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Introduction and overview
Purpose and scope
World water resources
The water sector and natural resource policy

Introduction and overview

An interesting observation arising from the preparation of this year's special chapter on water and agriculture is how difficult it is to generalize about water. Almost any statement requires qualification. For example, while we can say that water is one of the most abundant resources on earth, we know that less than 1 percent of the total supply is reliably available for human consumption. Water is a liquid for the most part, but it can also be a solid and a vapour. Drinking-water is certainly essential for human survival but water-related illnesses are the most common health threat in the developing world. An estimated 25 000 people die every day as a result of water-related sicknesses.1

1 UNEP. 1991. Freshwater pollution. UNEP/ GEMS Environmental Library. No. 6. Nairobi.
One statement, however, needs no qualification: human existence depends on water. The geosphere, the atmosphere and the biosphere are all linked to water. Water interacts with solar energy to determine climate and it transforms and transports the physical and chemical substances necessary for all life on earth.

In recent years, water issues have been the focus of increasing international concern and debate. From 26 to 31 January 1992, the UN system sponsored the International Conference on Water and the Environment (ICWE) in Dublin, Ireland. The ICWE called for innovative approaches to the assessment, development and management of freshwater resources. In addition, the ICWE provided policy guidance for the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro in June 1992. UNCED highlighted the need for water sector reforms throughout the world.

In 1993, the World Bank issued a comprehensive policy paper defining its new objectives for the water sector. FAO recently established an International Action Programme on Water and Sustainable Agricultural Development (IAP-WASAD). Likewise, the UNDP, WHO, UNICEF, WMO, Unesco and UNEP are all coordinating or participating in special programmes related to water resources.

Other international, national and local organizations are becoming more active in water issues. The 1990 Montreal meeting, "NGOs Working Together", focused attention on drinking-water supply and sanitation. The Canadian International Development Agency, the French Ministry of Cooperation and Development, the German Agency for Technical Cooperation (GTZ), the United Kingdom's Overseas Development Administration and the United States Agency for International Development (USAID) have recently developed water resource strategies for foreign assistance.

The message highlighted by all these efforts is that water is an increasingly scarce and valuable resource. Of principal concern is our failure to recognize and accept that there is a finite supply of water. The consensus is that the growing water scarcity and misuse of freshwater pose serious threats to sustainable development.

Competition among agriculture, industry and cities for limited water supplies is already constraining development efforts in many countries. As populations expand and economies grow, the competition for limited supplies will intensify and so will conflicts among water users.

Despite water shortages, misuse of water is widespread. Small communities and large cities, farmers and industries, developing countries and industrialized economies are all mismanaging water resources. Surface water quality is deteriorating in key basins from urban and industrial wastes.

Groundwater is polluted from surface sources and irreversibly damaged by the intrusion of salt water. Overexploited aquifers are losing their capacity to hold water and lands are subsiding. Cities are unable to provide adequate drinking-water and sanitation facilities. Waterlogging and salinization are diminishing the productivity of irrigated lands. Decreasing water flows are reducing hydroelectric power generation, pollution assimilation and fish and wildlife habitats.

At first glance, most of these water problems do not appear to be directly related to the agricultural sector. Yet, by far the largest demand for the world's water comes from agriculture. More than two-thirds of the water withdrawn from the earth's rivers, lakes and aquifers is used for irrigation. As competition, conflicts, shortages, waste, overuse and degradation of water resources grow, policy-makers look increasingly to agriculture as the system's safety valve.

Agriculture is not only the world's largest water user in terms of volume, it is also a relatively low-value, low-efficiency and highly subsidized water user. These facts are forcing governments and donors to rethink the economic, social and environmental implications of large publicly funded and operated irrigation projects. In the past, domestic spending for irrigation dominated agricultural budgets in countries throughout the world. For instance, since 1940, 80 percent of Mexico's public expenditures in agriculture have been for irrigation projects. In China, Indonesia and Pakistan, irrigation has absorbed more than half of agricultural investment. In India, about 30 percent of all public investment has gone into irrigation.2

2 R. Bhatia and M. Falkenmark. 1992. Water resource policies and the urban poor: innovative approaches and policy imperatives. Background paper for the ICWE, Dublin, Ireland.
A significant portion of international development assistance has also been used to establish irrigation systems. Irrigation received nearly 30 percent of World Bank agricultural lending during the 1980s. Spending commitments for irrigation by all aid agencies exceeded $2 billion per year in the past decade.

Once established, irrigation projects become some of the most heavily subsidized economic activities in the world. In the mid-1980s, Repetto3 estimated that average subsidies to irrigation in six Asian countries covered 90 percent of the total operating and maintenance costs. Case-studies indicate that irrigation fees are, on average, less than 8 percent of the value of benefits derived from irrigation.

