How Do You Price
Water?
Water is a basic
human right. We all need it to live. In India, the firm cultural belief in
karma means that water is what you give away to a parched guest, stranger or
no, who travels through the hot subcontinent to land on your doorstep. So how
do you sell price water? Is it even moral to do so?
Sarvajal thinks
yes.
Our water is
priced at less than US$0.01 per litre, or 30 paisa per litre. This
costs less than a cup of chai tea. As a result, this makes us the most
affordable safe water solution in most of these communities.
Of course, there
is still an argument that water is a basic human right and therefore shouldn’t
be priced at all. This is the route of most traditional charities. However, as
these charities soon find out, when the external funding runs dry the project
dies with it. Instead, by pricing the water at an affordable low cost we ensure
the long
term accessibility and
affordability of the resource. It has the added benefit of making our customers
value the water as a commoditized resource. This leads to better conservation
and less water waste since customers are not using the water to feed their
cattle or bathe in (both of which happened in Sarvajal’s early days, before our
priced model).
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| A Sarvajal Community Awareness employee going door to door to help community members understand the health benefits of drinking safe water. We use the analogy that it is like insurance: pay a little bit up front and then you can mitigate the bigger health cost down the line! |
Indeed, in
providing the service we are actually saving our customers an average of Rs.
337 (87% compared to the control) household medical expenses per month. In
certain communities household
savings are in the thousands of rupees! This is directly attributable to the
health benefits of clean drinking water and is an important part of Sarvajal’s value add . In explaining
this to our customers we often draw the comparison to an insurance payment: you
pay a small, regular amount to ensure that there are fewer cripplingly large
medical expenses sporadically.
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| Children in Jaipur enjoy free Sarvajal water at school. Costs are subsidized by water sales in the local village. |
However, we are
aware that by pricing our water we are excluding the most disenfranchised who
cannot afford even our low price. According to national data, 30% of Indians
live below poverty line. Sarvajal assumes that people living Below the Poverty
Line (BPL) cannot afford to pay for water, no matter what the price. This is
why we also operate CSR and charitable schemes that place our water solutions
in schools, hospitals or target communities where we provide the water on a
subsidized basis or free of charge. In these cases, the operational costs are
offset by the sponsoring organization or through regular commercial operations
in attached communities. Furthermore, the fact that our ATMs are smart-card
enabled means that we can do targeted subsidies for BPL families! These
subsidies are pay to play- meaning no money get’s wasted beyond
what is directly used by the BPL family on safe water. Our hope is that by
eliminating incidences of water borne disease, we can
help families mitigate crippling medical costs and free up resources saved for
other basic development needs. In this way Sarvajal hopes
to pursue our missions of providing affordable, safe water to all members of
the community.
----Alessandra Kortenhorst
----Alessandra Kortenhorst
[Alessandra is a Business Development Associate Fellow at Piramal Sarvajal. Find out more about us at Sarvajal and follow us on Twitter at @PiramalSarvajal]
