Wednesday, December 28, 2005

Water and Water Policy in Taiwan

Water and Taiwan

"If free-market mechanisms - which much of western agriculture publicly applauds and privately abhors - were actually allowed to work, the West's water "shortage" would be exposed for what it is: the sort of shortage you expect when inexhaustible demand chases an almost free good. (If someone were selling Porsches for three thousand dollars apiece, there would be a shortage of those, too.)" - Marc Reisner, Cadillac Desert

Many years ago, before the bus lanes and Civic Boulevard and the metro system and other accouterments of civilization had made Taipei almost livable, I was working in a cram school off of Fuhsing N. Rd. One day, shaking my head in frustration at some political silliness, I remarked to a long-term expat, that if Taiwan could only get rid of the KMT, they could build a paradise here. "Nope," he replied sourly, peering out the window as another soggy Taipei day resolved into rain, "there'd still be the weather."

Kvetching in the Rain
Among the locals weather is what generally catches the blame for the recent spate of water shortages in Taipei. In a way, they are right. Taiwan in general is heavily dependent on rainfall, 75-80% of which falls from May to October. The big typhoons that roll out of the Pacific summer and slam against the Central Mountain Range during that time, for all the destruction they cause, are a crucial source of water for the island. Although Taipei often seems to have trademarked the words "muggy" and "dreary", the reality is that, thanks to our warming planet, two key numbers are shifting: there are fewer rain-days in Taiwan, and the annual figure for maximum consecutive no-rain days is rising over time. This is especially true of northern and southern Taiwan. In the south rainfall is actually declining over time.

The heavens giveth 2,500 mm rain to Taiwan annually, but the steep slopes of Taiwan's mountains taketh away, allowing up to 80% of that to run off to the ocean. Only five of Taiwan's rivers have slopes gentler than 1/1000; in the upstream reaches slopes are typically 1/100 or higher. River basins are small, with all but nine rivers having watersheds smaller than 100 km2. The small watersheds and steep slopes give Taiwan's rivers the highest peak drainage per unit of basin area in the world: the peak discharge per unit area of the modest Choshui River, at 186 kms long Taiwan's longest, is 450 times that of the Yangtze. Some rivers with catchment areas of 3000 km2 discharge 10,000 m3 of water per second at peak. Taiwan's reservoirs, many of which must be filled two or three times a year, are crucial in maintaining an even flow of water across the island: 60% of northern Taiwan's rainwater falls during the rainy season, versus 90% for the south. Hence, seven months out of the year, southern Taiwan gives up more water to the air than it gets. Despite the seeming inevitability of rain, annual availability of water resources fluctuates from only 30 per cent of long-term average in the lowest year, to 210 per cent in the highest. This combination of powerful discharges, long periods of low water, poor soils, steep slopes, and large volumes of rain pose formidable problems for water management and conservation.

Taiwan makes up the shortfall in water from the skies by drawing from the ground. Each year Taiwan pumps 2 to 3 billion tons more groundwater than is replenished. In the south things are especially bad, subsidence in northern Taiwan being stabilized in the late 1970s after the government intervened. In southern Taiwan groundwater pumping has lowered 1,700 square kilometers of coastal land, an area six times the size of Taipei county, or about 16% of Taiwan's coastal plain. A tenth of Pingtung's western plain is below sea level, with subsidence of over two meters in some areas. Places in Kaohsiung county have sunk more than three meters. In coastal areas affected by groundwater pumping, average subsidence rates are between 5 and 15 cm annually. The major culprits? Agriculture, but especially Taiwan's enormous aquaculture industry. At one point in the mid-1990s there were over 170,000 illegal wells pumping groundwater for fish farming. Since much of the farmed fish was exported (glass eel shipments to Japan were worth a cool $400 million annually a decade ago), the government of Taiwan was essentially subsidizing the mining of water for shipment overseas in the form of fish. Since the early 1990s the government has attacked the problem with reclassifications of land, stricter controls on water use, improved technology, and education. But while the shortfall has been reduced, it has not disappeared. Illegal pumping continues, and officials admit that they have no idea how many illegal wells there might be in Taiwan.

