‘Capacity to build mega dam absent even with a blank cheque’

An interview with Ali Tauqeer Sheikh, CEO LEAD Pakistan
Published on Monday, 14 January 2019

Ali Tauqeer Sheikh is the CEO of Leadership for Environment and Development (LEAD) Pakistan. He manages the largest network of professionals on sustainable development in the country, drawn from academia, business and industry, media, civil society organizations, and the government. He also heads Climate Leaders Action Network, which consists of over 2,000 eminent experts from across Asia, Africa and Latin America.

Mr. Sheikh is deeply involved in various facets of sustainable development, particularly in poverty-environment nexus, climate vulnerabilities and equitable development. He has served as advisor/consultant to organizations such as Asian Development Bank, European Commission, IDRC, IFAD, JICA, Packard Foundation, Rockefeller Foundation, The Asia Foundation, UNDP, UNESCO and the USAID. His areas of interest are water governance, trans-boundary waters and groundwater management.

Given his breadth of experience and knowledge of water governance, he has strong views on almost every facet of the ongoing debate on water economy. BR Research sat down with him recently to learn from his views. Below are the edited excerpts of the conversation:

BR Research: An environmental expert recently pointed out that agriculture sector consuming 90 percent of all available freshwater sources in Pakistan appears to be a gospel truth lacking any basis in research. Do you agree?

Ali Tauqeer Sheikh: No, because the number comes from the Government of Pakistan’s water allocation and canal command system. While it is true that Pakistan’s per capita water usage has been increasing in urban areas in tandem with growth in urban population, the consumption by industrial sector has not increased proportionately; for two reasons.

First, the economy has not grown at the same rate as was envisioned in plans such as Vision2025. Second, few new industrial units have been established; in fact, we have seen flight of capital and deindustrialization during the past decade.

Having said that, a lot of water consumption by domestic sector in urban areas is unregulated; as city dwellers put up unlicensed water-suction pumps. Abstraction of groundwater in this manner goes unaccounted for.

But remember that abstraction by tube wells in the farming sector has also grown exponentially during the same time. So, in effect, it is quite possible that same kind of under-estimation may be taking place on both sides of the consumption equation.

Thus, while there may be gaps in available data, for planning purposes it is not too imprecise either.

BRR: By most estimates, Pakistan’s agriculture sector consumes between 90-94 percent of available freshwater resources. Similarly, 80 percent of the country’s exports constitute of agriculture and agri-derived products. Given this context, would you agree that there is an inherent contradiction in government’s advocacy for conservation when the state lacks the will to bring meaningful change to Pakistan’s crop-mix?

ATS: I can argue that Pakistan’s biggest export is its water. And it is exported through various water-intensive crop-based commodities. And that is tantamount to Pakistan’s poor farmers subsidizing middle classes in EU and USA who buy Pakistan’s towels and bed sheets. And it doesn’t stop there.

Pakistan is one of the few countries in the world which is growing rice (paddy) in desert conditions. More recently, water-intensive crops have been introduced to out-of-basin regions. For example, as we speak, a very rapid Punjabistation of Balochistan’s agriculture sector is taking place. Already, farmlands in South Punjab have been converted to cotton growing areas which were not fit for the purpose due to arid conditions.

And let’s not forget that most sugar mills in the country are owned by the first-tier leadership of Pakistan’s major political parties. This has led to area under cultivation of sugarcane increase consistently, even though Pakistan’s sugar output has remained export-uncompetitive for decades.

The government should have announced a policy for phased elimination of sugarcane cultivation many years ago. Instead, flower and horticulture practices are being encouraged which are as dangerous as sugarcane for water security, if not more.

Is horticulture being encouraged for Pakistan’s water security? Of course not, it’s either catering to domestic elite or being exported to Dubai for global middle classes. What Pakistan needs are specific zones in which crops suitable to unique climatic and hydrological conditions specific to that zone may be grown, based on scientific research. That’s nowhere in sight.

BRR: If water is priced-in as an input factor at its fair value, especially in cost of production of exportable commodities, that could potentially turn more of our exports uncompetitive in the export market just like sugar is. That’s no viable alternate.

