San José, Costa Rica, since 1956

New Water Policies Attract Int’l Attention

“Water doesn’t just fall from the sky,” Environment Minister Carlos Manuel Rodríguez has said on multiple occasions. While the statement may not seem accurate on first glance, in context the minister is speaking about the water that comes out of kitchen faucets, garden hoses and farm irrigation systems.

Before arriving for human consumption, this water must pass through the country’s rain forests, streams and underground springs. Along the way it faces pesticides, industrial chemicals and other risks for contamination.

Understanding this simple reality, President Abel Pacheco in January signed a decree requiring all water users and consumers to pay more for the resource in order to protect these forests and streams.

Water directors from Latin America and Spain were in Costa Rica last week discussing the innovative decree, which by its seventh year hopes to raise $25 million annually to protect the country’s watersheds. Later this month, the decree will be presented before the World Water Forum in Mexico City, where leaders from around the globe will discuss water issues.

Of the amount raised each year under the program, 50% is expected to finance the administrative costs of conservation, while the other 50% would go to Payment for Environmental Services (PSA), a program through which property-owners of forested areas receive economic remuneration for protecting the environment.

For protecting bodies of water within their properties, PSA beneficiaries will receive the equivalent of 10-13% of their annual PSA income, José Miguel Zeledón, director of the MINAE water department, explained during a press conference on the past and present challenges of the water resource in Costa Rica last week.

New Rates Coming

The new water rates will go into effect in August. Until then, the Environment and Energy Ministry (MINAE) is on a mission to inform farmers, hotel owners and water drinkers that the average 8,000% increase will make a big difference in the long run.

Though the increase seems large, it will occur gradually over the next seven years, and result in a minimal additional expense for private water consumers. The National Water and Sewer Institute (AyA) currently pays MINAE nothing for its concession to tap into the country’s water resources.

Under the decree, after seven years it will pay ¢1.46- ¢1.63 ($0.003) per cubic meter of water.

This will translate into an additional ¢50 ($0.10) per month for the average four-person family, which uses approximately 30 cubic meters of water a month, explained Zeledón. This is the total increase after seven years; the increase in the first year of the decree will amount to ¢4.5 ($0.009) a month for the average family and grow gradually over seven years.

“The part of the water consumer won’t be as important, they will pay small amounts; but, more than that, it will create a culture and custom of paying for water as a natural resource,” Zeledón said, adding that it is the productive sector that will be most affected by the decree.

“For them, it is not a matter of 30 cubic meters, but 2,000 to 3,000 cubic meters a month,” he explained.

For industrial, commercial, tourism and most agriculture activities, the increase varies from ¢1.29 to ¢3.25 ($0.007) per cubic meter. The sectors currently pay MINAE on average ¢0.0007 (TT, Sept. 2, 2005). For example, a hotel’s water payment to MINAE could go from ¢250,000 ($500) now to $8 million ($16,000) by year seven.

Zeledón explained that the decree, which was signed by Rodríguez last August, is the result of a negotiation process with sectors that will be affected.

The water director is hoping the decree will have a secondary impact.

“When you are hit in the pocket, above all for the business owner, you realize how much water you are using, so this will obligate companies to be more efficient, he said.

“Maybe not in the short term but in the mid and long term, companies will be obligated to include the value of water in their planning.”

However, while pineapple, banana and other agriculture producers will face a ¢1.29 increase, the increase for producers of beef, rice, coffee and sugarcane will be only ¢0.12.

The rates were established with the Agricultural Chamber based on the fact that rice, coffee and sugarcane are considered “unstable” products in the stock market, Zeledón said at the water conference.

If sectors paying the ¢0.12 rate were charged more, they might collapse, Zeledón explained, adding that rates were decided after analyzing political, social and economic factors, and could be raised in the future.

The Costa Rican Electricity Institute (ICE) and other hydroelectric electricity providers will also have to pay fractions of a colon per cubic meter, depending on how much electricity they generate.

Investing in the Source

Together, these funds will amount to approximately $250,000 in the first year and by year seven, when the plan is fully implemented, $21-25 million a year.

Half of these funds will be used for the management of water as a resource, Zeledón said. The water department, which currently has an annual budget of $750,000, will open more regional offices and fund projects for the conservation of river watersheds and environmentally friendly agriculture management.

While AyA, ICE and other institutions currently have environmental policies and projects, MINAE would have more resources to develop these comprehensively, Zeledón said.

Another 25% of the collected funds will go to protect national parks and reserves as sources of water, effectively doubling the national park budget.

The remaining 25% will be used to offer private property holders environmental service payments, paying them to protect their land in watershed areas from contamination.

Zeledón admits that the decree could be removed by future administrations, but he is confident once people get used to the idea, and see its effectiveness, it will be hard to take away. He also doesn’t discard the idea of increasing the payments even more, if the program proves to be a success, although he hesitates to discuss this idea prematurely, before water users have become accustomed to the new rates.

“What is coming is the most difficult – the implementation. That is where the credibility is,” Zeledón said. “Although the payment is small, people are going to say, ‘this is one more tax that will go to general budget.’

So we are making an effort, and the next government must continue, for transparency and to guarantee that these resources are invested.”

Tico Times reporter María Gabriela Díaz contributed to this report.


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