Water challenge and institutional response (a cross-country perspective)

This cross-country evaluation of institutional responses to problems in the water sector shows that changes in the nature of water problems have changed the development paradigm underlying water institutions. There is increasing recognition of how decentralized allocation mechanisms can influence economic forces and stakeholders in water sector decisions. As the notion of water provision as a public good and welfare activity gives way to the concept of water as an economic good and an input of economic activity, there is more policy concern about efficient and equitable use, cost recovery, and financial viability. All of the countries the authors studied (Australia, Brazil, Chile, China, India, Israel, Mexico, Morocco, South Africa, Spain, and Sri Lanka) are committed to changing the policies and institutions that have caused the present water sector crisis, but they are at different stages of institutional reform. Among cases discussed, Australia and Chile (and, in the United States, California and Colorado) are at an advanced (though not ideal) stage of institutional change. Israel, with its technologically advanced water sector, could well be ahead of them when the proposal to allow water transfers and decentralize water development and distribution systems takes practical shape. Tentative conclusions reached by the authors are: 1) Attempts to fix isolated parts of the water sector will influence other dimensions but an integrated approach is best. At the heart of such an approach should be institutional changes aimed at modernizing and strengthening legal, policy, and administrative arrangements for the whole sector. 2) Institutional changes taking place everywhere suggest that the opportunity costs of (and net gain from) institutional change is not uniform, suggesting that opportunity and transaction costs vary. 3) Funding agencies should focus efforts and resources in countries, areas, and subsectors that already have enough critical mass in institution-building to ensure success and lower transaction costs. 4) The sequence and pace of reform should reflect realities of scale economies and political pressures from reform constituencies. When possible, political economy should be exploited to move reform along more quickly.Environmental Economics&Policies,Water Conservation,Water and Industry,Water Supply and Systems,Decentralization,Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Water and Industry,Water Conservation,Water Use

Quantifying institutional impacts and development synergies in water resource programs : a methodology with application to the Kala Oya basin, Sri Lanka

The success of development programs, including water resource projects, depends on two key factors: the role of underlying institutions and the impact synergies from other closely related programs. Existing methodologies have limitations in accounting for these critical factors. This paper fills this gap by developing a methodology, which quantifies both the roles that institutions play in impact generation and the extent of impact synergies that flows from closely related programs within a unified framework. The methodology is applied to the Kala Oya Basin in Sri Lanka in order to evaluate the impacts of three water-related programs and the roles of 11 institutions in the context of food security. The results provide considerable insights on the relative role of institutions and the flow of development synergies both within and across different impact pathways. The methodology can also be used to locate slack in impact chains and identify policy options to enhance the impact flows.Economic Theory&Research,Food&Beverage Industry,E-Business,Rural Poverty Reduction,Climate Change

The Effectiveness of Alternative Water Governance Arrangements

http://www.unep.org/greeneconomy/Portals/88/documents/ger/GreenEconomyReport.pdfThis chapter aims to provide some answers using both theoretical considerations as well as practical illustrations at the sub sectoral levels of urban water supply and irrigation as well as at the water sector as a whole. It examines different possibilities to deal with governance issues appropriately using several criteria, particularly feasibility, performance efficiency, transparency of the process, and accountability of decision makers. It also derives certain guidelines and principles that can be used to enhance the effectiveness of water governance in sub sectoral and the general water sector context

Rules for water allocation in a small watershed: A game theoretic approach

Exchanges of either long term rights (property right transfer) or spot rights (rights rental) to water may result in third party effects that place practical limits on the geographic scope of a water market. The result will be a market with few eligible participants. A "thin" market suffers from strategic manipulation and allocational distortions. Using a game theoretic approach based on multilateral bargaining models, this study addresses the issue of designing trade rules to facilitate smooth functioning of a thin spot rights market operating in a variety of exchange environments.Six different trade rules were analyzed under 24 exchange environments. Numerical results were based on a hypothetical water market operating in conditions representing the Crane Creek Watershed of Kankakee County, Illinois. The water market equilibria under various trade rules and exchange environments were identified by simulating the multilateral bargaining among the participants. By comparing these equilibria, the relative efficacy of the candidate trade rules was determined.The results were that a price bidding signal produced maximal gains in most environments and the settlements based on the average of the buyer's and seller's prices performed best in most cases. As the market size increases, the bargaining equilibrium prices resulting from various trade rules converge to the competitive equilibrium prices in all exchange environments.U of I OnlyETDs are only available to UIUC Users without author permissio