Looming water crisis in India – Lessons from Israel

Prof. M. J. Xavier
Founding Director of IIM Ranchi
Professor of Marketing and Business Analytics with LIBA, Chennai


Population growth and changing climate are two major forces that are affecting the world today. Rapidly growing population is always accompanied by the growing demand for water. Coupled with the demand is the havoc caused by climate change which will have serious repercussions on the rainfall. Floods in some parts and drought in other areas have become a common phenomenon experienced by countries today. These kinds of rainfall shocks will affect farms, firms and families. Farms are the largest consumer of water in the world. Due to climate change we are experiencing declining yields in agriculture. The next major consumers are the firms. Textiles, meat production, beverages, and automotive manufacturing are some of the high water-consuming industries. Apart from this are hotels and restaurants… and they cannot function without water. If water is scarce their sales, revenues, and profits get a hit.   At the centre of such scarcities are the families, who feel the impact of this uncertainty on their incomes, jobs, and long-term health and welfare. Availability of piped water to households is used as a measure of development of a country.

Water scarcity in India

In India, more than 600 million people are facing an acute water shortage. About three-quarter households do not have clean drinking water facility. Currently, India ranks 120th among 122 countries in the water-quality index. By 2030, India’s water demand is expected to be double to that of supply that implies not only water scarcity for numerous people but also a loss of around 6 percent to the GDP. This makes it imperative for India to embark on effective water management systems.

Several large cities of India are prone to water shortages, with Chennai being the most prominent in 2019. The shortage of water affected the entire city of 9 million people and resulted in the closure of several hotels, restaurants and businesses. According to a report by the National Institution for Transforming India (NITI Aayog), at least 21 major Indian cities will run out of water soon.   The report also noted that approximately 200,000 people die in India each year due to the lack of access to safe drinking water.

Agriculture alone is responsible for 80% of the country’s water usage. The scarcity of water has rendered a lot of valuable farmland in India completely useless and much of the farming industry in these regions has ceased to operate. Water shortage hurts the rural economy so badly that it results in severe unemployment which in turn leads to urban migration. India has a cycle of droughts and floods that have left large tracts of land barren.

Water scarcity also threatens even the lives of wild animals across India. We often read of wild animals encroaching the farmland and human settlements in search of potable water. Drought in the forest land is the reason for wild animals like elephants, tigers, and spotted deer sneaking into the cities. Some of theseanimals pose a threat to humans, as they can attack them. Some animals like spotted deer get physically attacked by dogs in the process, or they wind-up injured or dead in accidents. Elephants getting run-over by trains or being electrocuted by electric fences set-up by farmers are common news these days.

Innovations in water-management by Israel

Israel and India are semi-arid countries with limited water resources. However, Israel is self-sufficient in water while India is yet to provide piped water to nearly 80% of the households.

India’s Average annual rainfall is 300–650 millimetres (11.8–25.6 in) but is very unreliable; as in much of the rest of India, the south-west monsoon accounts for most precipitation. The rainfall in Israel is unevenly distributed, significantly lower in the south of the country. In the extreme south, rainfall averages near 30 mm (1.18 in) annually; in the north, average annual rainfall exceeds 900 mm (35.4 in).The climate of Israel is characterized by a hot and dry summer and a cool rainy winter. Despite being one of the most water scarce countries in the world, Israel has achieved water security and full cost recovery through tariffs through a series of ambitious reforms. India has a lot to learn from Israel.

This involved nine key innovations[i], namely (1) putting in place a national water conveyance system to connect all water infrastructure, (2) reuse of treated wastewater for irrigation, (3) large-scale desalination PPP for potable water independence, (4) using aquifers as reservoirs, (5) interception of surface water run-off, (6) promoting crop selectivity and importation of virtual water, (7) efficient irrigation technologies, (8)demand management and public communication, and (9) creating a supporting environment for innovation.

National water system to connect all water infrastructure

Israel implemented early-on an innovative system of storing and conveying water from its wetter north to the drier centre and south—the main agricultural areas.A giant pipeline was  developed and has operated since 1964 to transport water from the Sea of Galilee to the main population areas in the centre and the Negev Desert in the south.  Israel established a national bulk-water transmission system that conveys 95 percent of Israel’s potable water resources (surface water, groundwater, desalinated water) to the regional providers that supply end-users (domestic, industrial, agriculture). The pipeline is operated by  Mekorot,  a regulated public utility owned by the state and operating as a monopoly in a strategic water sector. It has been running profitably.

Reuse of treated waste-water

Israel created an extensive network of treatment plants and started using treated water for irrigation. The scarce fresh water was released for domestic and industrial uses and to safeguard the environment. More than 87 percent of treated waste-water effluents are reused for agriculture, representing approximately half of all irrigation water nationwide.

Large-scale desalination of seawater

They set up a large desalination plant to treat sea-water and brackish water to supply potable water that municipal and regional utilities distribute in the country. Five mega seawater reverse osmosis (SWRO) desalination plants supply 85 percent of domestic urban water needs.A national bulk-water conveyance system that allows to optimize the distribution of water across the country from various sources depending on demand. It conveys 95 percent of Israel’s potable water resources (surface water, groundwater, desalinated water) to the regional providers that supply end-users.

