Although the National Water Plan (NVWP) did suggest a set of water sector policies, they were not comprehensive and never formalized. Consequently, planners and managers of water resources have no guidelines for actions, which may prove detrimental to the national interest. Disjointed policies also create conflicts between sub-sectors and different aspects of water use. Flood mitigation policies, (through FCDI projects), have had negative impact on fisheries and navigation. Uncontrolled groundwater extraction have lowered the water table in many areas, adversely affecting drinking water supplies. To deal with such inconsistencies, gaps and overlaps in water management, a coherent and consistent water policy is essential for Bangladesh.

_Policies on Water Pricing and Cost Recovery:_ Given the value of water to life and livelihood, governments allocate it on the basis of political and social considerations rather than purely economic criteria. Pricing water below its economic value is prevalent throughout the world." In many countries this has created tremendous strain on the water dependent eco-system. Farmers who pay little for their publicly supplied water often misuse it by growing water-intensive crop (as for example sugarcane in Pakistan and Maharashtra in India where an estimated 10 percent area used for sugarcane growing uses 50 percent of irrigation water<sup>12</sup> ). City dwellers fail to conserve water when it is cheap, as for example in many cities of South Asia.

For preserving the financial viability of a public water supply institution and for establishing a water market for private sector activities, it is essential to price water according to some reasonable standard. Because demand is responsive to price, it is worthwhile to measure, monitor and price water carefully to cut back on waste without cutting back on needed service. Determining the opportunity cost could be a important step in guiding policies for pricing of water and to establish the magnitude of penalties to be imposed on polluters. Experience has shown that the poor are willing to pay for good water services (as high as 8 percent of their income in Kenya)"<sup>3</sup> and that cost recovery is feasible with good management. For instance, water charges could be applied on a graduated scale such that beyond a set standard, the user has to pay increasingly higher amounts. Water pricing policies of the government has to take into account the various factors that affect the growth of an efficient water market, with an active private sector.

Besides setting the right prices, government policy also has to address the issue of cost recovery. Nonpayment and non-collection of water dues are sadly common in many parts of the world, including Bangladesh. Two reasons for this failure are fairly obvious, low incentive to collect and low willingness to pay for lack of adequate service quality. The former is mostly for political reasons and the latter is almost a consequence of the former.

l See Water Resource Management, World Bank, op cit. A recent review of municipal water supply projects by the World Bank found that the price charged for water covered only 35 percent of the cost, and charges in many irrigation system are much less.

> 12 See India Irrigation Sector Review, Agriculture Operation Division, India Country Department, World Bank, Washington D.C. December 1991.

> 13 See World Development Report, The World Bank, 1992.

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