Insights from antiquity: Oman and the art of water pricing

By Peter Brabeck-Letmathe

07 January 2013 See comments (17)

AFLAJ IN OMAN: Tradable water rights.

We rarely value what we don’t pay for. This is an unfortunate paradox, but it is also a human reality. And for water, this means that until we set a price the world will continue to overlook its essential value.

This is an issue that I have touched on previously in relation to my firm belief that water should be regarded as a human right but not a free good.

The idea of pricing water, which is sometimes viewed as controversial, can sometimes be mistaken as a very modern concept. Yet its true origins can be traced back to antiquity to the Aflaj water systems in Oman. The Aflaj is an ancient network of subterranean water channels originally built by farmers more than 4,500 years ago to irrigate fields and supply water to villages for household use. To this day the system provides more than 60% of the country’s fresh water supply and irrigates around 55% of its cropped land. It is also drinkable, with many Omanis still preferring the Aflaj water to pipe water.

Yet the real genius of the Omani Aflaj is not just in the inventiveness and efficiency of its irrigation system, but in the story of tradable water rights and the power of private ownership that it provides.

The system works by giving water a real value. First of all, only naturally renewing water is tapped. Using gravity, this water is channelled from underground sources or springs often from a distance of over many kilometres (the longest is 17 kilometres) through a simple system that is maintained by its joint owners, who each hold a defined share of the water.

For the first 50 meters or so, access to drinking water is free to everyone, including passing travellers. The water then goes to the mosque, and is free for ceremonial washing. A certain share of the water is also allocated to schools. After this point, the water becomes private property. Water entitlements are mostly measured by time of use: days, hours, half hours and minutes, which are traditionally measured by sundials during the day and by the movement of the stars at night.

Creating a price for water use not only creates a market. It also creates an incentive for sustainable and efficient use. Farmers are able to channel their share of water at specified times on certain days. These entitlements can also be traded at weekly auctions, where they can be either sold or temporarily rented out when not required. The price of the Aflaj water is not fixed but rather changes constantly to reflect variations in supply according to the season, the location and the type of usage. And crucially, the money exchanged in trading water remains within the community, allowing all costs for maintaining and developing the Aflaj to be recovered.

With the gap between global water withdrawals and renewals widening, the story of the Aflaj has several important lessons for us today. Giving water a price not only creates a mechanism that promotes greater efficiency in the supply, it also re-establishes respect and shared responsibility for water among end-users. The Omani Aflaj is one celebrated example of the contemporary relevance of ancient practices. But I would very much welcome readers to share any other examples from around the world that also deserve recognition.

  1. Water U-Can Trust @ Water U-Can Trust

    07 Jan 2013 - 19:09 (GMT)

    Happy New Year Nestle,
    Another interesting talking point.
    It indicates to me that our current drinking water scarcity, quality and accessibility are in urgent need of better solutions.
    I await the blinkers being removed....plastic bottles?

    Talk is cheap, genuine solutions are called INVENTIONS even in the provision of global drinking water pricing.

  2. Peter Brabeck-Letmathe @ Nestle

    08 Jan 2013 - 11:53 (GMT)

    Thanks for the comment and your interest in the Oman story. I think it shows how well these farmers have understood and tried to solve the real water issues. There is a lot we can learn from them – we at Nestlé, the 2030 Water Resources Group ( and all of us. It also shows to what extent water is local and that there is no global water price.

  3. Attilio Ascani @ FOCSIV

    08 Jan 2013 - 06:50 (GMT)

    Dear Peter,
    I very much agree with your concept that we value what we pay but this is not necessarely linked to private ownership of the water. Furthermore the example that you quote seem to indicate that the ownership is in the hands of members of the communities with a direct interest to the wellbeing of the community they are serving. Ensuring that the right to water is respected implies a social responsability of whoever is controlling the water system. In my work in Ethiopia and other East African Countries I have come across a great variety of situation where water is managed by communities and usersa are paying for the water they collect. However it is an interesting debate which ultimatly touches the future of humanity. More reflection should go int it and your efforts are steps in the right direction

  4. Peter Brabeck-Letmathe @ Nestle

    08 Jan 2013 - 11:48 (GMT)

    Dear Attilio,
    Thanks for your very substantial and fascinating comment. Oman combines joint social responsibility in a very smart way – for the overall water supply and its sustainability, and for covering the basic needs for hydration and hygiene – with private ownership of usage right, once these basic needs are covered. The tradability of these rights is a major driver of efficient use.
    You mention similar schemes in Ethiopia and East Africa. It would be fascinating if you could tell us more about these.
    Best regards,

  5. Carole Henriod Hohlman @ individual investor

    08 Jan 2013 - 12:24 (GMT)

    I treat myself every morning to using bottled water to make my coffee. Thank goodness that Missouri and the middle west of America has fine wells to draw water from. I know that Nestle knows about the one in Arkansas. I am the one who told you about it. Hopefully these wells will never dry up.

