Экономические науки / 13. Региональная экономика

Cherednichenko I.G.

Public institution “Institute of environmental economics and sustainable development of national academy of sciences of Ukraine”, Ukraine

The sustainable development of water treatment and disposal systems: Problems and prospects

Last year the UN Decade for Action “Water for Life” expired. It was not the first international program, the goal of which was to have the grabbed world attention to water problems. The summary report ‘Water for Sustainable Development” says that before the year 2015 the share of human beings without continuous access to clean drinking water decreased in 2 times, and at present 56% of the world population enjoys the high level of water supply. At the same time, more than 700m people have no direct access to the sources of drinking water. Around 80% of the waste products in developing countries are still stewed in rivers, whereas 1 liter of the waste product pollutes up to 8 liters of clean water in its source. The practice of water purification for its reuse has not become a strategy for managerial decisions, even in the developed countries of the world. In order to organize the world, wherein the dignity of every person is respected, it is planned to develop a framework program for the period from 2015, the implementation of which is to promote the elimination of existing differences as far as no one can be deprived of the right of access to safe water and proper health.

The important component of solution of these problems is water treatment and disposal systems – the structural elements of the water industry that are a part of external water supply and protection systems and their operation ensures the renewal of barrier functions of environmentally friendly capacities and the management of negative consequences of unprofitable economic activities that show up in the deterioration of water supply sources. The sustainable operation of the abovementioned systems affect water supply schedules in communities, quality of water, consumed by the urban and rural population that may significantly affect the public health in the long run.

Traditionally the water supply and disposal industry is regulated by the government considering its importance for the national economic development and social significance for the population. However, not least attractive is its profitability – one dollar, invested into water supply and health, may yield, depending on the region, in thirty four times more, but, at the same time, this industry is problematic enough – the construction of new water supply and disposal systems is more profitable than maintenance or repair of the old ones. Ukraine wishes to join the European Union and this means a transition to substantially higher technical standards of the industry by means of complete or partial replacement of the existing standards that comes at a price in resources, including financial resources.

In 2000, the Ukrainian government started to reform the municipal sector of the economy that resulted in rapid changes in the pricing for centralized water supply and disposal services. The goal of the reforms was to accept a rational, economically feasible pricing system that would be able to ensure the return on investment in the industry, to protect the municipal economy from the free fall and to make it possible to increase the level and quality of services provided to customers.

In August 2001, the State Committee for Construction, Architecture and Housing Policy, by the agreement with the Ministry of Economy and the State Antimonopoly Committee, developed the set of regulatory documents, according to which the principles of economic effectiveness and equity were introduced to the pricing system. In accordance with the principles, the industry’s enterprises had the opportunity to cover differences existing in economic, accounting and tax computations of the costs against the tariffs.

According to the Ministry of Regional Development, Construction, Housing and Communal Services of Ukraine, as at 1^st December 2015, the actual costs of the following cities were completely recovered using the approved residential tariffs for water supply services – Mariupol, Zaporizhia, Cherkasy, Chernihiv, and Kyiv; for water disposal services – Mariupol, Zhytomir, Zaporizhia, Bila Tserkva, Severodonetsk, Lviv, Rivne, Cherkasy, and Kyiv; however as at 1^st July 2016 only Zaporizhia and Chernihiv maintained the given status for water supply services, but Bila Tserkva, Zaporizhia, Lviv, Rivne, Sumy, Cherkasy, and Chernihiv maintained their status for water disposal services. Except for Vinnitsa, all regional centers had the same residential and commercial tariff per 1 cubic meter.

Considering Ukraine’s aspiration to join the European Union, the calculation of the uniform residential and commercial tariff for water supply and disposal services was a completely logical step. However, they have not still determined a separate expenditure item “Purification of Water” that, in turn, would apply the polluter-pays-principle in the sector. According to the website of Vik-Varna Water Supply Company (Varna, Bulgaria), the cost for purification of water of I-III contamination level for industrial and other consumers is EUR 0.23, 0.33, and 0.55 per one cubic meter respectively, but the cost of water supply and disposal is EUR 0.71 and 0.13 per one cubic meter. Voda Donbasu Public Utility Company has developed the validation of the latest tariff increase up to the market value, according to which the cost of water supply and disposal services amounted to EUR 0.2 and 0.34 per one cubic meter. However, the cost of services in Ukraine is still low compared to the EU countries, and, taking into account that inflation in our country was 48.7% in the last year, the increase in tariffs without improvement of service quality may result in negative consequences, in particular the decrease in payment discipline of consumers that was observed in the nineties of the last century.

We should pay special attention to the problem of water losses that is the generic one for many water supply companies in Ukraine. During 2011, the national average difference in water supply and sale was more than 40%. Moreover, in such cities as Zhytomir, Chernivtsi, Uzhhorod, and Sevastopol the level of losses was more than 70%. The lowest level of losses is in the Russian Federation – 14.2%. The EU countries have lower values: Germany – 8%, Spain – 11.0%, Japan – 11.7%. The level of losses in Italy and Sweden is 18% and 20% respectively that is close to our level. However, the specialists, including the foreign ones, believe that the water loss saving below the 15% level makes no economic sense as far as the effect is less than the money invested. The condition of water systems was characterized by significant water leakages from 1km of the mains per hour. According to the European standards, in case of significant leakages of more than 0.2 cubic meters per one kilometer in hour it is important to scan the mains and eliminate leakages. In Ukraine, the average significant leakages are 1.31 cubic meter per one kilometer in hour [1].

According to the State Statistics Service of Ukraine, as at 1^st January 2015 the length of old and emergency mains was still high – 34.6 % (38.2 in 2012) and while the general trend has a downward nature, the number of emergency and old mains increases in the most regions. Positive changes have been observed in Zhitomir, Kyiv, Kirovohrad, Mykolayiv, Sumy, Donetsk, and Luhansk regions. The number of leakages and unaccounted loses decreased to 0.8 billion cubic meters compared to 1.2 in 2012.

Consequently, the industry’s enterprises have to operate under the conditions when the tariffs do not cover their expenses for many years. In order to solve the problems, we should find additional funding sources for modernization of water supply and disposal systems.