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Part III Strategy formulation - The elements
Formulation of a strategy - the elements
Institutional and human resources issues
Stakeholder participation
Information systems
The role of economics
Environmental and health considerations
International issues
Water strategies in practice
Formulation of a strategy - the elements
A
holistic approach
Categories
of actions
Planning
and analysis
Modelling
Legal
and institutional reforms
Economic
measures
Technology
Projects and spending programmes
Based on the process presented in Chapter 3, this chapter introduces the main elements of developing a water resources strategy. The elements are discussed in individual detail in subsequent chapters. It begins by stressing the value of a holistic approach - and goes on to introductory sections on information gathering, forecasting, modelling, integrated planning, natural resource accounting, and Policy Analysis Matrices, legal and institutional reform and economic measures.
Under the sub-heading of projects and programmes there is a discussion of how the appraisal, selection and design of projects must adapt to the needs of a new strategy, with sections on cost-benefit and cost-effectiveness analysis, environmental assessment and financial management.
ICWE (1992) and UNCED (UN, 1992) both 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 sectorial water plans and programmes within the framework of national economic and social policy.
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 (Rogers, 1992). Water use in one part of the system alters the resource base and affects water users in other parts.
Water policies, laws, projects, regulations and administrative actions often overlook such linkages. Governments in general tend to organize and administer water sector activities separately: irrigation might be under one department; domestic water supply and sanitation overseen by another; hydropower activities managed by a third; transport supervised by a fourth; water quality controlled by a fifth; environmental policy under a sixth; and so forth.
While they may reflect political realities, these fragmented bureaucracies make uncoordinated decisions, according to individual agency mandates that are independent of each other. Too often, different groups of government planners develop the same water source within an interdependent system for different and competing uses. This project-by-project, department-by-department and region-by-region approach is no longer adequate for addressing water issues.
A more integrated approach to assessment and planning obliges water managers to understand not only the water cycle (including rainfall, distribution, ground and surface water interaction, ecosystem interactions, and natural environment and land use changes), but also the diverse inter-sectorial development needs for water resources.
BOX 5: POLICY ANALYSIS MATRIX
Action categories Components
1. Planning and analysis
Objectives: to collect data on the water sector; to analyse it in the light of national water needs; to formulate a national water strategy.
| Analytical framework | National water strategy | Demand projection |
| Information systems | Water resources assessment | Time scales |
| Data banks | ||
| Monitoring systems | ||
| Models | ||
| Research |
2. Legal and institutional
Objectives: create the right 'enabling environment' for the strategy; set up a legal framework in which rights and obligations in respect of water are clear and which facilitates its rational use; set up institutions and management responsibilities consistent with the strategy; ensure appropriate regulations are in place.
| Legal framework | Laws clarifying ownership and rights |
| Institutional reform | New authorities |
| Coordinating bodies | |
| Responsibilities of utilities | |
| Privatization | |
| Management structures | O&M reviews |
| Delegation, user groups | |
| Regulations | Water quality |
| Environmental standards | |
| Regulation of private sector | |
| Abstraction |
3. Economic regimes
Objectives: to ensure that macro-economic and sectorial economic policies support the water strategy; create specific incentives for the careful use of water.
| General economic policies | Agricultural support |
| Food self-sufficiency | |
| Industrial promotion | |
| New settlement | |
| Incentives | Prices |
| Conservation | |
| Markets | |
| Trading | |
| Pollution charges |
4. Projects and programmes
Objectives: to select, appraise and design projects and spending programmes systematically, and consistent with the national strategy.
| Public investment schemes | Project appraisal |
| Water efficiency programmes | Environmental assessment |
| Information campaigns | Financial management |
In keeping with the holistic approach to the water sector, the various kinds of actions can be grouped into four main categories: planning and analytical; legal and institutional; economic; and project and programmatic. Generally speaking, a water policy review will entail some actions in all these categories, but the balance of activities between each category will obviously vary from country to country, as will the detailed measures taken. These categories, which subsume the key elements of developing a water resources strategy, and details of some of their respective components are illustrated in Box 5, and further discussed in this section.
