Developing Economic Arrangements for Water Resources Management—The Potential of Stakeholder-oriented Water Valuation - Water and Agriculture: Sustainability, Markets and Policies - page 139

Although it is a hypothetical example, Table 1 illustrates the general thinking behind
stakeholder-oriented water valuation and demonstrates how a stakeholder-oriented
valuation approach fits the (negotiation) processes by which economic instruments for
water resources management are developed. Stakeholder-oriented valuation features a
pragmatic use of analytic tools, including some 'straightforward' economic analyses,
which are relatively easy to incorporate in a participatory process. For instance, the main
value driving the process in New York was the financial costs of filtration. This was
relatively easy to estimate and, although the estimate had a considerable margin of
uncertainty, it effectively triggered New York City to search for alternative solutions.
Conclusions
The available experiences show that economic arrangements can offer useful tools for
efficient, equitable and sustainable water resources management, but that they need to be
accompanied by adequate administrative arrangements and embedded in an appropriate
institutional framework. Apart from knowledge about the economic, administrative and
institutional arrangements, a proper understanding of the mechanisms that determine
success of failure of economic arrangements also requires knowledge about the processes
through which they are developed. A review of three cases where economic arrangements
have been successfully implemented shows that the economic arrangements have been
the result of a negotiation process among multiple stakeholders. The stakeholder process
was especially important to reach an agreement about the administrative and regulatory
arrangements that set the boundaries within which economic arrangements were confined
to ensure that societal goals were not jeopardised. This means that new economic
arrangements need to be carefully designed, with the involvement of multiple
stakeholders.
More insight is needed into these multi-stakeholder processes, to identify certain
commonalities that can help support future negotiations among stakeholders about the
regulations and conditions required to put in place sustainable economic arrangements for
water resources management. Nevertheless, one thing that is clear already from the three
described cases is that a transparent assessment of the value that water resources represent
to the involved stakeholders, as well as to society as a whole, will be helpful to support
this process. For this, traditional economic valuation methods need to be complemented
by stakeholder-oriented approaches that help to facilitate dialogue among stakeholders
and that can effectively incorporate the broader societal concerns related to social equity
and environmental sustainability, beyond mere monetary values. Further work in this area
is needed, building on the experiences that have already been gained and from which a
process for stakeholder-oriented valuation emerges. This needs to be further developed
into sound operational methodologies that link water valuation to the stakeholder
processes by which economic arrangements are developed. Specific attention is needed
for the participatory aspects in such valuation methodologies, as well as for the
assessment of the broader societal values associated with water resources management.