NITI Aayog proposes allowing trading of treated wastewater to incentivise and encourage efficient use of water

economictimes.indiatimes.com:

NITI Aayog has proposed allowing trading of treated wastewater to incentivise and encourage efficient use of water. This, it said, can be done by considering water as a commodity rather than as a public good, setting up a transparent trading platform and formation of an independent regulatory authority (IRAs) with statutory powers to determine water allocation and pricing of treated wastewater.

ET had reported in September last year that the government was contemplating trading of water to address the issue of water scarcity.Water trading is a water market mechanism that considers water as a commodity and can be traded amongst users according to their needs. The water company rather than creating their own water source, buys the water from a third party and sells it to the locals.

Under this, water rights are allocated to each sector and they use it according to their needs, buy when they need more water; and sell when they require less of it. “It is proposed to consider water as a commodity rather than as a public good due to the fact that market mechanisms would work best when it is considered as a commodity which can be purchased or sold,” it said in its report.

“Defining property rights and allowing water trading would help in the emergence of a water market which in turn would set the price according to market supply and demand and would increase the water conservation and reduce the water conflict amongst the various sectors,” it added. The Aayog has further proposed restructuring the role of the state including divesting the role of state and establishing IRAs and increasing the role of private players to promote active involvement of beneficiaries and people’s participation.