s dependency on external water is at the highest level.

But even this dependence on foreign sources cannot be taken for granted.

This is because Malta’s heavy reliance on virtual water makes it vulnerable to increasing water shortages in other countries which are aggravated by climate change. “How will Malta’s economy, heavily reliant on limited indigenous water, cope with these emerging global realities?” the TPPI report asks.

When water makes the news

Water only grabs the headlines when intense storms bring floods to Malta’s urban heartland. To address this issue the previous government had embarked on a €56 million National Flood Relief Project (NFRP), which in 2011 the government described as the “largest engineering project ever to be launched in Malta”.

The government also claimed that the NFRP would also “top up the national water reserve with a further 700,000 cubic metres of water”. But to date, no definitive or convincing explanation has been offered as to how this volume of rainwater would be captured.

“Even if the figure is valid, it is a paltry volume amounting only to 1% of the total annual indigenous water needs. The reality is that most of the rainwater that flows through the NFRP will be dumped into the sea, and lost,” the TPPI authors say.

Indeed, they complain about the lack of information on crucial issues. For example there are only rough estimates of when, with current extraction rates, ground water will become unusable for the public water supply without expensive polishing. 

Malta still relies on ground water for about half of its water supply, and complete reliance on RO water or on “polished” ground water will increase costs.

Nor is it known at which point the nitrate contamination – when the intrusion of sea water in the aquifer is made possible through over-abstraction of ground water and contaminates the resource – will become “irreversible”.

While Malta is committed by EU directives to restore the quality of its ground water to acceptable limits, it is not clear whether this is possible or can be done at “an affordable cost”.

What we know is that the nitrate levels of Malta’s ground water are already higher than the specified EU limits; indeed, in some cases nitrate levels are four times higher than the acceptable limits. 


Blaming fertilizers and manure run-off

The TPPI report calls for studies to show the rate at which nitrate contamination of the aquifers is changing and will change in future.

If the contamination becomes irreversible, the impact on both agriculture and water supply will be drastic. Analysis is needed to determine how fast the contamination is changing; what levels of continued abstraction are feasible, for how long and under what conditions and costs; and how recharging the aquifer is best attempted. 

The report also asks whether recharging the aquifer through human intervention would make a significant difference compared to natural rainfall recharge, and at what cost. The TPPI ignorance and complacency about the real condition of Malta’s water poses a significant challenge to the prospects of a sound national water policy and plan. 

“Malta needs a water-educated population culturally committed to more rational and efficient consumption and water conservation,” the report says.


Is agriculture worth the water?

The report says farmers are the major users of water, but contribute only a small part – 2% – to Malta’s GDP, raising questions on the future of Maltese agriculture, whose survival ultimately depends on the market competitiveness of domestic produce against imported produce. 

The free availability of ground water may be one of the factors which render local agriculture competitive but at a great cost. Significantly, the admission of Maghreb countries’ produce to the EU market through the removal of tariffs that have limited their competitiveness until now, would have a significant impact.

The impact of climate change could also be devastating. Higher temperatures inevitably lead to an increased use of water. Given that the amount that can be drawn from over-exploited aquifers is limited, costly water from Reverse Osmosis plants will have to increase to cover the shortfall extraction.

The report refers to the only thorough analysis of Malta’s agricultural sector released in 2006 by the United Nations Food and Agriculture Organization (FAO). The report indicates a number of scenarios in which the cost of water to the agriculture sector will inevitably increase to cover the costs of water treatment. 

The report asked for empirical studies to determine the affordability for different sources of water supply aside from the aquifer, which presently provides water for free.

The report warns that in the absence of “analysis and reliable facts” any debate on the future of agriculture almost inevitably results in sharp polarisation and exaggerated opinion. 

“Either the sector is fine and must be supported in any way requested, or the sector is doomed. A proper analysis will show that neither extreme is legitimate, and will identify what should be done in a reliable and detailed fashion.”


The cost of water

The authors of the report also argue that the full cost of water should be reflected in water tariffs. It also criticises the tendency by policy makers “to follow political imperatives” as was the case when the current government reduced water tariffs by 5%.

The report laments the lack of any studies to determine the true cost of water.

The only statistic available is one derived from an EU study, according to which Maltese consumers pay a low €1.39 for the first 33m3 of consumed water that has a production cost of €0.40. 

But the production costs do not include the environmental cost of electricity generation, and the cost of resource depletion. 

The current tariffs neither reflect the environmental cost of using fossil fuel electricity to produce RO water nor the cost pumping ground water “from overexploited aquifers”.

The EU’s Water Framework Directive makes it a requirement for EU Member States to take into account the “environmental and resource costs” of groundwater extraction and to ensure that these costs are accounted for when billing the consumption of water.

Since these costs are not accounted for current tariffs inevitably “include a subsidy that is both unknown and opaque”.

But while tariffs should reflect the true cost of water tariffs should reflect a “basic right to water, protect low income users, advantage low consumers, and penalise profligacy”, the report concludes. 

Moreover at present, no differentiation in price is made based on how water is used. 

“This may not matter in a country where water is abundant, but water stressed countries are compelled to pay attention to the uses to which scarce water is put”.