3 R. Repetto. 1986. Skimming the water: rent-seeking and the performance of public irrigation systems. Research Report No. 4. Washington, DC, WRI.
Despite these huge investments and subsidies, irrigation performance indicators are falling short of expectations for yield increases, area irrigated and technical efficiency in water use. As much as 60 percent of the water diverted or pumped for irrigation is wasted.4 Although some losses are inevitable, in too many cases this excess water seeps back into the ground, causing waterlogging and salinity. As much as one-quarter of all irrigated land in developing countries suffers from varying degrees of salinization.5 Moreover, stagnant water and poor irrigation drainage escalate the incidence of water-related diseases, resulting in human suffering and increased health costs.
4 FAO. 1990. An International Action Programme on Water and Sustainable Agricultural Development. Rome.

5 Ibid.

Today, agriculture is often unable to compete economically for scarce water. Cities and industries can afford to pay more for water and earn a higher economic rate of return from a unit of water than does agriculture. (For economists, water flows uphill to money.) For the first time in many countries, agriculture is being obliged to give up water for higher-value uses in cities and industries. Irrigators in some areas are now asked to pay for the water they receive, including the full cost of water delivery. In other areas, new regulations require farmers to pay for polluting streams, lakes and aquifers.

The irony is that irrigated agriculture is expected to produce much more in the future while using less water than it uses today. At present, 2.4 billion people depend on irrigated agriculture for jobs, food and income (some 55 percent of all wheat and rice output is irrigated). Over the next 30 years, an estimated 80 percent of the additional food supplies required to feed the world will depend on irrigation.6

6 International Irrigation Management Institute. 1992. Developing environmentally sound and lasting improvements in irrigation management: the role of international research. Colombo, Sri Lanka, IIMI.
These developments are placing enormous pressure on agricultural policy-makers and farmers. Throughout the world, governments assume the prime responsibility for ensuring food security and, because food depends increasingly on irrigation, food security is closely linked with water security. Between 30 and 40 percent of the world's food comes from the irrigated 16 percent of the total cultivated land; around one-fifth of the total value of fish production comes from freshwater aquaculture; and current global livestock drinking-water requirements are 60 billion litres per day (forecasts estimate an increase of 0.4 billion litres per year). Food security in the next century will be closely allied to success in irrigation.

Irrigation can help make yield-increasing innovations a more attractive investment proposition but it does not guarantee crop yield increases. The overall performance of many irrigation projects has been disappointing because of poor scheme conception, inadequate construction and implementation or ineffective management. The mediocre performance of the irrigation sector is also contributing to many socio-economic and environmental problems, but these problems are neither inherent in the technology nor inevitable, as is sometimes argued.

Irrigation projects can contribute greatly to increased incomes and agricultural production compared with rain-fed agriculture. In addition, irrigation is more reliable and allows for a wider and more diversified choice of cropping patterns as well as the production of higher-value crops. Irrigation's contribution to food security in China, Egypt, India, Morocco and Pakistan is widely recognized. For example, in India, 55 percent of agricultural output is from irrigated land. Moreover, average farm incomes have increased from 80 to 100 percent as a result of irrigation, while yields have doubled compared with those achieved under the former rain-fed conditions; incremental labour days used per hectare have increased by 50 to 100 percent. In Mexico, half the value of agriculture production and two-thirds of the value of agricultural exports is from the one-third of arable land that is irrigated.

Irrigation is a key component of the technical package needed to achieve productivity gains. In the future, as high levels of costly inputs are added to cropland to sustain yield increases, the security and efficiency of irrigated production will become even more important to world farming. Water will no longer be plentiful and cheap. It will be scarce, expensive to develop and maintain and valuable in use. The prospect of high-cost water may at first seem to be another problem looming for low-income economies. However, the high cost will be an incentive to use water more efficiently. The single most important factor limiting the adoption of proven irrigation and drainage technology is the low cost of water. Moreover, if farmers have opportunities for higher-value uses and can make profits, both governments and farmers will invest in irrigation.

This water dilemma - to produce more in a sustainable way with less water - points to the need for demand management mechanisms to reallocate existing supplies, encourage more efficient use and promote more equitable access. Policy-makers need to establish a structure of incentives, regulations, permits, restrictions and penalties that will help guide, influence and coordinate how people use water while encouraging innovations in water-saving technologies.

In the past, supply-side approaches dominated water resource management practices. Water itself was physically managed through technical and engineering means that captured, stored, delivered and treated water. However, the era of meeting growing demand by developing new supplies is ending. In our present-day water economy, resource management is shifting away from the goal of capturing more water towards that of designing demand- and user-focused approaches that influence behaviour.