ATS: There certainly are risks in the export-competitiveness domain. But for most part, Pakistan’s export policy is non-inclusionary. The Pakistan Agricultural Research Council (PARC) has noted that sugar-millers pocketed over hundred billion rupees just last year by paying less than the indicative rates to farmers for their sugarcane produce.

Dynamic economies don’t compete based on subsidies, which are distortions. These distortions in the marketplace don’t benefit the poor farmer but the economic elite. If there are risks to competitiveness, these should be addressed through improved technological input, enhanced skillset levels, better yield, and progressive farming practices.

Most farmers don’t take advantage of the virtually free water they receive the way a large farmer takes. Granted, that major crops offer liquidity, and small farmers are lured by cash transactions.

Despite the substantive agricultural output, Pakistan is facing one of the biggest crises of malnutrition and stunting in the world. And the GoP is not doing anything to correct this imbalance. Therefore, I am not in favour of expanding Pakistan’s exports at the cost of 60 million people from farming families.

Thus, Pakistan needs to diversify its sources of foreign exchange; the challenge is to grow as a knowledge economy and not an agricultural economy. And a policy shift is needed immediately in that direction.

BRR: What tangible actions do you propose to encourage efficiencies in the agriculture sector? Should the indicative pricing on sugarcane be removed altogether to discourage its cultivation?

ATS: Such steps are easy to speak of. The problem is much more complex than that.

The water districts inside Pakistan do not coincide with political districts. In other words, estimates of water demand come from fictional numbers submitted to Wapda by large growers, who often cultivate different crops than they report.

The key to Pakistan’s water security and enhanced exports comes from nazims and chairmen in districts and tehsils. Why is it that accountability on SDG goals related to education and health rests on tertiary government, but control of water supply rests with Wapda? Unless the water allocation is made subservient to district government, these fictional allocations will continue.

Remember that we use flooding of the canal system for water allocation. This means that first fifty percent users get excess water by illegally widening their outlets, resulting in tail-enders receiving water in insufficient quantities. The entitlements to water are not equitably exercised; theft is built-in in the allocation system.

We are told that the current government has come in with a reform agenda. Reform maybe slow but it needs to be time-bound. Our expectation is that water pricing shall be introduced at least in Punjab by the incumbents to rationalize consumption. Water pricing can usher in a revolution by which existing elite may be check-mated. Remember, these same people are known as electables in their districts.

Second, a water-saving formula needs to be agreed between federating units, whereby agriculture’s share in the water-pie is aimed to be reduced from present 90 percent to 25 percent. Of course, getting there will take a long time.

At a bare minimum, the target for present government should be to ensure 100 percent recovery of O&M costs by the end of its tenure. If anyone is to be made to pay for the $14 billion dam, it should be large farmers who consume most water without paying a dime!

Let me give you another example of how the rigged system can be corrected. Under the present system, lentils and pulses (legumes) are imported at the beginning of cultivation season every year, discouraging domestic growers. Chickpeas are mostly imported from Australia! It is so because vested interest buys influence with the government and control the external trade policy.

The government should introduce market-based pricing mechanisms to encourage domestic production of lentils and pulses. These are very high in protein and can help address the stunting and malnutrition problem. This will also ensure that farmers are weaned away from cultivating water-intensive crops to planting legumes instead. If the farming-sector subsidies cannot be removed altogether, they should at least be phased out from sugarcane, cotton and rice and introduced in crops which are less water-intensive, have higher nutritional value and shall help in poverty alleviation.

BRR: Another agricultural commodity with high protein factor is meat from livestock. In recent years, we have seen mushrooming of processed meat businesses oriented towards halal-meat export markets. Yet, studies show that livestock has a much higher water footprint per dollar value of output, compared to any water-intensive crop. In view of your advocacy for water conservation, what should be the state policy on livestock and export-meat industry?

ATS: Pakistan is the world’s sixth-largest dairy producer. Yet, it does not add to the nutritional consumption of the farmer family, who would rather sell the milk to earn a living. Similarly, while we are the fourth-largest livestock producer, meat consumption largely remains an urban phenomenon. As a result, stunting and malnutrition remains common in rural districts.