Methodologies and tools for water policy analysis
There is a danger of water policy reviews being 'technique-driven'. Certain methodologies particularly those drawing on large data sets and entailing modelling and optimization simulations -are attractive to professionals and allure policy-makers because of their quasi-scientific basis. However, rather than the sophistication of a method it is more important to ask about its relevance to the specific objective in hand, and its credibility in particular social, political and economic contexts.
Data requirements
Water policy formation is very data-intensive. However, data on water supply tends to be poor, while information on demand is often based on gross estimates. This means that the construction and interpretation of, for instance, water supply and demand balances needs great care.
Hydrological information on water supply and water-quality is expensive to obtain and interpret. The repercussions of major new structures and works have to be meticulously examined. The needs and attitudes of consumers have to be ascertained, by survey in some cases. However, data gathering should not become an end in itself. Decision-makers should always ask, "What is this information for?", and, "Is this the most cost-effective way of obtaining it?"
There are two main sets of information to be established to provide a baseline for policy making, planning, implementation and monitoring of the results, namely, an inventory of resources (location, quantity and quality), and an inventory of current diversion and instream uses.
Because of the size and longevity of many investments in the water sector, it is essential to take a long view of trends in the sector. Forecasting future requirements would normally mean taking 25-50 year scenarios of supply and demand. Extrapolating current and recent trends in demand is pointless if these are unsustainable, and if changes in behaviour are likely to be called for. Hence demand projections need to be iterative: if the first few demand-supply scenarios are clearly unworkable, scenarios including demand management and price elasticities should be introduced. In most cases it is unrealistic to assume unconstrained demand for water.
Obtaining the information
Box 6 summarizes key questions to ask about water data.
BOX 6: CHECKLIST OF QUESTIONS ABOUT DATA
• How is access to the required information to be obtained? Are the owners of data obliged to divulge them? If not, how can they be persuaded to cooperate? Where information has to be bought, what is the cost, and what is the most cost-effective way of obtaining it?
• What are the minimum information requirements and how is information to be managed and disseminated to those who need it?
• What standards of information quality are required and how are they to be achieved?
• What requirements are there for simplification and condensation of information for policy making and planning?
• How is additional information gathering and monitoring to be planned, financed and implemented?
Modelling is a useful way of throwing light on problems important to policy-makers, such as the sustainable yield of an aquifer, long-term supply-demand scenarios with water pricing, or optimizing the use of a reservoir serving different users (power, irrigation, flood control, amenity, fishing, etc.). Models are useful for exploring options, but the absolute accuracy of their output is frequently open to question for a number of reasons: inadequate, incomplete or inaccurate data; inadequate description of physical processes within the model; or idealized assumptions about the limits, boundaries and nature of the processes being modelled. It is also naive to think that models can produce generally applicable policy solutions since they are only as good as their underlying assumptions about laws, institutions and consumer behaviour - to cite three examples which are rarely incorporated. The same objections can be made to excessive reliance on integrated planning.
Models can be physical, descriptive or conceptual and describe environmental or economic processes, or combinations of the two. Conceptual models are perhaps the most useful in the planning process, and point the way to worthwhile physical model studies
Physical models range from lumped parameter (black box) models which use simple empirical equations to represent key relationships at a large or 'lumpy' scale - for instance catchment runoff. Physical-based models are intended to capture the complexity of a water system, and are very data intensive.
Economic models aim to represent the balance of supply and demand in a system. If price and demand elasticity are introduced as variables, future scenarios can be generated that may be useful for policy and investment purposes. Another use of models is to optimize the distribution of water between different purposes, by generating its value in different uses. Multi-objective models, such as linear programmes, have been popular in trying to find optimal solutions on economic, technical and other grounds, and help prioritize options for management and policy development.
Legal and institutional reforms
Legal reform
In order to formulate a legal system appropriate to water management, a series of steps and actions is called for, comprising:
It is first necessary to consider whether the proposed policy is consistent with existing legislation governing or regulating the use, development and conservation of water resources and other related natural resources (e.g., land, forest, fish) and the environment. If it is not, the next step is to consider what legislative changes will be required, and at which hierarchical level of lawmaking (i.e., constitutional, Act of Legislature, Government regulation). Legal reforms and water rights issues are discussed in more detail in Chapter 5.
