Water resources planning in a strategic context: Linking the water sector to the national economy

Abstract

In many parts of the developing world investment in water resources takes a large proportion of the available public investment funds. As the conflicts for funds between the water and other sectors become more severe, the traditional ways of analyzing and planning water investments has to move away from project‐by‐project (or even a river basin‐by‐river basin) approaches to include the relationships of water investments to other sectors and to overall national development policies. Current approaches to water resources investments are too narrow. There is a need for ways to expand the strategic thinking of water sector managers. This paper develops a water resources planning methodology with the primary objective of giving insights into the linking of water sector investments and macroeconomic policies. The model optimizes the present value of investments for water resources development, while embedding a macroeconomic model into the framework to allow for an examination of the interactions between water investments, the growth in the agricultural sector, and the performance of the overall economy. A case study of Bangladesh is presented which shows how strategic thinking could lead to widely differing implications for water investments than would conventional water resources systems planning models.