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Symposium 2009

Proposal - Watering the World: Elements of a blue revolution

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.

Questions

How is the world going to feed, water, and provide energy to another 2 billion people? The challenge becomes enormous when decides to keep water clean and nurture environmental services. The challenge becomes daunting when one adds the aspirations of many to escape from poverty and others to adopt more water-intensive diets and lifestyles. Factor is some extreme water scarcity and some adverse climate change, plus increased flood risks and one could give up.

To make matters worse, a considerable proportion of the earth’s fresh water resources are over-used. In many areas, there is no more water to be had –smarter use and re-use are the only options available. As a general rule, the environment needs more not less water.

Increasing amounts of water are being used to supply energy and increasing amounts of energy are being used to produce water, clean it and move it around.

As the title to this session implies, it is time for a Blue Revolution. Access to water is one of those factors that limit economic progress. Like financial management, the cost of getting the fundamentals of water management wrong can be very high. Now is not the time for complacency.

 

Good and bad news

The good news is that the technology and institutional arrangements necessary to meet these challenges exists.

Around much of the world, water use is notoriously inefficient. It is possible to produce much more with much less water. The challenge is to get the investment signals right and empower investment. If we get the signals right and the transaction costs down, there are significant job opportunities.

Similarly, whilst global assessments of infrastructure maintenance and enhancement needs are rare, at the local level, they are well understood.

In many parts of the world, storage, distribution and treatment infrastructure is run down. A 2005 Stockholm Environment Institute assessment of the cost of meeting Millennium Development Goals for water supply and sanitation found that US$47 billion was needed between 2004 and 2015. When the Millennium Development Goals are viewed through glasses that require economic discipline, these goals become much more achievable.

As pointed out many times before, one way forward is to charge all users the full cost of getting water too them and cleaning it up after they have finished with it. The more people pay, the easier the financial challenge becomes. The more blue water can become part of the solution.

Ecosystem services come free and tend to sequester rather than emit greenhouse gases. Investing in nature is part of the solution.

The bad news is that whilst the policy prescriptions are well known governments are finding the extremely difficult to implement them. The world is littered with policy statements and policy commitments that have been only partially implemented.

Less well understood by people in the water sector are the opportunities to speed the blue revolution by freeing up agricultural trade, signalling the true cost of carbon pollution and making the costs of subsidies transparent. For a Blue Revolution to work, changes in each of these enabling policy arenas are necessary.

 

A recommendation for economic discipline

Too many water policies impede change, impede investment and impede innovation. It is time to put in place a series of transitionary arrangements that will allow markets to send proper price signals to all involved in the use of water for production, for living and for processing waste without degrading the environmental processes that sustain us.

Many will object to this full cost pricing recommendation. Many see access to water as a basic human right. But, global experience is revealing that whenever governments attempt to supply free access to water, the resultant infrastructure and supply arrangements are substandard. As a result, the poor end up paying more for water than they would have if water was supplied and made available to them at a reasonable price. It needs to be remembered that the opportunity to access potable water supplies empowers people to work more productively. An economically-disciplined blue revolution has a central role to play in the development of a new world order. Water is a basic right but this does not mean that it does not have to be paid for.

A recommendation for smarter entitlement-sharing and allocation arrangements

In order for investment and innovation to occur at the business and community level, Basin and aquifer water sharing and allocation arrangements must be robust. In fully allocated systems, for example, when one person or country is allowed to take more water, arrangements must ensure that someone else takes less.

In recent years, there has been massive investment in Integrated Water Resource Management but little investment in the development of entitlement and allocation systems that facilitate autonomous change and low cost adjustment. Well designed entitlement and allocation systems understand supply risks and encourage individuals to plan for them.

As populations grow, as populations migrate, as rainfall regimes shift and as absolute scarcity limits are hit, water sharing arrangements are going to have to allow markets to have a say in the choice of place where water is consumed and how it is used. The distribution of water is too big a task and too complex a task for governments to control on their own. The use of separate policy instruments to manage equity, efficiency, environmental and social objectives enables the great use of market mechanisms to play a role in the pursuit of integrated outcomes.

 

A recommendation for “blue” governance

If the above is to be achieved then the prime role of central government is establish the institutional arrangements necessary to facilitate change. Transitionary arrangements are needed to allow and catalyse investment and adaptation. Well designed arrangements allow change in a way that is consistent with a well-established set of hydrological, economic and social principles nested within a set of absolute environmental constraints.

Astute blue governance – necessary for a blue revolution – is more about enabling change and less about controlling where change occurs and less about determining who gets access to water.

A recommendation for astute reform sequencing

Rather than dramatic and sudden policy shifts often advocated, a transitionary approach may be more appropriate. These transitionary pathways will need to pay careful attention to reform sequencing. Policy reforms have to occur in the right order.

  • Investment needs to follow the development of robust entitlement, allocation and trading arrangements.
  • Metering systems need to be put in place before prices can be set.
  • Arrangements that promote investment security and reward innovation need to be in place before water suppliers, water users and communities can be expected to respond.
  • Subsidies have to be made transparent before they can be phased out.

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