Note that Pakistan’s cattle-count shot up astronomically in the aftermath of the Afghan war, as refugees came with their cattle. Over the four decades, excessive grazing has resulted in rapid depletion of our forests and grasslands.

The livestock sector is virtually unregulated. If the sector is corporatized and brought under regulatory ambit as a result, it may not pose as much of a threat to environment and water security as it does currently due to uncontrolled growth. Corporates will to have to follow through on codes for environmental protection which do not apply to the informal sector.

Remember, the informal sector is interested in multiplication of cattle primarily for Eid purposes. Whatever regeneration happens during the year is slaughtered by year end. My point is, a regulated increase in cattle count will not hurt as much as unregulated growth.

BRR: The corporatization argument sounds nice in theory, but let’s looks at the evidence. The packaged-milk industry has been around for last three decades. And yet, little to no spillover gain or trickle-down effects has followed for the livestock farmer. Cattle growth, as you said, continues unregulated. Whereas stunting and malnutrition has seen little improvement. Should we really place our faith in the corporates?

ATS: Correct; Pakistan is also one of the biggest importers of dried milk-powder in the world. When you add all this up, it means that the regulator is weak. Those who cheat the system have hijacked the benefits of the white revolution. If dividends from white revolution had really followed, milk prices should have declined over the years. Instead, an ex-manager from dairy and fertilizer industry is now running the economy.

The sector, by itself, is thus not the challenge; regulatory weakness is. If regulatory weaknesses remain, corporatized livestock businesses could exploit it to incentivize cultivation of feed-crop in place of staples such as wheat, for example, which could endanger food security. But the solution is to strengthen the regulator and not nipping the industry.

BRR: Returning to the subject of water supply regulation, does Pakistan need new dams and small or large?

ATS: You can see that the capacity of existing dams is adversely affected by sedimentation which fills rather quickly. If dams are the solution, then we need to first invest in sedimentation-removal technology so that dams may at least fulfill their intended purpose. Currently, we are not investing enough in those technologies which exist and can be brought to scale with R&D spending.

So far as large dams are concerned, I believe they should not be a priority. But even if it is set in stone that a large dam must be built, crowd sourcing is no way to finance it.

Funding should be secured from those who have the largest share in the water consumption pie. Nobody talks about making the politically-connected agriculture elite pay for water reservoirs, even though they shall be the main beneficiary. They should at least be made to pay for one-fourth of the funding requirement. Remainder can be secured from sources such as green bonds, taxes, and sure, fund raising from expats.

Having said that, Pakistan simply does not have the capacity to construct a mega dam in the stipulated time period. People like to quote examples of Tarbela and Mangla, to which I say, ‘gone are the days.’ Back then, even PIA and Pakistan Steel Mills used to be in great shape. Pakistan does not have the institutional capacity to build a mega dam even if the funding is secured tomorrow with a blank cheque.

BRR: What is your view on the one-rupee (per liter) charge imposed on commercial water bottlers in a recent court judgment. Do you believe the issue has been tackled well? Concerns have been raised that top MNCs have been let go with a slap on the wrist.

ATS: First, it was not the court’s job to determine the rates. Second, the case represents a wasted opportunity to review the distortions in the groundwater regulation. Three, profits of a firm or industry cannot be capped if a marketplace of buyers exists who are willing to pay.

It is the government’s job as the ultimate regulator to run hydrological surveys, and then determine specific areas where commercial bottlers may be allowed to abstract water from. For example, telling bottlers to employ reverse-osmosis of brackish water and use it for commercial purposes. But the government has abdicated its role as a regulator, which creates an opportunity for other institutions to take charge, even as they lack the capacity to do so.

What if, as an outcome of this judgment, the private-sector investor exits the market? Everybody is worse off. The parliament and the provincial assemblies still have an opportunity to review the legislation (or lack thereof) on groundwater, specifically its abstraction by commercial bottlers. Remember, bottlers don’t have a right to groundwater; the access they enjoy represents our weakness in regulating them.