Friday, 25 March 2016

How Do You Price Water?

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).

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.

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 is a Business Development Associate Fellow at Piramal Sarvajal. Find out more about us at Sarvajal and follow us on Twitter at @PiramalSarvajal]