The Economics of Water Resource Allocation: Valuation Methods and Policy Implications

In this chapter a ‘watershed economics approach’ that could be applied in Cyprus is proposed which is composed of two important stages. In Stage I economic valuation techniques are used to establish the economic value of the competing demands for surface and groundwater, incorporating where necessary an analysis of water quality. The valuation exercise allows the objective balancing of demands based upon the equi-marginal principle to achieve economic efficiency. In Stage II a policy impact analysis is proposed which addresses issues of social equity and the value of water for environmental/ecological purposes. The analysis is undertaken within the confines of the watershed; the most natural unit for the analysis of water allocation and scarcity since it determines the hydrological links between competing users and thus the impacts of one user upon another. The methodology is encapsulated by a case study of the Kouris watershed in Cyprus

The costs of uncoordinated infrastructure management in multi-reservoir river basins

Though there are surprisingly few estimates of the economic benefits of coordinated infrastructure development and operations in international river basins, there is a widespread belief that improved cooperation is beneficial for managing water scarcity and variability. Hydro-economic optimization models are commonly-used for identifying efficient allocation of water across time and space, but such models typically assume full coordination. In the real world, investment and operational decisions for specific projects are often made without full consideration of potential downstream impacts. This paper describes a tractable methodology for evaluating the economic benefits of infrastructure coordination. We demonstrate its application over a range of water availability scenarios in a catchment of the Mekong located in Lao PDR, the Nam Ngum River Basin. Results from this basin suggest that coordination improves system net benefits from irrigation and hydropower by approximately 3–12% (or US$12-53 million/yr) assuming moderate levels of flood control, and that the magnitude of coordination benefits generally increases with the level of water availability and with inflow variability. Similar analyses would be useful for developing a systematic understanding of the factors that increase the costs of non-cooperation in river basin systems worldwide, and would likely help to improve targeting of efforts to stimulate complicated negotiations over water resources

Decision support systems for large dam planning and operation in Africa

Decision support systems/ Dams/ Planning/ Operations/ Social impact/ Environmental effects

Review of integrated approaches to river basin, planning, development and management

Piecemeal approaches to river basin development and management may not fully recognize the interactions and interdependence among components of a river basin system. River basin management that focuses on a single water use, on a single sector, or on the supply to particular segment of the basin population may inadvertently disrupt other sectors of the economy (in time or space). Hence, advocating for a systems approach to river basin development - for models that could help account for a river basin's key components and help address various objectives. The authors review the literature on such economic models, including models that deal with issues of water quality and quantity or with environmental considerations, recreational demand, countrywide planning, and multiple objective planning. Their review may serve as a source of references for those who need to consider whether they can use a model. Readers can evaluate the suitability, advantages, and disadvantages of particular modeling approaches for specific objectives.Water Conservation,River Basin Management,Water and Industry,Environmental Economics&Policies,Decentralization,Environmental Economics&Policies,Water Conservation,Water Supply and Sanitation Governance and Institutions,Water and Industry,Town Water Supply and Sanitation

Water Rights and Water Allocation: Issues and Challenges for Asia

The primary audience for this report is management and staff working in water resources agencies in Asia, particularly those in river basin organizations (RBOs) in their various forms. The roles and responsibilities of RBOs vary considerably and are evolving as pressureson water resources are becoming more severe. Although this report seeks to share knowledge about the fundamentals and application of waterrights and allocation, it attempts to do so with a practical focus

Closing of the Krishna Basin: irrigation, streamflow depletion and macroscale hydrology

River basins / Physical geography / Climate / Stream flow / Hydrology / Rainfall runoff relationships / Evapotranspiration / Irrigation programs / Water allocation / Water transfer / Environmental effects / Water quality / India / Krishna River / Andhra Pradesh / Maharashtra / Karnataka

Robust Reform: Implementing robust institutional arrangements to achieve efficient water use in Australia

The focus of this report is on implementing institutional arrangements for the efficient allocation and management of water. Water is an input into human use including economic production and recreation activities that generate many externalities. It also provides many valuable ecosystem services only partially captured in the market. Institutional arrangements are required that are dynamically efficient and low cost, and robust enough to withstand the test of time. Robust administrative arrangements are characterised by the lack of a need for change.water reform;institutional;trading;Australia

Irrigation externalities: pricing and charges

Irrigation externalities: pricing and charges by Gavan Dwyer, Robert Douglas, Deb Peterson, Jo Chong and Kate Maddern was released on 14 March 2006. The paper discusses the nature and causes of environmental change related to rural water use, and provides a taxonomy of the many diverse types. It also examines the issues surrounding possible charges on water use for water related externalities. There have been few attempts by water utilities to incorporate externalities into full cost pricing of irrigation water. The aim of this Staff Working Paper was to: examine the extent to which charges imposed by irrigation water utilities could address externalities from irrigation water supply and use; and to develop a framework to identify and characterise changes in environmental conditions from the supply and use of irrigation water that may lead to environmental externalities. The authors found that many factors influence the extent to which charging for water would change water use. These include the volume of water available to irrigators, the extent to which trade can occur, the size of the charge or tax, the price responsiveness for irrigation water and the existing mechanisms to address externalities. A tax on water use may increase economic efficiency where external costs are related only to the level of water use. However, such a tax is an unsuitable instrument if the Government's policy objective is to reduce environmental damage to a predetermined level or to raise a target level of revenue to address the externalities. The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.Resource /Energy Economics and Policy,

Irrigation and water policies in the Mekong region: current discourses and practices

Water resource management / Water policy / Water law / Participatory management / Irrigation management / River basins / Governance / South East Asia / Thailand / Cambodia / Laos / Vietnam / Myanmar / China / Mekong Region

Institutional and policy analysis of river basin management: the Brantas river basin, East Java, Indonesia

The authors describe and analyze an unconventional approach to river basin management in a developing country undergoing rapid economic, political, and institutional change. The founding of the Brantas River Basin Management Corporation (Perum Jasa Tirta I - PJT 1), a national state-owned company for river basin management, initiated an emphasis on river basin management to operate and maintain existing infrastructure, plan and implement the allocation of water, and address problems that affect basin-level water resources. The Brantas River basin is located within the province of East Java in Indonesia. It has an area of approximately 11,800 square kilometers and makes up 25 percent of East Java's land area. The basin's population, which amounts to nearly 15 million, has increased by 53.4 percent over the past 30 years and represents 42.4 percent of East Java's population with a density of 1,249 per square kilometer. A shift has taken place in Indonesia since the mid-1990s from emphasizing infrastructure development to strengthening institutional aspects (hydrology, flood fighting, flood warning, flood management, and so on). The institutional arrangement for water resources management in the Brantas basin through a state-owned corporation is an interesting model. PJT I has achieved results in implementing a reasonably good system of water allocation and management and a reliable flood forecasting system, as well as maintaining major infrastructure in fairly good condition. Managing water quality, catchment conditions, and the river environment, however, are the responsibility of many entities, and there is need for greater coordination and authority to address these issues.Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Drought Management,Water and Industry,Water Conservation