Developing Economic Arrangements for Water Resources Management—The Potential of Stakeholder-oriented Water Valuation - Water and Agriculture: Sustainability, Markets and Policies - page 128

important social, cultural and ecological values. A better understanding of the processes
behind the success stories will help to draw some lessons on what is needed to improve
the development of successful and sustainable economic arrangements in other places.
What is the process that leads towards the successful introduction of such arrangements,
and how can it be supported?
Without pretending to be exhaustive, three fairly recent cases are discussed where
economic arrangements have been introduced for water resources management: the New
York City Watershed Agreement in the USA, the 'fondo ambiental del agua' in Quito,
Ecuador and water rights trading in the Murray-Darling Basin in Australia. These cases
are generally considered to be successful, as illustrated by their inclusion in the recent
Millennium Ecosystem Assessment Water report (MA, 2005) and by citations in various
other international publications as good examples, as the coming sections will illustrate.
They show that economic arrangements can be successfully applied to water resources
management, linking the provision of good quality water resources to financial flows
between beneficiaries and providers. In all three cases economic arrangements were
introduced fairly recently, which is likely to increase the relevance for future replications
of insights into the processes that led to their adoption.
The processes behind the introduction of economic arrangements in water
management in cases in the US, Ecuador and Australia
The New York City Watershed Agreement
Description of the NYC Watershed Agreement
New York City (NYC) relies on the provision of clean water from upstate watersheds
for the water supply of about nine million people. In order to protect the source and to
maintain the quality of its drinking water, the city has reached an agreement with the
upstream watershed communities to finance the implementation of measures that will
help control pollution from agricultural and domestic sources. Under this agreement, New
York City makes funds available to the watershed residents for the implementation of
best management practices on farms, the upgrade of wastewater treatment facilities, the
rehabilitation of septic systems, the improvement of storm water runoff systems and the
acquisition of land from upstate landowners on a voluntary basis (NRC, 2000; Platt et al.,
2000). This agreement costs New York City approximately US$1.5 billion over ten years
(NRC, 2000).
The funds are administered by the Catskill Watershed Corporation, which is a non-
for-profit corporation established under the agreement to administer programmes for the
watersheds. It includes members from the watershed communities, as well as
representatives of state and city government. A Watershed Agricultural Program has been
incorporated into the agreement, administered by a council composed of farm,
agribusiness and environmental leaders, to review, approve and support efforts on
individual farms to improve the water quality of surface and groundwater resources (Platt
et al., 2000).