San José, Costa Rica, since 1956

Raising Prices to Protect Environment Water Law Breaks New Ground

An increase in the cost of water by as much as 8,000% will help Costa Rica ensure the vital resource is contaminant-free and permanently available, under a decree signed last week by Environment and Energy Minister Carlos Manuel Rodríguez.The decree, which seeks to ensure the protection of natural resources by quantifying their economic worth and turning their conservation into a profitable venture, will make Costa Rica the first country ever to apply such a strategy to water conservation on a national level.Meanwhile, members of the Legislative Assembly are working on even broader changes to the country’s approach to water in the form of a new law that would overhaul the outdated water law now in place and stiffen penalties for polluters.WHILE an 8,000% rate increase seems large, in actual figures it amounts to an increase from fractions of a penny to larger fractions of a penny for the country’s 5,000 water concession holders, who produce everything from hydroelectric power todrinking water to beer.The increase will add up over the next ten years to $20-25 million, which will be invested in the protection of watersheds throughout the country to guarantee the sustainability of water resources, according to Rodríguez.The idea is to put a cash value on the worth of water as a raw material, rather than quantifying only the infrastructure and administration it takes to capture the natural resource, as is currently the case, the minister explained.The decree, which must still be signed by President Abel Pacheco before taking effect, will increase rates gradually over seven years to up to ¢3.25 ($0.006) per cubic liter of water, depending on the use, from today’s average rate of ¢0.0007.“There is an economic cost of maintaining the watersheds that produce our water,” Rodríguez said.COSTA Rica is traversing uncharted waters in the breadth of this system, known as payments for environmental services. While cities and states around the globe have in recent years taken similar steps to protect water sources and other necessities provided by the environment, no country has done so nationwide. Furthermore, while similar structures of payments for carbon production through reforestation are becoming increasingly common, they are usually for the financial benefit of private foresters; Costa Rica’s water system will also finance protection of public forestland.Under the system, national parks will receive between $5-7 million dollars a year after 2007 for their role in the production of water – effectively doubling the current national park budget.Funds will also go to indigenous, private and government-sponsored efforts to protect watersheds.“We want to have producers of water, like we have producers of milk, of cheese, so that water production is economically profitable,” Rodríguez said.ALTHOUGH tropical Costa Rica boasts an abundance of water, demands on the resource are also abundant: among them, agriculture, hydroelectric power, human consumption, golf courses and water-intensive ecology. Contamination by waste and agriculture chemicals is a reality that threatens aquifers and drinking water supplies, Maureen Ballestero, coordinator of the Global Water Partnership, reminded an audience of hundreds at a water conference last week where Rodríguez signed the decree.However, studies show that water extraction for different uses amounts to only 20.2% of available water, with the vast majority going for electricity production, followed by agriculture.RODRÍGUEZ admitted that during the decree’s planning over the past three years, “there have been many objections and much worry,” particularly from the private sector, concerned the change will drive up overhead with higher electricity and water costs. At ¢0.12/cubic meter, the cost to hydroelectric producers is the lowest of the new rates; at approximately ¢1.5/cubic meter, potable water costs fall in the mid-range.The minister said it will take a “cultural change” for people to understand the economic value of protecting the country’s water sources. In the end, it will result in a minimal increase to the consumer, he added.“A user of (the Costa Rican Electricity Institute) ICE is going to have to pay about ¢60 ($0.12) more in his electric rate in the course of seven years. The final users of public services are not going to notice the economic impact of this, and it won’t affect the competitiveness of businesses,” he said.Rodríguez expects the rates to go into effect in the first semester of next year. Once it is signed by Pacheco, it will be published in the official government newspaper La Gaceta and take effect six months later.RODRÍGUEZ issued the decree in order to begin the system of payments for environmental services as soon as possible. On a more permanent basis, it is part of a proposed new water law awaiting legislative approval.Like the decree, the goal of the proposed law is to increase conservation and protection of the country’s water sources, primarily by improving an outdated and bureaucratic water administration.The country’s current water law dates back to 1942; more than 100 other laws and decrees have something to do with water; nearly 17 institutions have some legal power in water management (TT, March 18). All of this results in an outdated and ungovernable system, according to José Manuel Hermida of the United Nations Development Program (UNDP), which is funding efforts to return governability to Costa Rica’s water management.“The problems we face are not caused by lack of water, but rather by lack of governablility,” he said.THE proposed law aims to update and clean up this chaos. Under the law, the Ministry of Environment and Energy (MINAE) would oversee all water-related issues. The law would create a National Administration of Water Resources, which would be responsible for granting concessions and permission to anyone wishing to use water in the country, and would be funded in part by the increased water rates. The new law would also dramatically increase penalties – now as low, and laughable, according to legislators, as ¢2 ($0.005) – for violations of the law. People who contaminate aquifers or rivers would be punished by up to six years in prison. In addition, people who use more water than they are allowed under their concessions would face up to five years in prison.Six decades ago, when the first law was written, it was impossible to predict today’s level of pollution, industrial development, growth in the tourism sector and population increase, all of which have had an impact on water resources, explained Ballestero.THE proposed law is the product of three years of effort and the composite of three different proposals made in 2002. In creating the law, more than 60 institutions were consulted, from local and national government bodies to environmental groups to specialists, according to Patriotic Bloc legislator Quírico Jiménez.“Everybody is interested in the topic of water,” he explained.Despite this effort to include the interests of everyone, National Liberation Party legislator Joyce Zürcher admits the proposed law faces opposition. Electricity and potable water producers say the price of production will increase, she said, “but we must think of the common good.”The law was passed in legislative commission in April and awaits discussion in the full Legislative Assembly.FLAWS still exist in the current draft. For example, one article of the proposed law prohibits farming, construction and installation of landfills in all areas where aquifers are fed by water; but a recent study by the University of Costa Rica (UCR) found that such areas make up 76% of national territory, so that the article would essentially prohibit human activity in most of the country, the daily La Nación reported.The law’s supporters admitted to the daily that modifications are necessary.“We are in agreement with 97% of the law; there are five or six things that we want to change,” Rodríguez said.

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