Decision support for water policy: a review of economic concepts and tools

Abstract

This article reviews research on the application of economic concepts and tools to the analysis of the preservation, conservation, development, consumption, supply and allocation of water resources. It summarizes research on economic analysis to support policy formulation, implementation and evaluation, including both project appraisal and the design of institutions. Economic analysis can support ex post analysis of existing mechanisms that influence the allocation of water: Such mechanisms include laws, regulations, supply management, demand management, population and climate change. Economic analysis can also be used to conduct ex ante analysis to design future water allocation institutions. These institutions include various forms of marginal cost pricing, valuation of water in alternative uses, water quality management, optimization models, integrated supply and demand management, transboundary management, virtual water, decentralized management, common property institutions and watershed councils. BackgroundWater resources managers and policymakers worldwide are faced with increasing and competing demands on a limited and more uncertain resource as populations grow and climate varies. Water problems cover a variety of areas, including depletion of aquifers, contamination of ground water, siltation of dams, salinization of irrigation water, prolonged drought and flooding.

Analysis of Stakeholders’ Attitudes towards Water Markets in Southern Spain

“…A win-win outcome is usually expected by implementing water markets although externalities should also be considered. Ward [1] reviews economic concepts and tools for water management and sees a market for water rights as a cheaper approach to water management than administrative non-market demand management instruments. He furthermore sees water markets as a useful instrument to meet new water demands.…”

Linking Flow Regime and Water Quality in Rivers: a Challenge to Adaptive Catchment Management

“…A growing scarcity of safe water threatens the persistence of ecosystems as well as progress in poverty suppression, public health, and food supply (Ward 2007). The challenge that meets managers of freshwater ecosystems is to find ways to satisfy the Ecology and Society 13(2): 18 http://www.ecologyandsociety.org/vol13/iss2/art18/ Fig.…”

The Positioned Construction of Water Values: Pluralism, Positionality and Praxis

“…The growing emphasis on the economic, and often monetary, translation of water values is one of the pillars of the doctrine of integrated water resources management (IWRM) that has informed policy-making since the end of the 1970s (Ward, 2007). The application of IWRM principles has promoted the replacement of customary interpretations of water value with a techno-bureaucratic rationality based on an economic toolkit that includes marginal productivity, techno-economic efficiency, free market choices and the marginal cost of water (Ioris, 2008).…”