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Chapter 1 - Introduction

Special attributes of water
The case for public intervention
The water sector and its outreach
The international debate
Purpose of the guide
Target readership

The chapter begins by noting some of the special characteristics of water - physical, social and economic - which make it special, and which make a high degree of government involvement in the sector inevitable. Special emphasis is placed on the size and scope of the sector, making the point (for a mainly agricultural readership) that water involves many other sectors, and its use has wide repercussions. Since some of the results of water use transcend international boundaries, the chapter includes an account of recent international events, notably the Dublin Conference and the Rio UNCED, at which governments accepted the need to review policies in the water sector, recognizing in particular its growing scarcity value.

The purpose of the Guide is described as identifying the issues involved in water management, setting out principles and criteria for such management, introducing some useful methods and key processes, and indicating some of the results obtained in actual cases. The target reader is defined widely as anyone likely to be involved in water policy reviews, from ministers to technical specialists. It is also intended for those specialists working in the water sector who wish to satisfy their interests in the wider issues addressed, and particularly the general philosophy underlying the Guide.

Special attributes of water

It is commonly accepted that access to water is a basic human right. The Dublin Conference (International Conference on Water and the Environment [ICWE]) in 1992 asserted that

" is vital to recognize first the basic right of all human beings to have access to clean water and sanitation at an affordable price."

The connection between water and human life is most dramatic in arid regions, where crop irrigation is essential to food production.

Many societies believe that water has special cultural, religious and social values, which marks it out from other economic goods. In many cultures, goals other than economic efficiency influence the choice of water management institutions. Some religions even prohibit water allocation by market forces.

However, the focus on water's special status tends to obscure the fact that, in most societies, only a tiny fraction of water consumption is actually for drinking and preserving life. A large portion of urban water is used for convenience and comfort. In the arid western USA, per caput water withdrawal by households frequently exceeds 400 litres per day, about half of which is used to irrigate lawns and gardens. Most of the remainder is for flushing toilets, bathing, and washing cars.

The value of water to particular users depends crucially on its location, quality and timing. Its location determines its accessibility and cost. Its quality affects whether it can be used at all, and at what treatment cost. The time when it is available governs its reliability and its relative value for power, irrigation, environmental or potable uses.

In addition, the value of water, especially in agriculture, is inseparable from the type of land to which it is applied, the nature of the soil, its drainage possibilities, etc. Saline water is, for instance, unusable on some soils, but viable on others.

Water has two features that further complicate management efforts: bulkiness and mobility. The value per unit weight tends to be low. Transporting and storing water is costly relative to its economic value at the point of use. In crop irrigation, the water applied may yield additional economic values of less than $US 0.04 per tonne of water.

Water is also difficult to identify and measure because it is a fugitive resource - it flows, evaporates, seeps and transpires. This evasive nature means that exclusive property rights, which are the basis of a market economy, are hard to establish and enforce.

Water projects that attempt to compensate for extreme seasonal variations such as floods and droughts frequently require enormous investments. The economies of scale are such that a single supplying entity is often the most economically efficient organizational arrangement. This is a classic 'natural monopoly'. At the other extreme, most economies of size for pumping groundwater are achieved at relatively small outputs and multiple suppliers can therefore operate efficiently.

Aquifer management is often complicated by the aggregate impact of the actions of many individuals. Even though each individual may have a negligible impact when taken alone, the sum total can be of major importance. One tube-well has little effect on the total water supply, but thousands of tube-wells can quickly deplete an aquifer. Establishing effective policies to regulate water abstraction by these many small, scattered decision-makers is exceedingly difficult.

The case for public intervention

The above characteristics of water make a large measure of public intervention inevitable. Economies of scale in the collection and distribution of water tend towards natural monopolies, which need to be regulated to serve the public interest. The fact that many investments are huge, and have a long time-horizon, often discourages private capital, and requires large amounts of public investment.

Water uses in a river basin or aquifer are inter-dependent, which is to say that users impose 'externalities' on others that they ignore in their own decisions (e.g., discharging polluting effluent into a river causes harm, inconvenience and costs to other river users). In some respects, water is a 'public good' in the sense that it is impractical to exclude users or beneficiaries, and therefore impossible to apply charges for such ill-measurable benefits as improved navigation, flood control, or reduced river pollution. Where this is the case, private investment will not be forthcoming. In both these respects, water is prone to 'market failure', which implies that some public involvement is called for.

Ultimately, water is vital to life, and certain water systems are of national strategic importance. Governments have a responsibility to manage water for the national welfare. This does not imply that the water system needs to be 100% in public ownership. It does, however, mean that appropriate laws, regulations, institutions and incentives should be in place to underwrite the public interest, and that governments stand ready to invest where the market will not.

