The Economics of Potable Water

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The Economics of Potable Water

BY Rajendra Prasad Adhikary

With over 6,000 rivers and rivulets, and snow-capped mountains, including the majestic peaks of the Himalayas, Nepal boasts an abundance of natural resources in the form of water. These vast resources ensure a continuous flow throughout the year, from the higher mountains to the flat lands, gorges, and valleys. The flowing water undergoes a series of natural purifications in the presence of bright sunlight and unadulterated fresh air, imparting a tasteful aroma that distinguishes it from other water sources.

Nepal utilises water for various purposes, ranging from energy production to agricultural use. However, the paramount importance of potable water as a life-sustaining fluid on the planet has given rise to the opportunity to utilise this abundant natural resource as an economic commodity in the global market. Natural water can be processed within industrial setups to create potable water.

Recognising water as a vital and inseparable component of life, the practice of bottling water has emerged as a portable solution to quench human thirst. Given the ever-growing global population and the increasing demand for safe and clean drinking water, it is necessary to augment the water supply regardless of its geographical origin. 

Although a multitude of sugary and non-sugary beverages flood the market, each aiming to quench human thirst, none possess the inherent health benefits or the ability to fully satiate thirst like water. Recent trends in the global market indicate a decline in the consumption of other beverages, while the demand for natural water and mineral water continues to rise. China’s bottled water consumption stood at 105 billion litres in 2020. India, though with a lower consumption than China, emerges as one of the fastest-growing markets globally, with New Delhi and Bombay accounting for 1,190 million litres and 1,036 million litres, respectively, in 2021. In the Middle East and African countries, bottled water has transitioned from being perceived as a luxury to a necessity, driven by hot and arid climates, water scarcity, and subpar municipal water supplies.

Over the past decade, Nepal has established itself as a water-exporting nation, partially meeting the demands of markets in India, China, Hong Kong, UAE, and Japan, among other Asian and European nations. According to export data from the previous fiscal year, various types of bottled water, including pure natural, mineral, and semi-purified variants, were sold abroad, generating approximately Rs 550 million. This marks a significant advancement in the water business compared to fiscal year 2013/14 when only 528 litres of potable water were exported, earning a mere Rs 34,000.

There are approximately 517 bottled water companies across the country including 78 in the Kathmandu Valley. According to the Department of Food Quality and Test Control, the authorised government agency responsible for rating and monitoring the standards of bottled water throughout the country, only 35% of these companies are registered. The remaining entities operate independently, meeting local demands by filling jars and bottles. Meanwhile, notable companies such as Rasuwa Water, Himalayas On Top, Kinley, and AquaFina export water under their own brand names.

Nepal is blessed with abundant natural water sources, ranging from the pristine snow water of the Himalayan glaciers to inner mountain streams flowing from cascading hill terraces, and tranquil rivers or groundwater across the flat Terai region. The need of the hour is to commercialise and establish water industries to produce water of high quality, aligning with national, regional, and global standards. Ensuring compliance with World Health Organization (WHO) standards is crucial for potable water to prevent any adverse effects on human health resulting from the consumption of bottled water produced by any industry. However, industries must meet standard criteria set by the country of origin, adhere to Codex Alimentarius standards, and comply with the standards established by the Asia/Middle East Bottled Water Association.

Before bottled water reaches the market, freshwater from natural sources undergoes a comprehensive series of processing units within a single framework. This process includes pretreatment to eliminate visible impurities, separation of dissolved solids and salts through appropriate purification methods such as flocculation, sedimentation, and filtration. Additionally, ozonation and mineralisation are employed to ensure the water's longevity and enhance its taste. Commonly adopted technologies in modern water industries include ultrafiltration and reverse osmosis, involving the use of a semi-permeable membrane to purify water by separating undesired particles, ensuring it is free from harmful bacteria, viruses, and chemicals. Depending on quality standards and labour availability, options ranging from automation to semi-automation can be applied within a cyclic process in a covered setup.

Nepal’s trade deficit is one the rise with escalating imports and decreasing exports. Prolonged trade deficits pose a risk of economic collapse. One strategy to reduce the trade deficit is to reduce goods and service imports by increasing productivity. Water industry can be one promising venue for Nepal to boost its exports. People involved in the water processing industry call for well-planned programs and incentives, including subsidised loan offerings from commercial banks, to encourage investment. According to them, start-ups should be directed towards the water industry, quality water-producing zones should be identified, and cost subsidies in air and ground cargo transports should be granted. 

With potable water demands increasing globally, including in neighbouring and Middle Eastern countries, such measures would not only contribute to foreign currency earnings and revenue growth but also serve as national industrial assets. These industries create employment opportunities for the youth and generate earnings in proportion to the global supply-demand conditions, aligning with the country's advantageous hydrological conditions. 

(Adhikary is an engineer and served Nepal government in various high level capacities.)

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