Use of aquifers as reservoirs

With recharge of aquifers with treated waste-water during low-demand months,  and capture of occasional flash floods Israel was able to recharge the ground water. They putin place various systems for a comprehensive monitoring and control of aquifers’ levels and abstraction.

Major legal and institutional reforms

Israel implemented over the course of the last 15 years a number of major legal and institutional reforms. Their regulations and pricing policies helped them attain the sustainability of the water supply. This included changing the pricing principles of water from a public and social good to a commodity, institutional reforms with the corporatization of service providers and the establishment of a strong national regulator.

Despite a situation of acute water scarcity, implementation of this policy for sustainable water management has allowed Israel to achieve water security while at the same time drastically reducing over-exploitation of aquifers. This has been achieved through a massive increase in the production of non-conventional waters – waste-water reuse (since 1998) and seawater desalination (since 2006) – together with a legal framework that makes metering compulsory and asserts a strong government’s control over water resources.

A landmark of the reform was the establishment in 2007 of the Israel Water Authority (IWA) as an autonomous government agency combining planning and regulatory responsibilities for all the elements of the water chain (potable water and sanitation, irrigation, water resources management). This allowed Israel to draw a line between the political level, which is responsible for policy setting, and the professional level, which manages the water sector. All the various regulatory bodies in the water and sewage sectors became gradually transferred to the IWA within a few years.

Implementation of these ambitious reforms over the last decade has put the Israeli water sector on a course toward financial viability, based on the principles of full cost recovery through tariffs. A new financial framework was put in place gradually, under the direct control of IWA which as national water regulator sets tariffs for all water users. The national bulk water operator Mekorot (in charge of all potable water production and the national water conveyor) was corporatized and transformed into a regulated public company.

Municipal water and sanitation services have been gradually transformed into corporatized regional utilities. Water tariffs for all users were gradually increased to approach full cost recovery for the overall water chain (although there are also significant cross-subsidies between water uses), while the regulator set performance targets for improved efficiency.

After many years of reforms and massive investment, the Israeli water sector has now achieved almost full financial autonomy—with the exception of wastewater reuse (still relying on investment subsidies)—together with water security. Almost all the costs of investing and operating the water infrastructure are now paid by users through tariffs. Furthermore, the country is in a position to meet all future demand from multiple users.

Promoting crop selectivity and importation of virtual water

Israel is traditionally known for its collective farming, called kibbutz model. However, they experienced water shortage of fresh water for food crops as early as 1960. This forced the policy makers to think on a trade-off between food scarcity and water scarcity.  They worked out models on what food crops should be produced domestically and what other food items should be imported.

As Israel stared diversifying its economy, it was in a position to import more food items from cheaper sources. They looked at countries with abundant water and lower labour costs for import of foods, such as oranges, cotton etc. They started producing counter-seasonal vegetables in Israel for export to developed markets at higher prices.  These crops are cultivated ion playhouses under controlled environment. As they use drip irrigation and precision farming, the water consumption is kept to the minimum.

Efficient irrigation technologies

The widespread development of efficient irrigation technologies, together with growing access to treated waste-water, have made it possible for the agricultural sector to continue to irrigate despite a sharp reduction in the amount of available fresh water.  The efficiency of irrigation systems has been a major factor making possible the reduction in average water supply to agricultural land, down from 7,000 m3/ha in 1990 to 5,000 m3/ha in 2000.

Even in the early 1950s Israel started the manufacture of low-volume irrigation technologies such as drip irrigation and mini sprinklers. Now the technologies have become sophisticated that include moisture-sensitive automated drips, automatic vales and sprinklers, low discharge sprayers, mini-sprinklers and compensated drippers that are computer-controlled.The successful development of low-consumption irrigation technologies has allowed the development of a thriving irrigation industry in Israel. Approximately 80 percent of the irrigation equipment made in the country is exported.

Promoting demand management and public awareness

The price of water for irrigation in Israel is higher than in most other countries played. This created a sense of urgency in the farmers to improve farm productivity. For the domestic consumers, Israel follows a two-tier pricing system for potable water and sanitation water. This encouraged people to conserve water.

The Government also ran several water conservation campaigns. It promoted the installation of water-saving devices (bathrooms, toilets, kitchens), reaching 55 percent of all households and all public buildings and government offices.  A media awareness campaign was implemented over an 18-month period from 2008 to 2010 to educate consumers about water-use. The campaign was structured around a combination of education and media activities, carefully targeted to the various segments of the population.

These steps, together with the near doubling of water tariffs that also took place in 2008–10, proved effective. Thus, Israel reduced urban water consumption per capita by 24 percent, to stand now at less than 100 liters per capita for domestic customers. It is estimated that 8 percent of this reduction was due to educational activities and 16 percent to higher water tariffs and installation of water-saving devices.