  6. Peter Brabeck-Letmathe @ Nestle

    08 Jan 2013 - 16:02 (GMT)

    Dear Carole,
    Thanks for the comment. Actually, it is a minute share of total water withdrawn worldwide for human use that goes into bottled water. For Nestlé as the global leader in high quality bottled water, this share is only 0.0009%. So little or rather no risk at all that we might cause wells to dry up. In addition, like the Oman farmers, we only take out from an aquifer as much as is naturally renewed. We follow this fundamental rule for several reasons. Firstly, when the water table in an aquifer falls the quality of the water would change. Secondly, we believe we would be destroying the basis for our longer-term business and investment if we were over-exploiting a source. A look back to history proves my point: bottled water from the sources of some of our best-known bottled water have been on the market for far more than 100 years. For example, San Pellegrino mineral water has been produced for over 600 years. You can count on us so that you can continue to enjoy mineral water for many years, whenever, wherever and however you like it.

  7. Aaron @ student

    24 Aug 2014 - 21:36 (GMT)

    How was the 0.0009% calculated? What policies are in place that affect the tragedy of the commons situation that might emerge if other companies collected their 0.0009%? (I mean 0.0009% --with variation assumed embedded-- times company numbers---is that percentage dynamic to seasonal, monthly, etc. changes?)

  8. Ricky Baizas @ Nestle

    10 Jan 2013 - 00:19 (GMT)

    Though I sometimes believe Thomas Paine's, "That which we obtain too easily, we esteem too lightly", I am not yet convinced that this applies to everything, in this case, water.

    I have seen many families here in the Philippines, mine included, that easily exchanged their lands for money. The problem is that when you convert something like land to money, the money can easily be spent. They buy cars, houses, travel abroad, etc. Before they know it, the money is gone. Whereas if they just kept the land, the land will be there forever.

    Will this not be a real danger as well if we put a price on water?

  9. Peter Brabeck-Letmathe @ Nestlé

    10 Jan 2013 - 11:00 (GMT)

    Dear Ricky,
    I think you’ve made a good point. But look at the story in Oman, this system worked for over 4,500 years. Wherever you go, farmers act as responsible citizens. They know how to preserve their assets for the children. Whenever possible, they do not sell their land, and in Oman, they sell water right only to invest in water efficiency. For instance, making sure their future and their children’s and grandchildren’s livelihoods are not endangered.

  10. Ricky Baizas @ Nestle

    11 Jan 2013 - 02:35 (GMT)

    Thank you for the quick reply, Mr. Brabeck. It's not the farmers I'm worried about because they are very close to the land.

    Also, what's good for the goose may not be good for the gander.

    Thank you for championing this discussion though.

    The debate continues.

  11. Lucas Beck @

    22 Jan 2013 - 09:51 (GMT)

    Dear Peter,

    I very much appreciate your idea of pricing water and I like the examples you give. I have the impression this will be the only solution to move towards a more sustainable use of this resource. But I would like to add some points that in my opinion are very important in this challenging issue:

    1) I think we should not talk about a price for the water itself but mainly for the service provided or the damage we caused. This can also include environmental, social, and political costs to the withdrawal of water.

    2) A water price could be used to compensate the costs of getting the water (e.g. infrastructure that needs to be built) or damage (e.g. conflicts, social costs, etc). Such a price would be locally very different of course. This means, that tomatoes grown in water abundant Germany cause other water costs (or another price) than tomatoes grown in Morocco.

    3) If we talk about water as human right, we can not automatically imply that it should be for free. We only imply that this water should be "affordable" for everyone. I am currently working on a project in Burundi. Here everyone has to pay some very small amount of money to the government to get access even to untapped(!) sources. I think, that a fair water price could even help to ease the burden of a poor farmer if correctly implemented.

    Anyway, I think this is a very important issue and I agree, that water for direct human consumption is not the main problem compared to agriculture for example.
    I'm partner of an innovative startup in the domain of modelling water related processes combined with socio-economic parameters. I would be very glad and excited to discuss and contribute more to this issue!!

    Best wishes

  12. Slim Zekri @ Sultan Qaboos University

    03 Feb 2013 - 08:33 (GMT)

    Dear Peter,
    Thank you for your blog and diffusing the several centuries experience of Oman about water rights and water trade. Above all and the most important is the result of such a system. Actually by creating the right regulations (water rights) and the right business system the Afalj have been sustainable for centuries. When compared to small scale irrigation systems all over the world, where farmers have no explicit water rights, the difference can be easily observed. Low maintenance, low water service, conflicts among users, heavy intervention of public authorities and no sustainability. In Oman the maitenance and cost of maintenance is insured by the farmers themselves. Rarely the water authorities in Oman had to intervene. And when they did intervene it was due to natural disaster such as Gono Huricane in 2007 which caused a lot of damage to the Aflaj channels.
    Note that the water trade among farmers is just an artifact to collect money for maintaining the system.Besides, water for drinking purposes is still accessible to users not owning water rights.
    For more details please see the following publications.
    Zekri, S. and Al-Marshudi, A. 2008. A Millenarian Water Rights System and Water Markets in Oman. Water International, 33(3), 350-360
    Zekri, S.; Kotagama, H.; and Boughanmi, H.; 2006. Temporary Water Markets in Oman. Agricultural and Marine Sciences, 11 (SI), 77-84.
    Zekri, S.; Boughanmi, H.; Kotagama, H. (2006). Traditional Indigenous Water Market in Oman and Response of Farmers to Water Prices. International Symposium on Irrigation Modernization. IPTRID/FAO, 28-31 March 2006. pp 74-84 topic IV