Purpose and scope

This special chapter is primarily intended for agricultural policy-makers, water managers, researchers, students, development planners and agricultural project donors. It is meant to help us reflect on the way water resources are managed at present; to contribute to the discussion on sustainable water use; and to stimulate thinking, research and change. Decisions made in this decade regarding how water is used will have a profound effect on our future supplies.

This first section gives an overview of world water resources and briefly discusses the key issues: scarcity, quality and health.

The second section stresses the need to integrate the water sector with the national economy and analyses the physical, economic and social aspects of water. It then provides a conceptual foundation for understanding the circumstances under which water policies either work or fail. Section II also assesses the advantages and disadvantages of broad alternative approaches to public water policy.

Section III examines how policy analysis is applied to water resource planning, including both supply-side (physical and hydrological) and demand-side considerations. It discusses the advantages and disadvantages of various policy options for urgent water policy issues related to surface water and groundwater.

The fourth and final section reviews three specific policy issues in irrigated agriculture: declining growth and investment trends; the difficulties imposed by irrigation-induced environmental degradation; and efforts to reform managerial and administrative systems.



Water continuously circulates on the planet. The hydrological cycle has no beginning or end but we can describe it as starting with the waters of the oceans, which cover about three-quarters of the earth. Radiation from the sun and wind energy, which is itself indirectly derived from solar energy, cause evaporation of water which rises as a vapour and forms clouds. In turn, if conditions are right, these condense and fall back to earth as rain, hail or snow.

Some of this precipitation evaporates from leaves and soil, some runs over the surface and forms streams and some percolates into the soil where it may be drawn on by plants and transpired back into the atmosphere or returned to the surface by soil capillarity. Some soil moisture evaporates and some soaks down below the root zone to join the groundwater reservoir. Groundwater percolates through pores in the soil and rocks and may reappear on the surface at lower elevations as a spring or as seepage into streams and rivers which eventually re-enter the ocean. Still some lies in the groundwater reservoir or aquifer and may be tapped by a mechanical tube well or an open well.

The hydrological cycle illustrated in the Figure is the system by which water circulates from the oceans through the atmosphere and back to the ocean overland and underground. Available freshwater is a rare form of water, for 99 percent is either saline (97 percent of all water is in the ocean) or frozen (2 percent in the ice caps and glaciers). Most of the remainder (1 percent) is groundwater with minute proportions in freshwater lakes, soil moisture, rivers and biological systems.

World water resources

Water scarcity
World water use
Water and health
Water as a strategic resource

Every day the hydrological cycle renews the world's freshwater resources through evaporation and precipitation (see Box 8). The average annual rainfall over land is 110 000 km3, but some 70 000 km3 evaporate before reaching the sea. The remaining 40 000 km3 are potentially available for human use. Global freshwater consumption is currently around 4 000 km3, only 10 percent of the annual renewable supply.

These numbers suggest that plenty of water is available for human use but a closer look reveals a more complicated situation. The 40 000 km3 of available water are distributed very unevenly and two-thirds of it runs off in floods. That leaves around 14 000 km3 as a relatively stable supply. A substantial share of this supply should be left to follow its natural course in order to safeguard wetlands, deltas, lakes and rivers.7 For example, 6 000 km3 of water is needed to dilute and transport the estimated 450 km3 of waste water now entering the world's rivers each year.8 Without substantial investment in waste water treatment and more effective regulation, even more water will have to be diverted to dilute and transport wastes.

7 S. Postel. 1992. Last oasis: facing water scarcity. New York, Norton.
8 See footnote 1.
Precipitation, withdrawals and availability of water vary widely around the world. Table 6 demonstrates regional changes in per caput water availability since 1950 and shows forecasts for 2000. Per caput availability is highest in Latin America and lowest in North Africa and the Near East, while withdrawals are highest in North America and lowest in Africa. Per caput water availability in Europe and North America is not expected to change greatly by 2000, while Asians, Africans and Latin Americans will face less per caput water availability as their populations continue to grow.

At present, Asia accounts for over one-half of the world's water withdrawals. Figure 11 illustrates regional water consumption during the past century. Forecasts to the year 2000 suggest that Asia will consume 60 percent of the world's water, followed by 15 percent in North America, 13 percent in Europe and less than 7 percent in Africa. Latin America's share of world water consumption is forecast to be less than 5 percent in 2000, although the region's consumption has nearly quadrupled since 1950.