Reorganizing the water sector
There are four main approaches to reorganization of the water sector to improve its administrative and operational capacity and improve service and accountability.
Internal reforms to improve service can include training to improve professional capacity, financial and career enhancing incentives to improve productivity and the imposition of rigorous and transparent accounting procedures with external independent audit.
Water utility reforms would require them to behave more like commercial undertakings. This will require them to adopt more active pricing, metering and tariff restructuring, improved cost-recovery, and greater self-financing. This will often entail managerial and organizational reforms. Drawing up corporate plans (contract-plans) with the government has been employed in some cases.
Privatization is appropriate in some instances, though it can take many forms and full private ownership, as in the United Kingdom, is an extreme - and rare - variant. The French model of concessions and lease contracts has influenced a number of developing countries, e.g., Côte d'Ivoire, Guinea, Malaysia, Morocco and Thailand. Regulated private companies also operate in Santiago de Chile and Guatemala City.
Participation: NGOs and WUAs
An increasing number of private sector groups, including WUAs and other NGOs, are taking over some public-sector irrigation responsibilities. The inclusion of water users in irrigation planning, management and ownership is proving to be an effective method for increasing irrigation system efficiency in many cases. Studies throughout the world demonstrate that user participation in irrigation services improves access to information, reduces monitoring costs, establishes a sense of ownership among farmers and increases transparency as well as accountability in decision making. Already, governments are turning many aspects of public irrigation systems over to WUAs, and well-documented examples can be seen in Argentina, Colombia, Indonesia, Mexico, Nepal, the Philippines, Sri Lanka and Tunisia.
NGOs can undertake a wide range of water-related functions, from developing projects for rural water supplies and minor irrigation, to fostering WUAs for water management purposes. Many NGOs stem from local initiatives and operate as independently funded and self-managed groups. These organizations bring fresh views, new ideas and participatory working methods to other areas of development policy and practice. Much of their success is attributed to their local knowledge, as well as to their interest in and experience of regional conditions. They have been particularity active in promoting the interests of poor and disadvantaged groups through articulate and forceful advocacy and service provision.
The local base of NGOs may allow them to reach vulnerable or remote groups which are exceptionally difficult to reach with conventionally conceived and managed public schemes. With their close local contacts and skills in group mobilization and cohesion, NGOs can provide the institutional leadership required to bring about socially acceptable solutions, and in some cases (e.g., the Philippines) serve as community organizations.
Macro-micro links
Improving water resource management requires recognizing how the overall water sector is linked to the national economy. Equally important is understanding how alternative economic policy instruments influence water use across different economic sectors as well as between local, regional and national levels and among households, farms and firms. For too long, many water managers have failed to recognize the connection between macro-economic policies and their impact on, for example, technical areas such as irrigation.
Macro-economic policies and sectorial policies that are not aimed specifically at the water sector can have a strategic impact on resource allocation and aggregate demand in the economy. A country's overall development strategy and use of macro-economic policies including fiscal, monetary and trade policies - directly and indirectly affect demand and investment in water-related activities. The most obvious example is government expenditures (fiscal policy) on irrigation, flood control or dams.
National development strategies can directly influence water allocation and use in other ways. In the case of a food self-sufficiency strategy, the government may subsidize water-intensive inputs to encourage farmers to produce more rice. By providing financial incentives for rice producers, the government is influencing the demand for water and private irrigation investment through price policies.
Creating incentives
The best-intentioned and -designed reforms in the water sector may be frustrated if key economic signals work against them. For example, the benefits of rational pricing of irrigation water may be negated by artificially high farm-support prices. Penalizing wasteful industrial water use by pricing and effluent charges will be nullified by high protection on the output of heavy industry or by 'soft' budget constraints enabling parastatals to pass on increased water charges and fines to their sponsoring ministries. Hence, in those countries where water is becoming the scarce factor of production, action in the water sector should be consistent with other key economic signals.
The permissive effects of enabling conditions may be sharpened by the creation of incentives for the more rational use of water. These may be positive or negative, market or non-market. They will be categorized below as: tariffs; pollution charges; water markets; and non-market inducements.
