Water Charges Make Sense

Like it or not, you will be paying for your water shortly. By the start of 2014 water charges are planned to be introduced in accordance with the terms of the EU/IMF bailout. However, with a local election scheduled for that summer, the government would be quite eager to delay the implementation if at all possible.

There seems to be little reason why you shouldn’t pay for water. Many would claim that water is essential for human life and therefore should be provided free of charge by the state. Water is no more or less essential for human life than food, yet I do not see any protests over that not being provided free of charge. Others claim that all leaks should be fixed before metering and charging commences. Two issues arise with this: firstly we cannot easily identify where the leaks are without having metering. Secondly, water is a low value commodity, and hence there are some leaks which would be uneconomic to fix.

On a more environmental point, there is a strong case for charging people for water. If you charge people for water, they will reduce their consumption of water. If anything is free you will consume more than would be socially optimal. In the UK after charging for water, they saw a 10% – 20% decrease in water consumption. People are careful about their water use when they are paying for it. While there are no water shortages in Ireland at the moment, there could be shortages in the Leinster in 15 – 20 years’ time if there is a strong economic recovery.

Already, there are commercial charges for water but now domestic dwellings will be charged for their water. Currently, businesses are either metered and charged on that basis, or estimate their usage and pay a

fixed fee based on that. Some domestic rural dwellers also pay if they are not connected to the main supply. Just over a half of businesses (53%) actually pay up and local authorities are owed about €76.5m. This may explain why collecting water charges will not be up to local authorities but up to Bord Gáis who will collect on behalf of the newly formed water board. There is a clear logic to this, Bord Gáis have vast experience in collecting money from people. We have seen from the recent household charge fiasco, this is not as easy as it may seem, and local Government may not be best placed to do so.

While water may be a God given resource, there are significant costs in sourcing, filtering and distributing water. There are also significant capital outlays for the provision of water which must be recouped over time. Up until now, the water “industry” has been made up of a number of small county councils providing the water supply in their area. It seems more sensible to have a single semi state body responsible for the provision of water and metering/charging.

While charging is to commence at the start of 2014, there is no chance that many/any meters will be installed by this time. It would seem that some sort of flat charge similar to the household charge may be the only way of collecting in 2014. Given that the government wants to raise €500m from water charges, that would require a levy of about €370 per household. If the household charge is anything to go by, the water charges may be off to a bad start before the meters are installed. If people are to be charged for water they should be charged for what they use, not just a flat tax.

-Niall Conroy