Water scarcity

Human actions bring about water scarcity in three ways: through population growth, misuse and inequitable access.9 Population growth contributes to scarcity simply because the available water supply must be divided among more and more people. Every country has a more or less fixed amount of internal water resources, defined as the average annual flow of rivers and aquifers generated from precipitation. Overtime, this internal renewable supply must be divided among more and more people, eventually resulting in water scarcity.

9 T.F. Homer-Dixon, J.H. Boutwell and G.W. Rathjens. 1993. Environmental change and violent conflict. Sci. Am. (February).

Per caput water availability by region, 1950-2000







(...........................'000 m3...........................)













Latin America












North America






Source: N.B. Ayibotele. 1992. The world's water: assessing the resource. Keynote paper at the ICWE, Dublin, Ireland.
When annual internal renewable water resources are less than 1 000 m3 per caput, water availability is considered a severe constraint on socio-economic development and environmental protection. Table 7 lists the countries where per caput internal renewable water availability will fall below 1 000 m3 by the end of this decade. Most countries facing chronic water scarcity problems are in North Africa, the Near East and sub-Saharan Africa. Countries with less than 2 000 m3 per caput face a serious marginal water scarcity situation, with major problems occurring in drought years. By the end of the 1990s, water availability is expected to fall below 2 000 m3 per caput in more than 40 countries.

In many countries, while scarcity is less of a problem at a national level, serious water shortages are causing difficulties in specific regions and watersheds. Notable examples include northern China, western and southern India and parts of Mexico.

People also bring about water scarcity by polluting and overusing existing supplies. Box 9 describes some of the pressing water pollution issues. This type of scarcity can be regarded as the consumption of the resource's "capital". For instance, an aquifer represents resource capital, providing what is generally a renewable source of water "income" that can be tapped for human consumption. Sustainable use of the aquifer leaves the capital intact so that future generations can continuously use the renewable portion or income. If pumping is greater than recharge, the aquifer is depleted and the capital is consumed.

Overuse of groundwater has become a major problem in China, India, Indonesia, Mexico, the Near East, North Africa, Thailand, the western United States and many island countries where seawater intrusion results.

The overpumping of aquifers not only results in a water source that is too depleted to serve as a supply, it may also cause the land above the aquifer to settle or subside, resulting in widespread structural damage in extreme cases. Bangkok and Mexico City are well-known examples.

Finally, a shift in access or distribution patterns may concentrate water resources among one group and subject others to extreme scarcity. In many cities of the developing world, large numbers of people depend on water vendors and may pay 100 times as much as the rate of public utilities (see Table 8). Numerous recent studies document that large numbers of urban poor pay much higher prices and a much larger share of their income for water than families with access to a city water system.10 Poor families in some large cities spend up to 20 percent of their income on water. When the cost is so high, they use little water for washing and bathing, which results in serious health problems.

10 See footnote 2.

Countries predicted to have scarce water resources in 2000



Population in 2000

Water availability

Internal renewable water resources

Water resources including river flows from other countries


(....m3 per caput....)





Saudi Arabia




Libyan Arab Jamahiriya




United Arab Emirates
























Syrian Arab Republic



















11 326








11 187



















1 086

1 086

1 A number of other countries with smaller populations, e.g. Barbados, Cape Verde, Djibouti, Malta, Qatar and Singapore, are also included in the water-scarce category. Source: FAO calculations based on World Bank/WRI data.

Ratio of prices charged by vendors to prices charged by public utilities in selected cities










Côte d'Ivoire













































Source: R. Bhatia and M. Falkenmark. 1992. Water resource policies and the urban poor: innovative approaches and policy imperatives. Background paper for the ICWE, Dublin, Ireland.


Source: I.A. Shiklomanov. 1990. Global water resources.
Note: Consumption by reservoirs is through evaporation
Nat. Resour., 26: 34-43

World water use

The early civilizations of Asia, Africa and Latin America organized cooperative efforts to develop river valleys for irrigated agriculture. Through irrigation technology, societies controlled and manipulated natural water supplies to improve crop production. The result was often reliable and ample food supplies which led to the creation of stable agricultural villages, the division of labour and economic surpluses.

Many scholars still argue over whether irrigation technology facilitated political control and development of the state or whether political developments led to advancement of the technology. No matter the direction of cause and effect, no one disputes the association of development with control over water use.

In today's world, agriculture still accounts for the majority of human water use. Globally, around 70 percent of water withdrawals are for agriculture. Domestic and industrial uses consume the remaining 30 percent.11

11 Domestic uses include drinking-water supplies, private homes, commercial establishments, public services and municipal supplies.
Water uses differ greatly depending on access, quantity, quality and socio-economic conditions. For example, Table 9 illustrates that agricultural water use is higher as a proportion of total water use in the low-income countries (91 percent) than in the high-income group (39 percent).