Governments are, unfortunately, subject to shortcomings of their own, and it cannot be assumed that they are always efficient servants of the public good. 'Policy failures' are the public twin of market failures. The management of water is often fragmented between different agencies and parties, leading to conflict, confusion and mutually damaging tactics.

Water authorities and service agencies are often overextended and inefficient. They often fail to recover enough funds to cover essential operations, and there is often a growing backlog of unserviced consumers. Publicly owned companies and utilities are usually among the worst water polluters, whatever legislation is formally in place.

In short, a well managed water sector needs a balance of public and private involvement, recognizing the limits of both the market and government, and building on what each seems to do best.

The water sector and its outreach

The water sector embraces direct consumption and use of water, land drainage, flood relief, farm irrigation, fisheries, industrial and other abstraction, in-stream use of water for recreation, amenity, wildlife, etc., environmental protection, and disposal and treatment of sewage and industrial effluent.

It follows that decisions about water concern many interested parties - the 'stakeholders' - in the sector. The decision to use more water in agriculture, for instance, could affect power generation, municipal use, industrial offtake, in-stream uses such as fishing, navigation and recreation, and environmental purposes such as wetlands, deltas and game parks. These decisions could also entail major public health risks, such as the spread of malaria and bilharzia.

Apart from being the largest worldwide consumer of water, agriculture is also a major water polluter. Saline irrigation off-flows or drainage containing agrochemical residues are serious contaminants for downstream water users. Agricultural nitrate is contaminating groundwater in a number of areas. The disposal of liquid animal wastes pollutes surface and groundwater and is the main environmental problem in some intensively farmed regions.

Conversely, natural resources sectors such as agriculture, forestry and nature conservation can hold the key to improving the management of water resources. Certain kinds of farm practices, such as terracing and agroforestry, can help to preserve and improve the functions of watersheds and catchment areas. Afforestation, and sustainable management of standing forests, also has a vital part to play in the protection of upland water sources. Thus more careful use of water by irrigators can release supplies for the use of growing cities, or for hydropower or environmental purposes, while more diligent use of agrochemicals and better drainage practices would improve the quality of water for downstream users.

Water has an international dimension where countries share a river, lake, coast or aquifer. The issues are similar to those arising where the resource is of purely national concern, except that sovereignty is involved, international law is applicable, aid is often at stake, and countries may be willing to go to war to defend their interests. There is a serious risk of water becoming a casus belli in some of the arid parts of the world.

The international debate

Water issues have been the subject 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, Brazil, 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 UN specialized agencies, international non-governmental organizations (NGOs) and bilateral assistance agencies are all coordinating or participating in special programmes related to water resources.

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

Purpose of the guide

The ultimate responsibility for formulating water policies rests with national authorities. Although professionals and specialists are drawn into policy reviews and decisions, politicians and senior officials, as well as professionals from outside the water sector, have a crucial influence. Hence it is important that the message is disseminated widely. This Guide is intended to:

· indicate the wide range, and ramifications, of water management, and the relationship between the 'water sector' and other parts of the economy;

· identify the principal issues involved in managing water resources, for the guidance of policy-makers;

· set out principles and criteria by which water resources can be managed;

· introduce some of the methods and processes entailed in a water policy review;

· illustrate how different countries have carried out such reviews, and how they have gone about implementing their findings; and, by means of the above,

· promote national policy and legislative reform, planning, and institutional development in the water sector.

Target readership

The Guide is addressed to all those likely to be involved in national water policy reviews. This includes ministers, their advisers, senior administrators and managers, and specialists and professionals. It should be read by those active in the water sector in its widest sense, as described above, not just those in directly water-related undertakings.

Some of its contents, addressed to a wider readership, will be familiar to water specialists. At the same time, it is intended that the latter would benefit from the introduction to the wider issues and principles at stake. Water is too important to be left to the specialists, so the reader is likely to become involved in a range of issues, such as:

· coping with growing water shortages both nationally and locally;

· establishing principles, or developing legal or negotiating frameworks, for defusing conflicts among water users;

· allocating scarce supplies between different uses, regions, and types of consumer;

· raising finance for investment in new water sources and recovering costs to meet recurrent operation and maintenance;

· dealing with the threats to public health from groundwater contamination and the pollution of surface water bodies;

· planning national food security involving irrigated farming;

· conducting international negotiations over the use and pollution of international rivers, lakes, and coastal waters;

· extending water, sanitation and wastewater disposal services to populations currently lacking adequate facilities;

· setting affordable and appropriate water quality standards;

· planning flood control and mitigating the harmful effects of floods;

· devising institutional reforms in this sector, such as commercialization and privatization; and

· drawing up appropriate environmental policies and standards as they affect water.

It is intended that the Guide would have some relevance to all such matters.

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