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Symposium 2009

Proposal - Reforming water governance

The Challenge

Water shortages are cropping up around the world – from Australia to South Africa, from Brazil to the Sahel. Many of the world’s mightiest rivers run dry before reaching the sea. Perhaps half th ...

Water shortages are cropping up around the world – from Australia to South Africa, from Brazil to the Sahel. Many of the world’s mightiest rivers run dry before reaching the sea. Perhaps half the world’s wetlands have been damaged or destroyed in the past century as salt water has displaced fresh water. These facts are striking, in view of the fact that the world’s population withdraws less than a tenth of the water that falls to the ground and that – unlike our fossil fuels – the world’s water supplies cannot be used up.

Technological and engineering solutions to double food and feed production are the easier part of the equation to solve if we are to overcome water scarcity and the impact it will have on food production and economic development. Overcoming the social, economic and environmental impediments and obtaining the needed financial investment is the hard part. Making things harder still is the fact that institutional and governance arrangements for water in many countries were designed in the middle of the last century and based on inappropriate models in which water was viewed as an infinite resource.

Governments lack incentives to implement the reforms necessary to ensure more productive and equitable use of water. Fear of potential political repercussions for those who push reform permeate the water and agricultural sectors from top to bottom.

To develop incentives and support for reform, water has to be seen as something that can be valued, and ultimately priced. It can not continue to be treated as a “free” good. This does not mean that the human right to water is overlooked in the process. Few would argue against access to clean water for drinking and sanitation being a fundamental human right that must be protected in any wholesale change to the way water is governed and managed. However, this human right accounts for a very modest amount of total water use. The rest, probably about 90 percent, goes to beneficial uses and the environment. The biggest beneficiary is clearly agriculture.

Measures that governments can take to drive up agricultural water productivity are non-existent in many countries. Clearly the first measure has to be the development of effective water allocation policies, which can be used to reduce allocation as the total pool shrinks or when demands for water resources from other sectors increase. However, allocation policies depend on good water availability measurements, historical data and models and defined water rights.

The most critical solution is to reduce water allocations to agriculture whilst at the same time increasing agricultural productivity. This is a hard task, but by no means impossible. Reduced allocations must be accompanied by support mechanisms for farmers that can improve on-farm efficiency. Currently, if a farmer invests in improving productivity, he or she can keep the water saved and use it to increase the area irrigated. While this may increase food production, it does not solve the problem of reallocation of water to other economic sectors, or to the environment. A real challenge here is to try and develop incentives that link broader society to farmers and lead to broader society paying farmers for the improved environmental services and other benefits that result from improved on-farm water savings.

In the search for improved governance, we must examine the potential solutions that have been and are currently being developed. In parts of Australia and several other countries, a series of mechanisms are used to regulate water use and allocation that depend on seasonal available supply. In the Murray-Darling Basin of Australia, a new system of separation of water and land rights, water trading and water pricing based on supply and demand, has evolved through a combination of market and political forces. The result: water is traded from low to high value uses, which can potentially allow for a market mechanism for trade out of agriculture into urban areas. It is a model worth exploring elsewhere. So long as individual water rights and allocations can be defined, it provides farmers opportunities and incentives to sell temporarily or permanently. It also gives governments opportunities to buy out system tail-end users, improve overall system efficiency and to buy water for environmental flow purposes.

Developing appropriate market-based and other incentives is vital to reform in the water sector. Better definition of water rights and better measurement of water are needed to even contemplate better systems for valuation, pricing, and trade. Without these improvements, will be few incentives to improve productivity whether by the use of economic or regulatory instruments.

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