Sectoral water withdrawals, by income group

Country income group

Annual withdrawals per caput

Withdrawals by sector

















1 167




Source: World Bank. 1992. World Development Report 1992, based on WRI data.
Nevertheless, on a per caput basis, the high-income countries use more water for agricultural purposes than the low-income countries.

The trends in world water use during this century are presented in Figure 12. Overall, global water consumption has increased almost tenfold. Agriculture's share, which was 90 percent in 1900, will have dropped to an estimated 62 percent by 2000. During this same period, industrial consumption will have grown from 6 percent to 25 percent, while consumption by cities will have increased from 2 percent to nearly 9 percent. By 2000, around 35 percent of available water supplies will be in use, compared with less than 5 percent at the beginning of the century.

Water quantity and quality requirements also differ widely depending on the type of use. Net agricultural requirements are especially large in relation to other uses. For instance, around 15 000 m3 of water are normally sufficient to irrigate 1 ha of rice. This same amount of water can supply: 100 nomads and 450 head of stock for three years; or 100 rural families through house connections for four years; or 100 urban families for two years; or 100 luxury hotel guests for 55 days.12

12 I. Carruthers and C. dark. 1983. The economics of irrigation. Liverpool, Liverpool University Press.



The quality of water from different sources varies widely. Precipitation absorbs gases from the atmosphere and removes particles from the air. When the precipitation strikes the ground it becomes surface water runoff or enters the ground. The surface water flows into larger and larger channels, ponds, lakes and rivers until some of it reaches the sea. Along its course, surface water picks up both organic and mineral particles, bacteria and other organisms as well as salts and other soluble substances. The water in lakes and swamps sometimes acquires odours, tastes and colours from algae and other organisms and from decaying vegetation.

Since ancient times, heavy metals from mining and pathogens from cities have caused serious, although localized, contamination. Since the industrial revolution, water pollution problems have become first regional, then continental and now global in nature. Much water is polluted when it is used in industry and agriculture or for domestic purposes. Mining is the major cause of metal contamination, whereas other industries contribute to acidification. The intensification of agricultural activities has led to the contamination of groundwater by fertilizers and other chemicals. Moreover, irrigation projects often cause a rapid rise in the level of groundwater, which leads to waterlogging and soil salinity.

Since 1977, the UNEP/ WHO Global Environment Monitoring System (GEMS) has been working with Unesco and WMO to develop a global water quality monitoring network. More than 50 water variables are monitored to provide information on the suitability of water for human consumption and for agricultural, commercial and industrial use. Recent assessments have found that the main water pollutants are: sewage, nutrients, toxic metals and industrial as well as agricultural chemicals.

Conclusions drawn from the GEMS assessment include: the nature and level of freshwater pollution strongly depends on socio-economic development; the most common water pollutant is organic material from domestic sewage, municipal waste and agro-industrial effluent; and the high water nitrate levels found in Western Europe and the United States are a result of the nitrogen fertilizers and manure used for intensive agriculture. The GEMS assessment also noted a dramatic increase in the use of fertilizers in developing countries, particularly where intensive irrigation allows for double or triple cropping.

Other conditions highlighted in the GEMS report include deforestation, eutrophication, suspended particulate matter (SM) and salinity.

Deforestation, i.e. the clearing of land for agriculture and urban development, often leads to water contamination. When the soil is stripped of its protective vegetative covering, it becomes prone to erosion. This in turn leads to higher water turbidity, because of the increased amounts of suspended matter, to nutrient leaching and to a decreased water-retention capacity of the soil. There is also concern about the destruction of wetlands, which destroys the habitat of many species and removes natural filter mechanisms, permitting many common pollutants to reach water supplies.

Eutrophication is the enrichment of waters with nutrients, especially phosphorus and nitrogen. It can lead to enhanced plant growth and depleted oxygen levels as this plant material decays. It is not always a human-induced problem, but is often linked to organic waste and agricultural runoff. Today 30 to 40 percent of the world's lakes and reservoirs are eutrophic. Not all interventions have proved successful, but eutrophication can be reversible if mid- and long-term strategies are enacted. Laws and measures introduced to reduce tripolyphosphates (used mostly in detergents) and to remove phosphorus from waste water have had positive effects.

SM consists of materials that float in suspension in water. There are three main sources of SM: natural soil erosion, matter formed organically within a water body and material produced as a by-product of human activity. SM settles on the sediment bed and forms deposits in rivers, lakes, deltas and estuaries. Evidence of human-induced SM from Roman and Mayan times has been discovered in lake beds, implying that this was one of the first types of water pollution. River damming affects the amount of SM flowing from rivers to the oceans because reservoirs act as effective sinks for SM. An estimated 10 percent of the global SM discharge to the sea is trapped in reservoirs. Approximately 25 percent of the water currently flowing to the oceans has been previously stored in a reservoir. Damming can also greatly modify water quality; waters flowing out of reservoirs not only have reduced SM quantities, they are also depleted of nutrients and are often more saline, which consequently has detrimental effects on downstream agriculture and fisheries.

