The Voice Explains

Explanatory: Why do large producers of rice, sugarcane and pasturelands in Guanacaste pay only 2.42 colones per cubic meter of water?

Esta publicación también está disponible en: Español
Translator: Arianna Hernández

In summary: It’s true that the current rate for water for agricultural use in the Arenal Tempisque Irrigation District (DRAT for the Spanish acronym) is ₡2.42 per cubic meter (that’s less than half a cent in USD), as criticized by the President of the Republic, Rodrigo Chaves, during his first tour of Guanacaste. This amount has not been updated since 2020 and is not enough to maintain the project’s operation.

In addition, the nearly 1,000 producers benefiting from DRAT don’t pay the canon tax for water use due to institutional disagreements. The canon is something that all people pay for the use of water resources.

The president indicated that he won’t implement the Water Supply Project for the Middle Basin of the Tempisque River and Coastal Communities (PAACUME for the Spanish acronym) until the water rates on both banks of the Tempisque River are “fixed”. The executive branch can delay the development of this project, which will be financed through a loan from the Central American Bank for Economic Integration (CABEI).

What did the president say?

In his first tour of Guanacaste at the end of July, President Rodrigo Chaves expressed doubts about the Water Supply Project for the Middle Basin of the Tempisque River and Coastal Communities (PAACUME). The president said that what is charged per cubic meter of water for PAACUME would be different from what the National Groundwater, Irrigation and Drainage Service (SENARA for the Spanish acronym) charges for other projects that also take advantage of water from the Tempisque River.

“It turns out that on the left bank of the Tempisque River, there is already a project that was built many years ago to favor poor farmers. The farmers no longer have those plots. The big sugar companies and other big companies bought them… but the big sugar cane growers pay ¢2.42 per cubic meter,” Chaves said on July 25 in Nicoya’s park.

“It turns out that I met with SENARA and said to them: how much are you going to charge for the water from the right bank of the Tempisque [which corresponds to PAACUME]? Well, like 16 [colones] per cubic meter,” the president added.

Chaves said that he told SENARA that “either both banks of the Tempisque River get fixed or we don’t implement the [PAACUME] project.”

The Voice of Guanacaste and Doble Check from UCR radio stations joined forces to verify this information and give more context to what the president said.

When President Rodrigo Chaves came to the Annexation celebration in Nicoya, he asked SENARA to update the amounts that the institution charges for water usage on both banks of the Tempisque River. Photo: Cesar Arroyo Castro

Water on the “left” bank of the Tempisque

Chaves was referring to the Arenal Tempisque Irrigation District (DRAT), a 40-year-old project that uses water from the ARDESA Hydroelectric Complex that belongs to the Costa Rican Electricity Institute (ICE).

DRAT has 321 km (199 miles) of canals that distribute water from the Abangares River to the Tempisque. After being used to generate electricity, the DRAT water passes through two main canals: the southern Canal del Sur, which supplies the low-lying areas of Cañas and Abangares; and the western Canal del Oeste, which carries water to the lower region of Bagaces, Liberia and Carrillo. SENARA explained this to Doble Check and The Voice.

The project wasn’t designed for poor farmers only, as the president said, but rather for all types of producers within DRAT’s area of ​​influence. This was specified by the director of DRAT, Jose Maria Alfaro.

SENARA confirmed that the authorized rate for DRAT water is ¢2.42 (less than half a cent in USD) for each cubic meter. They also admitted that this amount “does not cover all the costs of administration, operation, maintenance and recovery of the infrastructure.”

Why do they charge an insufficient amount? The Public Services Regulatory Authority (ARESEP for the Spanish acronym) set the rate in 2015 for the following five years, starting at ¢2.27 per cubic meter of water and gradually increasing to ¢2.42 in 2020.

The rate should have been updated in 2020, but that didn’t happen. ARESEP indicated that DRAT has tried to process the update twice since 2020, but both proposals were unsuccessful. DRAT withdrew a request from January of 2020 from ARESEP and ARESEP rejected an adjustment procedure the following year due to “not fulfilling admissibility requirements.”

In an interview, Alfaro, the director of DRAT, admitted that the rate was withdrawn in 2020 because “a group of rice farmers” opposed the price update. According to him, consideration for the producers was given weight because it is “a very depressed sector.”

“However, it’s not enough for maintenance costs. We’ve done everything humanly possible to keep the system in operation, with meager resources,” he acknowledged. Alfaro estimated that the rate charged should be approximately double the current amount to maintain DRAT’s infrastructure and cover operating expenses, which includes 49 public workers.

“The infrastructure is 38 years old now, so it needs resources for recovery because the project could collapse and wouldn’t be able to supply the irrigation district. That’s the problem when the rates cause a deficit,” he explained.

On August 16, the ARESEP Water Administration began an official rate study for DRAT (file ET-069-2022). SENARA was due to deliver updated information on its operation, maintenance and investment costs by Thursday, September 8. Alfaro confirmed that DRAT provided this information.

Are large companies paying that rate?

The rate set by ARESEP is the same for small, medium and large producers. All together, there are about 1,000, explained Alfaro. According to him, most of the water is used for rice, sugar cane and pastures.

Is it reasonable that small, medium and large producers be charged equally? Alfaro, from SENARA, stated that he himself isn’t in agreement with it. “I don’t know why it was done that way. For a social reason, small producers should have paid less,” he said. “It’s been talked about with ARESEP, but they have to make a policy [to define the parameters to make what they are charged differentiated],” he added.

He also said that it is possible that this year’s adjustment will define different rates for small, medium and large producers, since that conversation has been held between SENARA, ARESEP and the Presidential House.

More Deficit Amounts

The nearly 1,000 producers benefiting from DRAT don’t pay the canon tax for water use due to disagreements between the Ministry of Environment and Energy (MINAE) Water Administration and SENARA. The canon is something that all people pay for using water resources.

Initially, SENARA was in charge of paying that canon to MINAE, but stopped doing so in 2010 because the institution’s lawyer concluded that it was not their responsibility.

However, in 2017, MINAE consulted the Attorney General’s Office regarding who should pay the canon. Resolution C-218-2017 indicates that SENARA should not pay the canon “out of their pocket” but that it should collect it from the producers and transfer the money to MINAE.

Five years later, SENARA still doesn’t bill the producers for it. According to the adjustment for 2022, the canon is ¢1.5 (about a fourth of a cent USD) per cubic meter of surface water and ¢1.7 for groundwater.

Why? According to DRAT’s director, they still aren’t sure about how to collect that amount. “It isn’t defined at the institution level, but it is an issue that has to be resolved,” he commented.

Can the president postpone PAACUME?

During his first tour of Guanacaste, President Rodrigo Chaves said that he won’t implement PAACUME until the water service rates on both banks of the Tempisque River are “fixed.”

One month before Chaves took office as president, Carlos Alvarado’s administration and the Central American Bank for Economic Integration (CABEI) signed the PAACUME financing contract for $425 million. However, the president can delay the project’s development.

According to that contract, the executive branch has five years to execute the project from the first disbursement of the loan. Even so, CABEI confirmed in an official response that the institution has not received requests from the government to disburse money for PAACUME.

In addition, CABEI indicated that the contract doesn’t set a deadline for the request for this first disbursement or penalties for postponing it, nor is there a risk that the financial entity will cancel the loan if the Presidential House delays beginning the work.

How much would PAACUME water be worth? SENARA clarified that an endorsed rate has not yet been established for this project. “It must be authorized by ARESEP once it begins to operate,” the entity indicated.

To date, SENARA manages possible amounts that were evaluated in the PAACUME feasibility analysis.