  13. Peter Brabeck-Letmathe @ Nestle

    04 Feb 2013 - 15:23 (GMT)

    Dear Slim,

    Thanks for your excellent set of remarks – what I think is of particular interest to readers is your point on administrative efficiency; the low administrative cost of Aflaj thanks to explicit water right within a very effective local institutional and social set up.
    I will also try and find copies of the three papers you mention.


  14. Aline Baillat @ WaterLex

    06 Feb 2013 - 15:23 (GMT)

    Dear Peter,
    Thank you for launching this interesting debate about water pricing. Water pricing is indeed a central and necessary measure of many water reforms today. How to determine water prices? In presenting the tradable right scheme in Oman, you suggest water prices are best defined by the market (it reveals the opportunity cost of the usage of the resource). I would like to introduce some difficulties surrounding this ideal solution.

    - As just mentioned by Slim Zekri this scheme is “just an artifact to collect money for maintaining the system”. In the literature about water rights trading, there is a lot of confusion about what is actually traded: it is rarely a right to use water resources but a right to a service to get the resource at a specific time, for a certain type of use, at a specific location (this includes the maintenance of the irrigation system). The Oman example is indeed very interesting but its contribution to the debate about the real value of water being revealed by water rights trading is limited as it builds on a very specific case of water market (irrigation water rights).

    - For water rights trading to bring truly sustainable and equitable outcomes important pre-conditions have to be met (limited size of the market, no transaction cost, natural infrastructure, sufficient number and homogenous actors, protection of third parties, definition of sustainable diversion limits/cap, etc.). Water pricing through water markets is a limited tool to face water challenges. Another problem with water rights trading is how to define water entitlements in order to get the right balance between sufficient security (for investment) and flexibility (necessary to adapt to changing water availability/climate change- see recent difficulties in the Murray Darling Basin).

    - What makes the water rights system in Oman works, is not the trading scheme per se but rather the traditional knowledge and community management of Aflaj system. What is fascinating in this example is the various layers of property regimes governing the resource. If these water rights have private characteristics (tradability) they are also part of a larger “bundle of rights” resting on a conception of the system as a common property. It is important here to underline that what leads to the tragedy of the commons is not the common property regime but the absence of property regime, the absence of rules. Private property rights are not the unique solution to the tragedy of the common. The problem is that many of these traditional systems rest on customary rights and informal arrangements that modern water reforms usually overlook.

  15. Chemalyn Zambrano @ Metropolitan Waterworks Authority, Bangkok, Thailand

    15 Aug 2013 - 07:15 (GMT)

    Dear Peter,

    Thanks for sharing your interesting article about water pricing. I think this is one way, if not the best alternatives, to encourage people to value what they consume daily. Water sector in Singapore has been a global hydro in spite of lack of freshwater because it implements high water tariff to encourage consumers conserve water.

    However, water pricing can affect the right to consume water I see huge issues in water pricing that affect the society.

    1.) Water Disconnection.
    Urban private water suppliers have trampled the right of the poor families to enjoy the gift of water nature everytime these private companies disconnect the water line of poor households who failed to pay their monthly water bills.

    2.) High percentage of Water Loss.
    SEA countries have suffered high percentage of water loss per year because of water stealing done by poor people who can not afford to pay the water bills. Aside from leakages caused by old pipes that cause high rate of non-revenue water, water stealing have contributed water loss for the company, which in return add more price for the consumers to compensate the loss. The high price goes on and on until the companies get their target revenue. At the end of the year, water loss is not the loss of the private companies by to those poor people who pay higher prices. (Indonesia is one of the examples of this issue)


  16. Fred L Curry @ Submission Solutions

    13 Oct 2014 - 23:00 (GMT)

    Free water causes overuse. This means that some "poor" people will take water that other "poor" people need. It is much smarter to give the poor money to buy the water with, just like we should for food and housing. In the US we hide this welfare by using low income rates, but that is much stupider than allowing a market to work as it should.

  17. German Ortega @ hidroelectrica monos de agua ltda

    10 Dec 2014 - 01:16 (GMT)

    dear Sir

    Chinese navigators supply water to Tahiti island in South Pacific Thousand years ago and changing all other products

    The price ?? but there were ,,,

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