Developing Economic Arrangements for Water Resources Management—The Potential of Stakeholder-oriented Water Valuation - Water and Agriculture: Sustainability, Markets and Policies - page 125

Chapter 10.
Developing Economic Arrangements for Water Resources Management —
The Potential of Stakeholder-oriented Water Valuation

Leon Hermans, Gerardo van Halsema, Daniel Renault 1

As water is increasingly recognised as a scarce resource, the use of economic
arrangements for water resources management seems increasingly promising.
Experiences show that economic arrangements can contribute to a more efficient use of
water resources, but only if specific conditions are met, related to a well-functioning
institutional framework and regulations that ensure that the use of economic
arrangements is balanced with broader societal objectives. One of the remaining
questions is how to replicate the existing cases where economic arrangements are
successfully used in water resources management, in other areas where the conditions
seem promising. Therefore, this paper reviews three cases in the USA, Ecuador and
Australia where economic arrangements have been successfully applied, focusing on the
processes that have characterised their evolution. Based on these cases, it is concluded
that stakeholder-oriented valuation can offer useful support for the development of
economic arrangements for water resources management, and an approach for such
stakeholder-oriented water valuation is briefly outlined and illustrated.

Introduction

Water is increasingly recognised as a scarce resource in a growing number of regions.
Numerous countries are expected to experience structural water stress, whereas numerous
others are facing problems in securing sufficient water resources during occasional
periods of drought. Also, polluting activities and deteriorating water quality threaten the
reliability of water supplies and contribute to the scarcity of freshwater resources of
sufficient quality. Water scarcity may be related to physical scarcity of water resources, it
may be due to scarcity in financial means to develop infrastructure to access and
distribute water resources, it may be induced by poor management of existing
infrastructure, or it may be caused by inadequate (enforcement of) institutional
arrangements for the allocation of access rights to water resources and inadequate
arrangements for pollution control.

1. Land and Water Development Division, FAO, Rome, Italy.