It is time for Hong Kong to get real about water pricing

The wet stuff is too cheap, so residents waste it, but growing demand on the river that supplies the city means we have to learn to conserve it

PUBLISHED : Wednesday, 31 July, 2013, 12:00am
UPDATED : Wednesday, 31 July, 2013, 6:52am

Back in the 1960s, Hong Kong used to suffer from debilitating water shortages.

The worst was the drought of 1963 to 1964. With almost no rainfall and the limited reservoir capacity running dry, water rationing got tighter and tighter, until eventually the city's taps were allowed to work for just four hours in every four days.

In response, the government came up with some innovative measures to conserve fresh water. It installed a separate piping system to provide seawater for flushing the city's lavatories. It set aside almost a third of Hong Kong's land area as water catchment, and it embarked on a massive construction programme, building the huge Plover Cove and High Island reservoirs.

It also built the world's largest desalination plant at Lok On Pai, near what's now the Gold Coast.

The 1970s energy crisis put paid to that project, so to secure adequate water supplies for the future, the government signed a supply agreement with the mainland, piping in water from the Dongjiang, or East River, 80 kilometres away in eastern Guangdong province.

Today the Dongjiang supplies about 80 per cent of Hong Kong's freshwater consumption for a modest price of about HK$5 a tonne.

However, users in the city don't even pay that much. Although costs have risen steeply in recent years, water tariffs have remained frozen since 1995, with the Water Supplies Department making up the difference in cost.

Thanks to this hefty government subsidy, Hongkongers today enjoy among the lowest water bills in the world. As the first chart shows, according to the International Water Association, we pay only 20 per cent as much as Sydney-siders and just 6 per cent as much as the lakeside inhabitants of Zurich.

As a result, Hongkongers have become profligate water consumers. As the second chart illustrates, on average we use 220 litres a day each, 13 per cent more than Singaporeans and 60 per cent more than the average New Yorker.

[In the 60s' drought] the city's taps worked for just four hours in every four days

Unfortunately, we won't be able to go on splashing around this freely for much longer. With the Dongjiang also the main water supply for Shenzhen, Dongguan and Huizhou, demand on the river has reached unsustainable levels. Water quality is fast deteriorating.

Given that mainland demand is only likely to increase further, Hong Kong's water supply will soon be in doubt again, for the first time in more than 30 years.

Happily, there are steps we can take now to mitigate the future shortage. In a major study published yesterday, independent think tank Civic Exchange called on the government to carry out a comprehensive audit of Hong Kong's full water costs - from source to waste treatment - and rejig its pricing system accurately to reflect its "user pays" principles.

This would have two effects. Firstly, imposing market pricing on big consumers would give them a powerful incentive to use water more conservatively.

Secondly, a price structure that reflected the true cost of water would facilitate investment in new sources of supply.

For example, the government could invest in recycling plants to treat Hong Kong's waste water and feed it back into the drinking water supply.

That might sound a distasteful idea at first, but it is what happens in nature anyway. And there are plenty of precedents for water recycling. In Singapore, for example, 30 per cent of the fresh water flowing from the taps has been recycled, with the government planning to raise that proportion to more than 50 per cent.

Hong Kong should also re-examine desalination, which thanks to new technologies is now far more efficient than in the 1970s.

Sure, it's still an expensive option. But if the alternative is a return to 1960s-style water rationing, Hongkongers will be happy to pay.