Creating a supporting environment for water innovation

Like electricity, water is a public entity in most of the countries. Since these are managed by public sector or the government sector, innovation is rare in these areas. Israel made water a commodity and encouraged private entrepreneurs to come forward with their innovations. Water unitalities companies work with the private entrepreneurs to try out new ideas. Israeli government too incentivised these innovations.

What started off with simple innovations, such as drip irrigation, has grown in sophistication with the advent of information and communications technologies, many high-technology concepts have penetrated the water sector, such as algorithm-based leak detection and cloud-based fixed leak detection. These technologies germinate in academia, private companies, or individual entrepreneurs. The success of Israel in irrigation innovation is due to the ability of the government to nurture such ecosystems.

Lessons for India

India can learn several lessons from Israel:

Strong control and enforcement of water allocations: This is crucial for mitigating extreme water scarcity. Pricing incentives are not sufficient. The Water Law of 1959 brought water under state control in Israel and gave state organizations the authority to regulate and allocate consumption for alternative uses. Control of consumption has been successful because of strong enforcement with sanctions – it has not relied exclusively on incentives. States in India keep fighting on sharing of river water. There is no clear policy on allocation of water between irrigation, industry and domestic use.

Collection of comprehensive and timely data: These are crucial for efficient integrated management of water. The Israel Water Authority (IWA) relies on its Hydrological Services Unit to collect, analyze, and model water data and factors in the effects of global warming on Israel’s natural water resources. This allows IWA to allocate and manage all water resources on a real-time basis.

Build a national conveyance water system: This can help optimize water management under conditions of scarcity, allocating supplies and uses of water across the country. Israel’s small size and the institutional reforms made it possible to create a national integrated water infrastructure that is economically efficient and well managed. It proved essential to bringing efficiency, promoting alternative water resources, and being able to mitigate adverse hydrological variations. We have been talking about linking of rivers since independence. It is never too late to start linking rivers.

Invest on financially sustainable projects: Investing massively in new water infrastructure is not enough; this needs to be done in a financially sustainable manner through appropriate institutional reforms. This includes putting in place a clear separation of roles between policy setting, regulation and planning, and operation of infrastructure. In the specific case of Israel, the vesting of all planning and regulatory powers of the water sector (water supply and wastewater, irrigation, water resources management) under a single autonomous agency (IWA) proved a beneficial decision, since it is managed professionally and largely insulated from political influence. India has to go a long way in building autonomous institutions that cannot be influenced by politics. This is going to be a real challenge for India. We need to make water a national resource and build an autonomous water authority to manage water. This should be filled with water experts, policy makers, and stakeholders.

Introduce BOT and PPP models: The relatively low price obtained for desalinated water through Build-operate-transfer (BOT) schemes for Israel’s desalination plants was contingent on a careful design of the PPP contracts—with more government guarantees being provided to private investors than what is typical for such public-private partnerships (PPP) projects. This allowed Israel to get bid prices for desalinated water that are among the lowest in the world, in turn making large-scale access to desalination financially viable. India has a large sea coast. Entire south can meet its water requirement through desalination.

Reuse water: Waste-water reuse is beneficial when dealing with water scarcity, butis also costly and requires significant public subsidies – even in the case of Israel where farmers have achieved high levels of efficiency and are able to pay significant prices for reclaimed water. Subsidies are concentrated to the treatment of wastewater and storage of recycled water, while farmers do pay the incremental costs of conveying treated wastewater effluents to irrigated areas.

Create public awareness: It is important to build public awareness and for demand management. Israel carried out on a massive scale public awareness campaign to emphasize the value of water in a country suffering from acute water scarcity. This must be accompanied by a move toward full cost recovery and pricing water at its actual cost, as a strong signal to users that water is a precious resource not to be wasted.

Put in sound regulations and an enforcement team: Corporatization and aggregation of water and sanitation services is along process, that requires sound regulation and efficient supervision to be successful. Israel Water Authority regulates all utility companies and keeps them in check through a  mix of financial incentives. There are sanctions for the worst performers. India is known for making high pitch slogans and nice policy frameworks.  We may coin a slogan, like,  PaaneeBachao – BhaaratBhachao. But, if we fail to implement the policies, the slogans will not bear any fruit.

Develop an integrated water management framework: Immediate steps should be taken to improve agriculture that consumes 80% of water resources. Israel adopted drip irrigation and precision farming to increase yield for every litre of water used in agriculture. Crop mix for every region has to be looked in to carefully to optimize water utilization. Industries should be made to treat water and reuse them. Domestic consumption has to be regulated by metering water used by every household. Rain-water harvesting must be made compulsory in every building. India has enough water but it needs to be harvested, stored, processed, recycled and reused for avoiding shortages during droughts. Initiatives that started in 1959 has helped Israel attain self-sufficiency in water. We have a long way to go.  It is high time that India gives enough importance to this critical area.

[i] Philippe Marin, Shimon Tal, Joshua Yeres, and KlasRingskog, “Water Management in Israel”, Technical Paper, World Bank Group, August 2017.


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