Salinity is a significant and widespread form of freshwater pollution, particularly in arid, semi-arid and some coastal regions. The primary cause of salinization is a combination of poor drainage and high evaporation rates which concentrate salts on irrigated land. Salinity can adversely affect the productivity of irrigated crops and is also detrimental to industrial and household water users. It is not a new phenomenon; salinization of soil and water in the flood plain of the Tigris and Euphrates Rivers contributed to the decline of the Mesopotamian civilization some 6 000 years ago. The estimated global gross area of irrigated land is 270 million ha. About 20 to 30 million ha are severely affected by salinity while an additional 60 to 80 million ha are affected to some degree. Waterlogged soil, which aggravates the problem of salinity, is usually caused by overwatering and a lack of proper drainage systems. Runoff from agricultural areas fertilized with manure and chemicals pollutes watercourses and groundwater by increasing levels of nutrients.

The present level of water pollution warrants that steps be taken to control further contamination of water resources. More serious action needs to be taken in water resource management, waste water treatment and the provision of safe public water supplies. In developed and developing countries there should be controls and regulations regarding the treatment and recycling of industrial effluents, while efforts must be made to replace harmful products and ban dangerous pesticides.

There is compelling evidence that at least 20 to 30 percent of the water currently used in households and industries can be saved by adopting appropriate regulatory and policy instruments (tariffs, quotas, groundwater extraction charges). The twin benefits of clean water and reduced demand can be obtained if the recycling or reuse of water is encouraged in industries through pollution control legislation and economic incentives (water tariffs based on economic costs, effluent charges and low-interest loans for effluent and sewage treatment plants). Similar savings may be possible in irrigated agriculture by investments in canal lining, by encouraging less water-intensive crops (through relative output prices) and by raising irrigation rates.

Source: UNEP. 1991. Freshwater pollution. UNEP/ GEMS Environmental Library. No. 6. Nairobi.
Industry requires large amounts of water, but most of it is recycled back into the water system. The major problem is that much of this water is returned polluted with wastes, chemicals and heavy metals. Over 85 percent of total withdrawals by industry are recycled as waste water.13
13 D.B. Gupta. 1992. The importance of water resources for urban socioeconomic development. In International Conference on Water and the Environment: Development Issues for the 21st Century. Keynote Papers. Dublin, Ireland.
Domestic water demand is moderate in comparison with agriculture and industry but its quality requirements are high. Domestic and municipal water uses include drinking, washing, food preparation and sanitation.

Water and health

Two of the most troubling domestic water supply issues for policy-makers are access and health. Nearly one billion people in the world are without clean drinking-water. Providing easier access to safe drinking-water significantly improves health conditions. Personal hygiene increases when water availability rises above 50 litres per day (which generally means that it must be delivered to the house or yard). An estimated 1.7 billion persons contend with inadequate sanitation facilities. The lack of sewage collection and treatment is a major source of surface and groundwater pollution.

Health officials identify five categories of disease related to water: i) water-borne diseases (typhoid, cholera, dysentery, gastroenteritis and infectious hepatitis); ii) water-washed infections of the skin and eyes (trachoma, scabies, yaws, leprosy, conjunctivitis and ulcers); iii) water-based diseases (schistosomiasis and guinea-worm); iv) diseases from water-related insect vectors such as mosquitoes and blackflies; and v) infections caused by defective sanitation (hookworm).

The World Bank's World Development Report 1992 estimates that providing access to safe water and adequate sanitation could result in two million fewer deaths from diarrhoea among young children and 200 million fewer episodes of diarrhoeal illnesses each year.

Water as a strategic resource

Water, even when plentiful, is frequently drawn into the realm of politics. Domestic laws and well-established customs can help resolve water-related disputes at national and village levels but international law has not developed fast enough to deal with the growing number of water-related conflicts between many countries and regions. In 1989, Egypt's then Minister of State for Foreign Affairs, Boutros-Ghali, declared: "The national security of Egypt is in the hands of the eight other African countries in the Nile basin."14 As Postel notes, Boutros-Ghali highlights the importance of water to Egypt's economy as well as the advantage upstream countries have over downstream neighbours.

14 See footnote 7.
The increasing value of water, concern about water quality and quantity, and problems of access and denial have given rise to the concept of resource geopolitics or "hydropolitics". In this context, water joins petroleum and certain minerals as a strategic resource. Its increasing scarcity and value will only intensify the prevalence of water politics and relevant international conflicts.

