GUEST COMMENT
By Dr. Jim Leontiades
Cyprus International Institute of Management
Importing water is expensive. The current commitment to bring water from Greece will cost Cyprus some 40 million euros. It must represent one of the most unnecessary expenditures to be made by any of the past governments.
Six tankers have been chartered to bring 8 million tons of water to Cyprus at a cost of 40 million euros. There are so many ways it could have been avoided.
Lets first consider that the great bulk of our water, some 70-80%, goes to agriculture (the higher figure is more accurate if you include animals), 12% goes to Cypriot residents and 3-5% for tourism.*
The over 2/3rds of our water going to agriculture is also heavily subsidized, charged at only 17 euro cents per cubic meter. But who can complain if all this valuable water and the millions of pounds of subsidy behind it are going to farmers who will provide us with the food we eat?
This is a popular view, particularly among environmentalists but it is very naive. Firstly, the water to farmers is not all going to feed Cypriots. Quite a bit of it is required to water crops that will be exported. Since farm exports make up some 17% of total agricultural production we can use this figure to arrive at a rough estimate of the water required to provide for these exports. If 17% of the agricultural water is going to grow agriculture exports, this means that some 13% of our total water usage is being shipped abroad in the form of exports. In other words, our agricultural exports require more water than is made available for residential use, several times more than the 5% required for tourism and much more than is currently planned for importation by ship.
Moreover, the water going to agriculture is heavily supported by the government, sold at only 17 euro cents per cubic meter. By virtue of some creative accounting, this is not labeled as a subsidy, but that is what it is. The latest figures from desalinization plants indicate that water costs a minimum of 66 Euro cents. Water being shipped in from Greece costs five times that (40 million euro divided by 8,000,000 cu.m. of water = 5 Euros per cu.m). The price to residents varies but it is also several times the agricultural price, at about 1 Euro per cu.m.
Going "Bananas"
The profligate use of water does not end there. Bananas come from tropical rain forests. What are they doing in Cyprus? Thanks to the European Union's removal of protective barriers, many are now being imported. Nevertheless, many hundreds of donums of prime coastal land in Paphos are still devoted to this tropical fruit. As long as the government sells water to farmers so cheaply, it pays to grow bananas, kiwis, mangos, etc. With a more rational water pricing policy, they would all be imported.
Those Golf Courses
There are also the notorious golf courses, a favourite hate object. They do take a lot of water. Are they worth it? I don’t know, but let’s consider the contribution of tourism in general. Although taking some 5% of our water, tourism and homes sold to tourists supply well over 50% of our foreign exchange. Farm exports, though they require more water, contribute only 2%. It is tourism and tourist-related activates which provide the bulk of the foreign currency required to purchase the BMWs, cell phones, TV sets, designer clothing, etc., which now appear to be considered essential to life here.
Water Leakage and Local Authorities
Much of our water is first sold by central authorities to local authorities at a rate of .77 euro cents per cu.m. However, many local authorities have so far refused to pay the government for their water. This is certainly “cheap” water. So cheap that it does not pay to repair broken pipes. It is estimated that of the water sold by central authorities to certain villages as much as 40% is classified as "unaccounted" water. In other words, no-one knows where it has gone. Most likely it has leaked through ancient and decrepit water pipes. In fact, this makes a certain amount of sense if it is cheaper to waste water than to repair leaking pipes.
The current system is both unfair and wasteful. It is unfair to farmers to encourage them to plant crops which are afterwards starved of water. There is no simple solution but surely the place to start is a more rational water pricing policy. The current patchwork of widely different prices should be replaced by a price for water which covers not only distribution but all costs for necessary maintenance and investment for new, secure sources of this increasingly scarce and vital resource.
Decisions have to be made, and soon. Our political masters appear fairly relaxed over a difficult situation which can quickly turn into a major crisis. The recent celebrations over the arrival of the first shipment of water from Greece had the character of a primitive rain dance, with no better results.
* NOTE: The figures of water use for agriculture vary. Some sources quote as low as 32% water usage by agriculture. However, this excludes water (largely unpaid for) from private boreholes which are the source used by the majority of farmers. My figures are based on a report by the Water Development Department, 2007.
