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Symposium 2009

Solution for Preparing for the 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.

Price water. Decouple land ownership and water rights, so that water rights are allocated to assure access to clean water for drinking and sanitation as a fundamental human right.

To develop incentives and support for reform, water has to be seen as something that can be valued and ultimately priced. Access to clean water for drinking and sanitation is a fundamental human right that must be protected. But this human right accounts for a very modest amount of total water use. And while water is a basic right, this does not mean that it does not have to be paid for.

Once water rights have been defined, water and land rights should be separated from water pricing and water trading. A sufficient quantity of water should be allocated on a per capita basis to assure access to clean water for drinking and sanitation as a fundamental human right. Pricing should be based on long-run supply and demand. In particular, major users should be paying a price for water that reflects service and delivery charges based around quantity.

As a result, water will be allocated and ultimately “traded” from low to high value uses. As long as individual water rights and allocations can be defined, it provides farmers with 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 buy water for environmental flow purposes.

Better definition of water rights and better measurement of water are needed to contemplate better systems for valuation, pricing, and trade. Without these improvements, there will be few incentives to improve productivity whether by the use of economic or regulatory instruments. With such arrangements, managing down in an integrated way, all water allocation across agriculture, mining, and other uses becomes feasible.

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