Several countries depend heavily on river flows from other countries. Botswana, Bulgaria, Cambodia, the Congo, Egypt, the Gambia, Hungary, Luxembourg, Mauritania, the Netherlands, Romania, the Sudan and the Syrian Arab Republic all receive over 75 percent of their available water supplies from the river flows of upstream neighbours. More than 40 percent of the world's population lives in river basins that are shared by more than one country.

Along with land and energy sources, water has been the focus of disputes and, in extreme cases, even wars. The division of the Indus waters and its tributaries among India and Pakistan provided a salutary warning example. War was only just avoided in the early years of independence by a binding agreement, backed by massive international aid, to build two huge water storage dams and a system of canals. Water could then be channelled to the areas of Pakistan that were deprived of water when some of the Indus tributaries were diverted into Indian territory.

The costs to all parties of this settlement were high but certainly less than the human and financial costs of a conflict. Many other international rivers, including the Nile, Euphrates, Ganges and Mekong, are prospective risk points for disputes. The future of the Jordan waters is already an integral component of regional peace talks and illustrates how complicated hydropolitics can be. The fact that groundwater resources are also involved in the talks adds another dimension of difficulty.

BOX 10

The International Conference on Water and the Environment (ICWE) was held in Dublin, Ireland, from 26 to 31 January 1992. The conference provided the major input on freshwater problems for UNCED, convened in Rio de Janeiro, Brazil, June 1992. The ICWE was attended by 500 participants from 114 countries, 38 NGOs, 14 intergovernmental organizations and 28 UN bodies and agencies.

The major work of the ICWE was undertaken by six working groups which addressed:

· integrated water resources development and management;

· water resources assessment and impacts of climate change on water resources;

· protection of water resources, water quality and aquatic ecosystems;

· water and sustainable urban development and drinking-water supply and sanitation;

· water for sustainable food production and rural development and drinking-water supply and sanitation;

· mechanisms for implementation and coordination at global, national, regional and local levels.

The two main outputs of the conference are the Dublin Statement and Report of the Conference, which set out recommendations for action based on four guiding principles. First, the effective management of water resources demands a holistic approach linking social and economic development with the protection of natural ecosystems, including land and water linkages across catchment areas or groundwater aquifers; second, water development and management should be based on a participatory approach that involves users, planners and policy-makers at all levels; third, women play a central part in the provision, management and safeguarding of water; and, finally, water has an economic value in all its competing uses and should be recognized as an economic good.

The water sector and natural resource policy

In January 1992, the ICWE concluded that scarcity and misuse of freshwater pose a serious and growing threat to sustainable development and protection of the environment.15 The conference emphasized that human health and welfare, food security, economic development and ecosystems are all at risk, unless water and land resources are managed more effectively in the future.

15 The Dublin Statement and Report of the Conference. 1992. ICWE, Dublin, Ireland.
To address water problems at local, national and international levels, the ICWE recommended a range of development strategies and policies based on four principles (see Box 10). While the conference participants readily agreed on the wording of the first three principles, the fourth provoked a long and contentious debate. Principle 4 declares that water has an economic value in all its competing uses and should be recognized as an economic good.

For many, it is difficult to reconcile the concept of water as an economic good with the traditional idea of water as a basic necessity and human right. Older elementary economic textbooks explain this conceptual puzzle - why diamonds, which have so little utility, are expensive while freshwater, which is so essential to life, is cheap. More recent texts leave water out of these vignettes. Like fresh air, water was once considered a classic free good; now that it is growing scarce, while not yet expensive, it is at least acknowledged to be valuable.

Scarcity is one of the most important issues in considering the various socio-economic tradeoffs in allocating water among different users. Allocation policies and decisions determine who will have access to water and under what conditions, and what impact this will have on society and the economy.

The cheapness of water is often more apparent than real. It is a free good not because water provision is without cost - obviously this is far from true - but because governments have chosen to charge less than full costs for water services for one or more reasons.16 These subsidies are now coming under scrutiny. The ICWE's final report acknowledges that failure in the past to recognize water's economic value and the real cost of service provision has led to wasteful and environmentally damaging uses. Moreover, the conference report states that managing water as an economic good is an important way of achieving efficient and equitable use, as well as encouraging the conservation and protection of scarce water resources.

