It is surprisingly difficult to determine whether water is truly scarce in the physical sense at a global scale (a supply problem) or whether it is available but should be used better (a demand problem). The paper reviews water scarcity indicators and global assessments based on these indicators. The most widely used indicator, the Falkenmark Indicator, is popular because it is easy to apply and understand but it does not help to explain the true nature of water scarcity. The more complex indicators are not widely applied because data are lacking to apply them and the definitions are not intuitive. Water is definitely physically scarce in densely populated arid areas, Central and West Asia, and North Africa, with projected availabilities of less than 1,000 cubic meters per capita per year. This scarcity relates to water for food production, however, and not to water for domestic purposes that are minute at this scale. In most of the rest of the world water scarcity at a national scale has as much to do with the development of the demand as the availability of the supply. Accounting for water for environmental requirements shows that abstraction of water for domestic, food and industrial uses already have a major impact on ecosystems in many parts of the world, even those not considered "water scarce". Water will be a major constraint for agriculture in coming decades and particularly in Asia and Africa this will require major institutional adjustments. A "soft path" to address water scarcity, focusing on increasing overall water productivity, is recommended.

In this paper, it is proposed that water resources should be managed as an integral part of a nation's social and economic development. Water resources managers should broaden their scope of work to include an integrated management approach. Instead of the traditional ‘supply oriented approach’ in which they act in response to ever‐increasing demands for water from different sectors of the economy, water resources management agencies should play a more active role in guiding and stimulating socioeconomic development through more efficient water use. Demand management should be an important tool which should go beyond the improvement of technical efficiencies. Most important is to develop economic and institutional approaches that accept charging for the full costs of the utilization and management of water resources. Implementation of such an approach will require more sectoral integration than is currently the case and will have considerable implications for organizations, staffing, institutional arrangements and corresponding capacity building.

A set of three global scenarios used to initiate consultation on a World Water Vision is presented, derived from alternative evolutions of the major forces driving the global water situation: economic, demographic, technological, social, environmental and governance. The alternative scenarios are the Busi ness-as-Usual scenario (BAU), representing the future trajectory if those who don't believe in the crisis prevail, and no major policy or lifestyle changes take place; the Economics, Technology and Private Sector scenario (TEC), which could result from policies favoured by those who rely on the market, the involvement of the private sector and mainly technological solutions, and largely national/local or basin-level action; and the Values and Lifestyles scenario (VAL), that could materialize through a reviv al of human values, strengthened international cooperation, heavy emphasis on education, international mechanisms, international rules, increased solidarity and changes in lifestyles and behaviour. A number of general conclusions are derived.

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The United Nations Millennium Declaration and resolutions at the 2002 World Summit on Sustainable Development give high priority to poverty reduction in international development agenda for the next decade and a half. It is now widely recognized that water resources development and management play a fundamental role in sustainable growth and poverty reduction. However, investments in water resources development, which were considered a high priority by governments and aid agencies for decades, have fallen drastically. The key question addressed in this paper is: Can water resources development reduce poverty? It examines the impacts of past investments on water resources development and management, (especially on irrigation), on poverty reduction. It is shown that past investments in irrigation development have made a significant contribution to alleviating poverty. In recent years investments made by private farmers in groundwater irrigation may have had a larger impact on livelihoods for poor people than the public investments in large-scale surface water irrigation systems. It is argued that there is not a single silver bullet to reduce poverty though water resources development or management. The best chance for lasting and sustainable impact on poverty is likely to be achieved through a combination of sustainable water resources development, combined with the development of appropriate pro-poor institutions and technologies.