Informing policy-makers of the choices of appropriate technology to meet policy goals and making them aware of the significance of their interactions and impacts is an important but little-explored area of strategy formulation. It highlights problems of common understanding and dialogue between specialist technicians, planners, politicians and the general public, and indicates that improved and simple communication of complex ideas is a fundamental component of human resources development and capacity building. Conversely, improved knowledge of policy frameworks and water resources management strategies allows technologists to assess the context and value of their research and adapt it accordingly.
Although one of the reasons for this publication is that water resources development has too frequently been technology-driven, it is clear that technology, information and management capacity go hand in hand. Water resources strategies should not overlook technological solutions where they are appropriate or even fundamental to improved and more rational management. As management decisions become increasingly complex and information intensive, the demand for appropriate supporting technology actually increases and cannot be omitted from the equation. Box 7 provides an example of a recent initiative in China, which has a strong technology focus, although it was framed within the context of a cohesive national water management strategy.
Projects and spending programmes
The process of water strategy formulation is likely to culminate in drawing up, revising, or implementing projects and programmes entailing public expenditure. It is important that the choice of projects, and the way they are designed and carried out, is consistent with the overall strategy. Four processes are particularly relevant in this context: cost-benefit analysis, cost-effectiveness analysis (both discussed in Chapter 8), EIA, and financial management.
Projects and policies
The impact of the kind of reforms suggested in earlier chapters would be to produce an 'enabling environment' in which better decisions about water were made. Some of these decisions would be made by private individuals, farmers and companies - e.g., in response to regulations, pricing, or the development of water markets. No further action would be required of the state.
Policy reforms may substitute for projects. In the event of an emerging water shortage in a sector or region, the government has the broad choice of introducing demand-management and conservation policies, or investing in new supply schemes. In this sense, projects may represent the 'easier' option, at least in so far as they are more popular with the public and avoid difficult changes in consumer behaviour. However, a new strategy will typically involve both policy reforms and projects and spending programmes, which require more detailed economic assessment, as outlined at the end of Chapter 8.
BOX 7 THE CHINESE APPROACH
China has launched a ten-year programme that calls for the expansion of the irrigated area from 48 to 53 million ha, and for drainage of 3 million ha of land with surface waterlogging and of 2 million ha of saline/alkaline land, all of which will not be possible without technology research and adaption of advanced technologies from other countries. For the research themes proposed under the International Programme for Technical Research in Irrigation and Drainage (IPTRID) in China, the focus is on four areas:
i. Water- and energy-saving technology.
ii. Operation and maintenance of canal systems.
iii. Waterlogging and salinity control.
iv. Training, networking, and international support.
Of 22 research proposals identified for a possible programme, seven were selected as priorities:
• Optimization in the use of water and energy in farm irrigation.
• Water management in systems where surface water and groundwater are limited in quantity.
• Prevention of seepage and frost-heave.
• Technology for structure rehabilitation.
• Support for networking in irrigation and drainage research.
• Institutional support for leading research institutes.
• Guidelines for salinity control, drainage design and design of field drainage to control waterlogging.
Environmental assessment
The water sector is simultaneously a major perpetrator and victim of environmental change. The provision of water often entails drastic interference with natural hydrological systems (e.g., dams, reservoirs, river diversions, aquifer depletion). But, equally, water is polluted by the waste from other sectors, and irrigation and urban water supplies are vulnerable to upstream activities, and the deterioration of upper catchment areas and watersheds. Water is inextricable from the environment and the pre-condition of any important decision in this sector is an understanding, firstly, of its own environmental effects, and, secondly, how environmental change triggered by other forces will affect this sector. Determining environmental values and making the economic case for environmental action and protection is an emerging discipline, and the reader is referred to recent literature for a general introduction (e.g., Winpenny, 1991).
Institutional and human resources issues
Assessment and institutional analysis
Water
rights and legislation
Regulations, administration and enforcement
Organizational
arrangements
Human
resources development
The chapter considers the wide scope of institutions with importance in relation to the formulation of water resources management strategies. It focuses on assessment and institutional analysis, and covers legislation, including regulation, administration and enforcement, and public and private organizations at different levels.