If You Have to Ask the Price, You Can't Afford It
Because of the importance of water, I always assign my classes to write on water policy in Taiwan. When I ask my students what the reason for the water problem is, I typically get a range of responses. Students cite drought, a lack of reservoirs, global warming, tree-cutting in watersheds that causes the reservoirs to silt up, and the way the locals waste water. Invariably they neglect the most important reason for Taiwan's water woes: low water prices.

Water prices in Taiwan are, not to put too fine a point on it, insanely low. According to a recent commentary a local English newspaper, the unit price of water in the US and Europe is NT$40. In Taiwan, it is NT$9. In Taipei, it is a mere $7. Similar figures were given three years ago by the Directorate General of Budget, Accounting and Statistics, which said that the average price for each tonne of tap water in Taiwan was about NT$10.1, compared to NT$65 in Tokyo, NT$33 in London. NT$26 in Paris, and between NT$24 and NT$38 in Singapore. These prices are rock bottom, lower than many developing countries, and twice as low as those in mainland China.

The low water price has numerous ill effects. Looking at such trophies as the smart new metro system, the widespread availability of DSL, and Taiwan's advanced biotechnology and information industries, the visitor to Taipei may be forgiven for imagining that the island's infrastructure is world class. But in fact, many of Taiwan's pipes date from the Japanese period. Low water costs means that while the local water company can recover its operations and maintenance costs, it has no cash for investment in infrastructure upgrades. As a result, experts estimate that up to 30% of the system's water is lost on its way to local faucets. By some accounts this figure is equivalent to 2 million m3 a day- 325 million flushes of the toilet. The inability to invest in infrastructure also means that water is wasted by going untreated. Though the perception is typically that industry is the leading violator of water cleanliness, as local industry cleans up or shifts to China, household waste running untreated into Taiwan's rivers has become the leading water pollutant. In Taiwan DSL penetration (~23%) beats sewer connections (~10%) hands down. Yes, that's right: the sewage of 90% of Taiwan's households rolls unvexed to the sea.

The second problem raised by low water rates is massive wastage by locals. Figures vary, but Taiwan's water-crazed consumers are generally said to use between 270 and 350 liters of water per day, compared to 150 liters per day in Europe and 150-250 in the US. Since water is cheap, few consumers care about conserving it. Nor does it make sense to spend large sums of money to rip out expensive concrete walls in order to replace the leaky pipes that are a fixture of so many of Taiwan's older homes, since the cost of the lost water, even over many years, will not be noticeable. Businesses wasteful of water abound - nearly every gas station has a car wash attached, for example, and a favorite recreation of Taiwanese is to fish in one of the artificial fish ponds found in every community. At the private swimming pool we frequently visit, the groundwater pump runs all the time. With price artificially low, naturally demand is artificially high, leading to "shortages."

It is not just Taiwan's consumers who are used to low water rates. The government has from time to time proposed desalination plants to solve Taiwan's water shortage problems (though few foreigners are aware, the island operates roughly a dozen cranky old desalination plants on its offshore islands, and one at the nuclear power plant in Pingtung). However, unit costs are expected to be three to four times higher than current water rates: between NT$30 and NT$40 per ton on the islands, while on Taiwan proper consumers can look forward to between NT$10 and NT$20. Taiwan's manufacturers, accustomed to subsidized water, balk at paying such high prices. Nevertheless, Taiwan's Water Resources Agency (WRA) is developing the technology in several counties, including Tainan, Kaohsiung, Yunlin, Hsinchu, Miaoli and Changhua. The agency hopes to produce at least 200,000 tonnes of desalinated water per day by 2021.

On the plus side, many of Taiwan's advanced manufacturing firms have begun to recycle water, maintain their own water reservoirs, or upgraded their own piping. In Hsinchu Science Park recycling of water has been mandatory for almost a decade. In 1991, the WRA and Environmental Protection Administration introduced new recycling policies aimed at encouraging industry to recylce. According to the government, Taiwan's industrial wastewater reuse ratio stood at 34% in 1991, but climbed to 46% by 2001. The Water Resources Agency is targeting 65% by 2011. However, this gaudy figures applies only to large legal factories regulated by the government, a minority of the industrial establishments on the island. The government has also taken steps to reduce water from low value applications like agriculture, which accounts for three-fourths of the island's water use but just 3-4% of its GDP, and shift it to higher value applications in manufacturing, which uses just 9% of the island's water. However, politically powerful farming areas balk at sharing water with industry. The government tends to side with industry in these clashes, part of its long-term plan to reduce agricultural water use.