16 Water may be considered a "free" good in the form of rain, but when this free good is captured and delivered to customers by canal, pipe or other means, it becomes a water service. There is generally much less resistance to water service fees than there is to water charges.
It is in this context that the ICWE and UNCED called for a new approach to the assessment, development and management of freshwater resources. The proposed approach involves the management of freshwater as a finite and vulnerable resource and the integration of sectoral water plans and programmes within the framework of national economic and social policy.17
17 UN. 1992. Protection of the quality and supply of freshwater resources: application of integrated approaches to the development, management and use of water resources. Chapter 18, Agenda 21, Report of the United Nations Conference on Environment and Development.

BOX 11

The World Bank's water resources management policy paper presents several examples from southern India to illustrate the kinds of problem caused by fragmented decision-making. The Chittur River's highly variable flows have traditionally been diverted at many points into small reservoirs to irrigate the main rice crop. The diversion channels are large enough to accommodate flood flows following the monsoon rains. Thus, when a storage dam was constructed, the uppermost channel was able to absorb virtually all the regulated flow. The upper tanks now tend to remain full throughout the year, concentrating benefits and adding to evaporation losses. The more extensive lower areas have reverted to uncertain rain-fed cultivation, and total agricultural value added has decreased. Construction of the storage dam without adequate consideration of downstream users or the existing storage capacity of the basin is one example of how individual project development in isolation can cause significant economic losses.

The construction of the Sathanur Dam on the Ponnani River in Tamil Nadu to serve a left bank command area deprived productive delta areas of irrigation water. While the rights of downstream irrigators are recognized in the dam operating rules, most of the regulated flow is diverted upstream; water losses have greatly increased in the wide sandy bed and no surface water has reached the sea for 20 or more years. Continued spills in about 50 percent of all years were used to justify the subsequent construction of the right bank command, further aggravating shortages in the delta and leading to continual conflicts between the two Sathanur commands. Meanwhile, additional storage dams on upstream tributaries are adding to evaporation losses in what was already a fully developed basin. Irrigation in the productive delta has declined further and the Sathanur commands in turn are suffering. The high-value crops that were once grown on the main river are being replaced by cultivation on less productive lands, served by tributaries that are more variable than the main river.

The Amaravati River, a tributary of the Cauvery, is the most disputed major river in India. In the absence of a Cauvery agreement, Karnataka (the upstream riparian state) has steadily developed large irrigation schemes, depriving the delta (Tamil Nadu's rice bowl) of its accustomed supplies. Meanwhile, Tamil Nadu has been developing the Amaravati. As at Sathanur, water releases are made from the Amaravati Dam for the traditional areas, but these are far downstream and the substitution of regulated flood flows has encouraged the development of private pumps along the river bank. Even though the new electric connections have now been banned, little can be done to control illegal connections or diesel pumps and, consequently, little water now reaches the lowest commands, let alone the Cauvery. Meanwhile, new storage dams are being constructed on tributaries both in Kerala and Tamil Nadu, further depriving not only the old lands but also the new lands and the pump areas.

Source: World Bank. 1993.
Water resources management: a policy paper.
A more integrated and broader approach to water sector polices and issues is important because of water's special nature as a unitary resource. Rainwater, rivers, lakes, groundwater and polluted water are all part of the same resource, which means global, national, regional and local actions are highly interdependent.18 Water use in one part of the system alters the resource base and affects water users in other parts.
18 P. Rogers. 1992. Comprehensive water resources management: a concept paper. Policy Research Working Paper. Washington, DC, World Bank.
Dams built in one country frequently reduce river flows to downstream countries for years afterwards, thereby affecting hydroelectric and irrigation capacity. When a city overpumps a groundwater supply, streamflows may be reduced in surrounding areas; when it contaminates its surface water, it can pollute groundwater supplies as well. Certain human actions at local levels may contribute to climate change, with long-term implications for the hydrological system worldwide.

Water policies, laws, projects, regulations and administrative actions often overlook these linkages. Governments generally tend to organize and administer water sector activities separately: one department is in charge of irrigation; another oversees water supply and sanitation; a third manages hydropower activities; a fourth supervises transportation; a fifth controls water quality; a sixth directs environmental policy; and so forth.

These fragmented bureaucracies make uncoordinated decisions, reflecting individual agency responsibilities that are independent of each other. Too often, government planners develop the same water source within an interdependent system for different and competing uses (see Box 11). This project-by-project, department-by-department and region-by-region approach is no longer adequate for addressing water issues.

To help resolve the growing number of water resource issues, policy-makers are increasingly being called on to review and explain the conditions, problems and progress in the overall water sector.

This integrated approach requires water managers to understand not only the water cycle (including rainfall, distribution, ecosystem interactions and natural environment and land-use changes), but also the diverse intersectoral development needs for water resources.

The next section further explores this important concept of linking the water sector with the national economy and provides a conceptual basis for understanding the role of economic policy-making.

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