Finally the significance of the personnel staffing the organizations is underlined, with the presentation of a brief overview in summary form of the most important aspects of human resources development.
Experience shows that institutional weaknesses and malfunctions are a major cause of unsustainable and ineffective water services. To remedy these shortcomings requires attention to building institutional capacity at all levels, especially as there is increasing pressure to improve service delivery by making agencies more demand responsive. Also, the need for better and more rational water resources management and to facilitate allocation amongst all users suggests an expansion of national integrated planning. A critical institutional challenge is to become more adept at developing policies, rules, organizations and management skills to address these needs simultaneously without constraining specific major aims.
Capacity building in developing a water resources strategy involves:
• creating an enabling environment with appropriate policy and legal frameworks;
• institutional development, including community participation; and
• human resources development (HRD), and strengthening of managerial systems.
UNDP's Capacity Building Programme for Sustainable Water Sector Development stresses 'vertical' capacity building within an individual water sector and 'horizontally' between sectors. It recognizes that capacity building is a long-term and continuing process involving all stakeholders.
In this framework, the term 'institutions' refers to both the set of rules governing water use and the specific organizational arrangements involved in the formulation and implementation of water resources laws, policies, strategies and programmes. Together, these rules form the enabling environment for water resources management. Changes in the rules, organizational arrangements and means of HRD may be required to effectively translate water resources management policies into an action programme. Such changes should provide incentives for improved performance in terms of water resources planning, allocation and operations management. Sound institutions together with high quality human resources are the best assurance of achieving water sector objectives.
Two objects are served by analysing institutions and human resources: first, it assesses existing rules and organizational arrangements and matches them to the demands of programme implementation, and, second, it identifies means of strengthening capacity to undertake strategy formulation on a continuing basis.
The strategy formulation process is an opportunity to evaluate whether institutions and HRD programmes in a country effectively serve the national water resources management goals. Evaluation of the set of rules is an opportunity to consider the social norms governing water supply and use, as well as whether explicit policies, laws and regulations are sufficient. A review of organizational arrangements can reveal whether existing or recommended rules can be enforced; it is also a chance to consider ways of involving community organizations, WUAs or professional associations in the planning and management of water resources. Finally, HRD considerations involve a look at supply and demand for key personnel, as well as education, training, employment, career structures and incentives.
Water resources management strategy is country-specific. Analysis of institutional and human resources should pay special attention to a country's culture in terms of its legal framework, the mix of public and private sectors, educational and manpower development policies and traditional modes of organization. In some cases, religious beliefs direct a certain code of conduct with regard to society's management of natural resources. Therefore, in the analysis of institutions, particular care should be paid to social and cultural practices governing the use of the resource. Institutional analysis should lead to:
• an inventory of information,
• identification and analysis of key issues,
• development of options for a legal and regulatory framework, and
• organizational arrangements and human resources requirements to achieve desired policy goals.
Assessment and institutional analysis
The starting point for institutional analysis is a country's water resource policies. Certain broad directions of reform are visible in the developing world. For example:
The following legal aspects should be addressed during strategy formulation:
Regarding institutional aspects:
The necessity for legal reform was introduced in Chapter 4, although in practice the complexity and long history of existing legal frameworks and precedent make this a daunting task. Simple prescriptions of legal reform are unlikely to account for the cultural, political and economic background to the legislation in place. For instance, the present Water Law in Spain has evolved over the last 100 years, and the consolidated Water Act (1989) in Australia combined and rationalized 15 separate pieces of legislation.
A recent FAO review (discussed in FAO, 1995b) of legal issues and legislative requirements of water resource policy review and reform concludes:
- collection of all legislation in force on, or related to, water resources management;
- analysis of such legislation for consistency, with a view to detecting issues pertaining to established rights and governmental powers, and in general to assess the legislative drafting required to implement a new policy or strategy; and
- drafting of the required legislation.
Examples of problems of consistency with existing legislation include the case where the proposed regulatory policy of water abstraction and use may require a modification of the rights to use water held by individual or corporate members of the public. This would entail decisions about the extent to which such rights would be subject to change, what guarantees should be offered, and possible compensation.
