Innovative Groundwater Tariff Introduced in Peru
When Peru’s water services regulator, SUNASS, was drafting legislation to manage the country’s groundwater resources more sustainably, it approached the 2030 WRG for technical support. SUNASS and the 2030 WRG formed a working group that discussed proposals and communicated the concerns of groundwater users to the government.
In the Rimac River basin, in Lima, groundwater is an important source of water, providing on average 18 percent of the total water abstracted by the utility. During drought periods the share of groundwater rises to 33 percent. In a business-as-usual scenario, water demand is expected to almost double by 2040. As rainfall and surface water sources are erratic and surface flows are seasonal, water users are increasingly exploiting groundwater reserves. Pollution in aquifers is increasing, water levels are dropping to critical levels, and saline intrusion is worsening.
To address these challenges, a groundwater monitoring and management tariff was proposed, whereby industrial users pay their share for the operating and capital cost of the projects that make available the groundwater they use. It is one of the first groundwater services tariffs to be enacted worldwide.
The water utilities will administer the levy and the funds will be used to monitor groundwater quality and quantity, providing valuable new information and enabling SUNASS and the utilities to take suitable remedial action.
The new groundwater tariff regulations were enacted early in 2016 and SUNASS is coordinating implementation with the first two water utilities to apply the tariff—Sedepal in Lima and Sedalib in Trujillo.
In the longer term, once the tariff is established it can be rolled out across the country, and be applied to non-industrial groundwater users too. It will help conserve a valuable resource, building the country’s resilience to climate change effects, safeguarding water supply for industry, and building investor confidence.
“To comply with sustainable development goal 6 approved by the United Nations there is a need to move toward Integrated Management of Urban Water Resources. In Peru, responsibility for providing groundwater management & monitoring services has been transferred to Water Utilities in geographical areas where they operate and bill users of these water reserves a tariff for this service. SUNASS is responsible for developing a methodology for the calculation of a groundwater management & monitoring service tariff and setting for each operator. The 2030 WRG contributed in a decisive and fundamental manner to the design and development of the methodology and are performing a key role, both in supporting the water services regulator (SUNASS), as well as in the creation of the proper incentives for sustainable water use.”
President of the Board of Directors of SUNASS