In many industries the use of subsidized water and lack of government enforcement of treatment standards and legal usage is in fact the main source of industry profits. For example, some analysts claim that pig farming would be impossible were it not for subsidized water. By law every pig farm must have a water treatment plant, but the law is routinely ignored in practice, and pig waste is dumped untreated into the watersheds of southern Taiwan (wastewise, 1 pig equals 8 humans). Back in 2001, the government solved a host of water problems in Kaohsiung by forcing 567,000 pigs to relocate, for which it paid out compensation. Similarly, it handles northern Taiwan's water "shortage" problems by paying rice farmers not to plant. The absurdity of that is clear - first the government subsidizes the cost of water so that households overuse it, and then it pays farmers another subsidy so that they won't use water the government is in effect paying consumers to use. Such a policy can have only one outcome.

The agricultural water price issue is even more complex because in 1995 the government suspended payments for many irrigation cooperatives as Taiwan's farmers could no longer afford to pay even the subsidized prices for water. The government then extended subsidies for the operations and maintenance of irrigation systems. Modernization of Taiwan's creaky irrigation systems is also being paid for by the government, which is assuming 40-100% of the costs, depending on how the local irrigation cooperatives handle the projects. In other words, the government first gives the farmers free water, then subsidizes the delivery system operations, and finally pays for all the upgrades. Fiscal madness.

Wring Out Your Dishrags, Not Your Hands
As with so many of Taiwan's problems, the government is aware that the price of water is too low, but no political party is willing to accept the political cost of increasing the water rates. A further obstacle, also a common one in Taiwan's public policy circles, is that the government has shown a distinct lack of imagination in its public policy approaches. When I lived in Kenya in the mid 1980s, it was routine for houses to be equipped with rainwater catchments that captured and stored rain that fell on rooftops. Such alternative water systems are practically non-existent in Taiwan. Instead, the government is going forward with plans to add more reservoirs to the existing 40 or so, a traditional solution driven by a public policy preference for solving problems by throwing concrete at them, which enables whatever party is in power to funnel large sums of cash to local politicians. New reservoirs, however, do not address the problem of low prices and entrenched consumption habits. Instead, they send a signal that consumers do not have to be responsible for their behavior, as the government will always bail them out with more reservoirs. Constructing reservoirs to solve water shortages thus resembles solving traffic problems by building more roads.

Hence, the next time you hear about a typhoon flooding coastal areas, think: subsidence. The next time you hear about a local water shortage, think: subsidies. And the next time you contemplate a glass of water, think: subsistence. Because unless the government of Taiwan raises water prices, enforces conservation, and begins to attack the island's water problems in a robust and unconventional way, that's where the island will be within our lifetimes.

(A longer version of a piece to come out next year in a local east coast bilingual newspaper, Highway 11. This beautiful and informative magazine is always looking for good writing)


Anonymous said...

I enjoyed your comments on water in Taiwan. Do you teach at university here in Taiwan?
Actually I noticed your referal on my blog counter. I will bookmark and come back more often.

i r i s said...

Hurrah...I mean, thank you! ;)


Michael Turton said...

Anon, yes, I teach at Chaoyang U in Wufeng.

Iris, the layout was impressive and stunning! You guys should be proud! I hope it lives on. I can't wait to come around to your end of Taiwan and visit ya'll!


Anonymous said...

This is the greatest thing you've ever written, Michael. Its presentation of fact after fact with no lean in the middle is tremendous. It's factually thick as an encyclopedia but compacted to the size of an i-pod, and 100% impactive.

Great stuff.

rmdazwdv said...

Good analysis. Can you delve more into the "cui bono" angle?

Anonymous said...

Geese, You're so familiar Taiwan water issue. Are you water resource expert ? I always think about how to solve Taiwan environment issue. Like, trash dumping, sewage, rugged roads.
Just don't know how to promote our home land.
Anyway, thanks your great paper

Anonymous said...