Policies may require a modification of the powers or scope of authority of the governmental or pare-governmental bodies responsible for water resources management or develop meet, or for related functions (i.e., public health preservation, environmental protection, management of lands and forests, or conservation of wildlife). The introduction of a water charging policy may require modification to legislation currently giving water a non-economic status, or a modification of the privileges enjoyed by given user groups, such as farmers.
The policy review may imply new legislation - as opposed to amending legislation already in existence. Implications for substantive legislative drafting should be recognized, especially if privatization or the introduction of corporate status to water departments is foreseen. Mechanisms for assuring the public accountability or control of private and autonomous bodies can be legally complex. If it is proposed to allow the transferability of water through marketing water rights, the key legal questions are whether water should be transferable separately from the land where it is used, and whether transfers would be free or controlled by the Government.
Water rights have generally originated in historical use and have been sustained over time by custom, sometimes confirmed by specific legislation or constitutional decree. In many cases, the nature of water rights is vague. Realistic assessment of customary rights, and granting of appropriate legal recognition, is an complex and intrigue-prone undertaking that is important on equity grounds, but if handled badly is likely to have strong political consequences.
In some cases, government regulations may substitute for law, as in the case of operating rules of a reservoir that may determine water allocation for different uses. The strategy should include a coherent legal programme and should consider the training and enforcement requirements consistent with existing and proposed legislation. One key question is whether formal establishment of rights is warranted. It should be remembered that once rights are conferred it is not easy to withdraw them. Any new system of conferring rights should also pay attention to equitable allocation among users, including their access to relevant information.
The system of rights may include the right to trade water. Irrespective of whether formal rights exist, informal markets for water can be observed in various countries and specific written or verbal contracts may govern water trading, as is often the case with trading between irrigation organizations or between such organizations and other users. Lack of extensive irrigation infrastructure restricts conveyance capacity and may restrict the tradability of water. In the case of drinking water supply in the cities, there is some evidence of the population's willingness to pay for water supplied by private vendor, typically entrepreneurs with access to groundwater. Phase I of the water strategy formulation process (Figure 2) provides an opportunity to record the existence and spread of such practices and to determine whether they help meet a country's goals and water-related policies, and whether strategies should promote or discourage such activities.
Laws will usually specify the entity responsible for managing water resources and assets in the sector. Usually, a range of ownership and management entities will be found in a country, including the central and provincial governments. Other managers of water resources and infrastructure include semi-autonomous public agencies (such as river basin commissions), private companies, cooperatives and user organizations. The nature and type of governance and administration of these legal entities, including their accounting and audit procedures, should be of central interest to institutional assessment. For instance, in some cases, existing laws of incorporation may hinder the transfer of ownership or management from government to other agencies.
Conflicts and conflict resolution are inherent in any sharing of resources. Conflicts may be resolved by interpersonal means, local community organizations, government agents or the courts. In the case of international or interprovincial waters, allocation rights and conflict resolution procedures could be part of agreements and treaties. Identifying mechanisms that will not only resolve conflicts but also prevent them could be important. In this regard, existing community practices for dispute resolution would be an fruitful area of inquiry. Experience with water rights in some developed countries suggests that it is important to forestall an expensive litigious process of dispute resolution through the courts, where cases may be tied up for long periods of time.
Regulations, administration and enforcement
The enforcement of water legislation and policies depends on the relevance of the regulations and on the administrative machinery required to ensure compliance. For instance, in many countries, the regulation of groundwater abstraction is weak and siting restrictions for pumps are either absent or poorly enforced. Aquifer monitoring to alert decision-makers to draw-down levels is often absent and special attention is needed during the assessment phase to collect and analyze information about groundwater regulation and its enforcement.
Water regulations might cover land use rights related to water management, watershed development, environmental quality and pollution control standards, dam safety standards, service standards for water supply, and financial and management standards. A principle to remember in this context is that users should not also be the regulators - in the UK, the recently privatized water companies are controlled by separate price and environmental regulators, whereas previously water authorities set and implemented standards for the same locality that they managed.
A study of the effectiveness of the present enforcement capabilities is a necessary part of the assessment and careful consideration should be accorded to the costs and benefits of enhancing enforcement: alternatives might include increased staffing or using instruments such as traceable pollution licences.