Water Policy Reform Research Articles

Bearing The Cost: An Examination Of The Gendered Impacts Of Water Policy Reform In Malawi

Water insecurity is one of the most pressing issues currently faced by Malawi. The consequences of these issues are borne significantly by women, who are most directly involved with water provision and use, particularly at the household level. Since the mid-1990s, Malawi has undertaken a process of water policy reform. Reflective of international trends, these reforms include decentralization, privatization and user-pays. Under the reformed policy, women are hidden within generic terms such as ‘community’. Although the Malawian constitution makes gender discrimination illegal, such gender blindness has a similar effect to discriminatory law. The statistics indicate that women in Malawi are least likely to be able to afford user charges and there are a multitude of negative impacts upon women, ranging from health and education to empowerment. Whilst some men are beginning to experience the benefits of the reforms in Malawi, many women are losing what little control they once held.

Ripples Not Waves: A Policy Configuration Approach to Reform in the Wake of the 1998 Sydney Water Crisis

The aim of this article is to understand why, in the aftermath of the 1998 Sydney water contamination crisis, policy and institutional reform was comparatively minor—despite intense scrutiny and criticism of the framework of water policy in New South Wales (NSW). The article should be of serious interest to scholars interested in crisis and policy change, rather than simply those with a particular interest in water policy in Australia. It frames the Sydney case as a disconfirming one but finds that an understanding of the stability/change relationship in NSW water policy can only partially be understood through applying key contemporary institutional, actor, and interest‐centered explanations. Therefore, it probes the plausibility of an additional explanation and develops the rudiments of a new “policy configuration” approach to help explain policy stability and change. It concludes by suggesting that there is potential for a policy configuration perspective to be tested against other cases.

A review of the relevance of demography to Australian water planning

Australia is in the process of implementing a new and comprehensive agenda of water policy reform, notably under the National Water Initiative (NWI). National, regional and local water plans are crucial components of the water policy framework. Together with other disciplines, demography can make important contributions to the water planning process. Demography is clearly relevant to urban water supply planning. It is also relevant to national, State/Territory and regional water planning: for example, demographers can assist with understanding who is affected by water plans, who uses water, and who is likely to be affected by new water policy initiatives such as markets and trading.

Limits of pricing policy in curtailing household water consumption under scarcity conditions

A key policy question in designing urban water policy and institutional reforms is: what should be the appropriate structure of water charges to ensure long-term sustainability of water service? This is because water pricing touches on equity and on the willingness of the consumer to pay, but more on its affordability. This study focuses on understanding the nature of household demand for water, and attempts to express the household demand functions. A panel of data of 10,564 complete observations on water bills, drawn from a household expenditure survey conducted in 2003, is used to estimate domestic water demand function. Price and other dummy variables were used in the analysis and the results discussed. Specifically, the household water demand and the per capita demand are analysed, taking into consideration such variables as marginal price, rate structure premium and level of household income. The results show that the estimated water demand is inelastic and so is the income elasticity. The effect of the findings on water policy making in regard to pricing is cited. Limitations of price effectiveness as a tool to curtail water consumption are highlighted.

An empirical analysis of the impacts of irrigation pricing reforms in China

Water pricing constitutes a key component currently ongoing agricultural water policy reforms in China. It is used as a means to achieve two sets of goals: (a) improvements in irrigation efficiency and financial sustainability of irrigation systems and (b) enhancement of food self-sufficiency and rural farm income. Utilizing empirical data on the impacts of water pricing reforms in three large irrigation districts in China with diverse physical and socio-economic settings, this paper argues that water pricing, as a policy tool, is unlikely to succeed on its own in meeting these two sets of objectives. The reasons are related to a combination of infrastructure condition, farmers' lack of understanding of irrigation financing, and, more importantly, the perverse impacts that the price increases will have on agricultural output and farm income. The findings do indicate that pricing reform can improve water management when it is tailored to fit with the specific contexts of irrigation systems and is coupled with improvement in management transparency. However, for water pricing reform to contribute to the achievement of the broader national goals of food security, it needs to be packaged with additional policies and supported by rural investments.

