Why Water Pricing and Management in Singapore Needs to be More AmbitiousDistinguished Visiting Professor at Lee Kuan Yew School of Public Policy, National University of Singapore Senior Research Fellow at the Institute of Water Policy, Singapore and Editor-in-Chief of the International Journal of Water Resources Development
A recent poll in Singapore’s national daily, The Straits Times, showed that 75 percent of Singaporeans have no idea what their monthly water bill is.
Yet, when the Singapore government recently announced that the country’s water price would be increased in two stages, they opened the sluice gates to a torrent of mainstream and social media comments that questioned need, relevance and appropriateness of the price increases.
Singapore last increased its water price in 2000, so almost a generation has grown up with no adjustment in water prices. In comparison, electricity rates are adjusted regularly, so when electricity rates are modified, it is not news. Reactions from the media and the public are very different regarding changing water prices.
The impact of the price increase will be softened by the increase in the value of the Goods and Services Tax (GST) voucher, one of the support measures by the government to help lower-income households in the face of a slowing economy.
Singapore needs to change the narrative from an argument of cost recovery for domestic and industrial water supply, to one of managing a scarce, strategic and essential resource. For this, a profound societal mindset change is necessary as to how water should be managed in the future.
The Situation Now
Consider some facts. First, the Public Utilities Board (PUB), the national water agency, has been an incredibly efficient institution. It managed to increase its operational efficiency, managing to balance its books until 2010, when it last made an operational profit of S$48 million ($36.9 million). From 2011, it has been making operating losses, which were subsidized by government grants. PUB losses have increased from S$36 million in 2013 to S$57.2 million in 2015.
Our studies indicate that between 2000 and 2014, because of inflation, the price of water decreased by 25.48 percent in real terms. In contrast, electricity and gas prices have increased at a rate slightly higher than inflation.
In addition, the monthly median income of employed residential households was S$4,398 in 2000. This increased to S$8,292 by 2014. Thus, assuming a household used 20 cubic meters of water per month in 2000, the water bill represented 0.69 percent of income. By 2014, it had declined to about 0.36 percent.
At present, about 50 percent of the water used in Singapore comes from Johor, Malaysia. Due to recent prolonged drought, storage at Linggui Reservoir in late 2016 was at a historic low. On January 9, Foreign Minister Balakrishnan noted in the Parliament that there is a “significant risk” that the reservoir may not have any water if 2017 turned out to be a dry year.
Water demand in Singapore will be significantly higher by 2050. Efficient water management must become a priority.
Fortunately, storage is now over 30 percent, but nothing assures this may not change again in the near future.
If the Linggui dries up, Singapore would lose half its water supply and could experience a significant reduction in its NEWater production—high quality recycled wastewater. If the supply from Linggui is cut by half, the question is how would this affect wastewater generated and thus NEWater production?
Add to this the potential uncertainty imposed by climate change, which is likely to contribute to prolonged droughts—a situation already being witnessed in many parts of the world. A prudent strategy for Singapore will be to prepare for not if, but when the supply from Linggui will be reduced to a trickle. Over the past six years, we have regularly argued that it is not floods, but droughts, that Singapore needs to fear.
The current estimate of water demand in Singapore by 2050 is expected to be significantly higher than what it is at present. Accordingly, efficient water management must receive priority and national attention.
At present, in Singapore, domestic and industrial water uses are far too high for comfort. Both need to be reduced significantly by judicious use of pricing, economic incentives, public education and awareness, and, above all, behavioral changes.
Take domestic water use. Per capita daily consumption in Singapore stands at about 150 liters, which is among the lowest for Asian cities, but it is over 50 percent more than the per capita consumption in many other water-efficient cities.
What Can Singapore Do?
Water conservation practices will count, and a combination of economic instruments and attitudinal changes by developing conservation ethics can ensure more efficient use of water.
Singapore’s current targets are to reduce per capita water consumption to 147 liters by 2020 and 140 by 2030. This is too little, too late. The city-state should be much more ambitious.
Between 1960 and 1970, Singapore carried out a unique study on how much water an individual needed to lead a healthy life. It showed that when consumption went over 75 liters per day there were no health benefits for individuals. An average Singaporean now uses twice this amount. Given that many European cities have progressively reduced their daily water consumption to less than 100 liters, Singapore needs to consider a much lower target of around 110 liters per day by 2035, which is achievable. By 2035, based on our estimates, it is likely that the population in the most water-efficient cities will be using around 85 liters per day.
Finally, a mindset change is needed in terms of benchmarking good practices. Major technological breakthroughs often come from the developed world. However, many of the most significant policy breakthroughs are coming from the developing world. For example, the city of Jaipur in India informs people, in their regular water bills, of how much they are receiving in the form of public subsidies. For most Singaporeans, it may come as a surprise to know that they do not pay for all their water-related services through their water bills. For example, the government pays for all stormwater management services as public goods, which households in numerous cities pay directly through their water bills.
Given the strategic importance of water in Singapore, it is essential to engage the population in the formulation of future policies through a robust communication strategy with all the facts, figures and implications of possible decisions. This will ensure its water security for decades to come.
A version of this piece appeared on Asia & The Pacific Policy Society website.