BANGKOK–No doubt government officials have treated the farmers of the Pai River callously, even shamefully. Dam construction firms will probably earn excessive profits. Some animals may suffer and yet more trees will fall.

But probably many compassionate nature lovers would nevertheless conclude that dams and diversion projects in the Salween Basin aren’t so bad in themselves; the problems are in the execution. Progress has a price. Irrigated farms, households and industries elsewhere need water. Mae Hong Son province has water but not many people. The few must sacrifice for the majority. Or must they? 

Chainarong Srettachuea, research and policy division coordinator for Wildlife Thailand, believes short-term needs would evaporate if the country made more efficient use of the present water supply. “In the Chao Phraya River Basin, there is over-consumption and low efficiency. The efficacy is 33 percent, while the world standard is 66 percent. So the Chao Phraya usage is only about 50 percent of the standard,” he said.

Eric Azumi, a US hydrologist working at Chiang Mai University, didn’t think such claims were far-fetched. In Chiang Mai in 1993, he said, only about 71 percent of treated water was actually sold. The remainder was lost in the distribution system. “The leakage rate is about 50 percent higher than what is considered normal even in a developing country,” he said.

Yet the city’s water works agency is now constructing a 60-million baht pipeline to draw water from the Ping River. The Ping River is fed by the Taeng River which, if plans are carried out, will be supplemented by water piped from the Pai River. Because  the waterworks withdraws raw water for free from the Ping River and, when available, from the Taeng River Irrigation Project, it has little incentive to plug leaks, Azumi said.

The remarks concerning how Thailand could better manage its existing water supply were contained in a paper by Azumi, Jeffrey Vincent of Harvard University and associates. It was published by the Thailand Development Research Institute earlier this year. The basis was a case study of the Taeng River Watershed, but the conclusions have wider application.

Most obviously, the writers argue, waterworks, intensive farmers, industries and households need greater motivation–such as prices or tax write-offs to conserve, recycle and adopt better technology, such as drip irrigation. Less obviously, the Royal Forestry Department should find an alternative to pine trees, the priority species in its reforestation programmes. Deciduous hardwoods or grasses allow more water to seep into waterways. Contrary to popular belief, the declines in stream flows in the past few decades probably aren’t due to deforestation; most likely, they’ve been caused by changes in land use.

The scientists’ strongest and most controversial pitch is for creation of a system of tradeable water rights. Their economic analysis has persuasive force. For each cubic meter of water that Thai farmers use, they derive marginal benefits of at most one baht. The Chiang Mai Water Works can afford to pay as much as 3.79 baht to 6.99 baht per cubic meter for marginal units of water without causing an increase in water rates. The long-run marginal costs for the agency to draw water from the Mae Kuang Dam will total 7.14 baht per cubic metre.

Why then doesn’t the city buy water from farmers? A farmer would earn more than 1 baht per cubic meter. The city and the central government would be spared the monetary and human costs that dams and water transfer projects entail.

Unfortunately, no promising precedent can be drawn from the Thai history of attempts to award land titles and usage rights to longtime occupants. It’s all too easy to imagine the well-lacquered wife of a politician claiming her water rights based on the amount of water she used all those years tilling the soil. Azumi and colleagues don’t downplay the huge political obstacles to the establishment of a water market. Nor do they suggest that a water market is likely here in the near future. But the long-term is another matter.

Water markets will seem less a California fad and more a commonsense solution as more developing countries adopt them. A World Bank study issued last year, Markets in Tradeable Water Rights, described systems in Chile, India, Jordan and Mexico. Peru is in the process of reforming water laws to permit tradeability and Pakistan has markets despite the lack of law. Chilean farmers’ associations have been contracting to sell water to urban users since 1976.

The World Bank study also foresees the inevitable rise of water markets, but it adds a few more reasons. For one, throughout the world, farmers’ capital costs are increasing, yet global grain prices look set to sink. The prospects of selling water may soon look very attractive.

This was a sidebar accompanying a story I wrote long ago for The Nation newspaper about the Thai government’s secretive plans to build a dam near a cluster of feisty villages in the northwestern Thai province of Mae Hong Son. This is Thailand’s most heavily forested province, where national forests are supposed to be protected from such development. Water markets have been proposed a few times since, but the idea is still very controversial.