Capturing the complexity of water uses and water users within a multi-agent framework

Due to the hydrological and socio-economic complexity of water use within river basins and even sub-basins, it is a considerable challenge to manage water resources in an efficient, equitable and sustainable way. This paper shows that multi-agent simulation (MAS) is a promising approach to better understand the complexity of water uses and water users within sub-basins. This approach is especially suitable to take the collective action into account when simulating the outcome of technical innovation and policy change. A case study from Chile is used as an example to demonstrate the potential of the MAS framework. Chile has played a pioneering role in water policy reform by privatizing water rights and promoting trade in such rights, devolving irrigation management authority to user groups, and privatizing the provision of irrigation infrastructure. The paper describes the different components of a MAS model developed for four micro-watersheds in the Maule river basin. Preliminary results of simulation experiments are presented, which show the impacts of technical change and of informal rental markets on household income and water use efficiency. The paper also discusses how the collective action problems in water markets and in small-scale and large-scale infrastructure provision can be captured by the MAS model. To promote the use of the MAS approach for planning purposes, a collaborative research and learning framework has been established, with a recently created multi-stakeholder platform at the regional level (Comision Regional de Recursos Hidricos) as the major partner. Finally, the paper discusses the potentials of using MAS models for water resources management, such as increasing transparency as an aspect of good governance. The challenges, for example the need to build trust in the model, are discussed as well.

Water policy reform in Australia: lessons from the Victorian seasonal water market*

The nature of the seasonal water market is examined using a theoretical model and empirical evidence from the Victorian market. Drivers of the seasonal opportunity cost of water include the underlying nature of investment in the industry made in the context of risky entitlement yields; and the timing and nature of information regarding seasonal water availability and rainfall. Seasonal water markets facilitate the re‐allocation of water availability according to this short‐run opportunity cost. Evidence from the market suggests that transactions costs are low and most of the existing constraints to trade in seasonal allocations are the result of hydrological conditions. Analysis of market data suggests that the price response of the market to water availability is much more pronounced in years of low rainfall. The implications of the paper for wider policy reform are that attention should be paid to improving property rights for the management of intertemporal risk before other reforms, such as broadening of permanent water markets and institutionalising environmental flows, are implemented. This is because these other reforms will change the spatial and temporal pattern of water use and thus affect reliability, which underpins the value of water in irrigated agriculture.

Third‐party effects of water trading and potential policy responses*

A key feature of water policy reform in Australia has been the separation of water access entitlements from land titles and the establishment of markets for water. However, the separation of water entitlements from land failed to account for a number of characteristics that were implicit in the joint right. This has given rise to a number of third party effects as water is traded in an incomplete market. This paper describes four third‐party effects of water trade; reliability of supply, timeliness of delivery, storage and delivery charges, and water quality and examines policy responses to address these effects. The discussion draws on the concepts of exclusiveness and rivalry to determine the applicability of property rights and other solutions to the third‐party effects of trade. It is likely that many of the third‐party effects of trade discussed in this paper do not warrant policy intervention at the national or state level, but intervention at the local level may be warranted. The costs of addressing some third‐party effects may outweigh the benefits. Where there are significant gains from trade, the existence of these third‐party effects should not been seen as a reason to impede trade.

An alternative solution of the water shortage problem in Libya

In Libya there is a growing awareness of increasing demand for fresh water while fossil groundwater supply is limited. This situation of water supply has become more problematic with rapidly increasing population and low rainfall. Hence soon after the discovery of fresh groundwater in the deserts of southern Libya, the local authority has made huge efforts to address its water deficit problems, mainly through the implementation of “The Great Manmade River Project” to sustain its economy. Especially the agriculture sector exceeds its traditional supplies. The Libyan authority began to design and install the hydraulic infrastructure needed to withdraw and transport this fossil water to various demand sites along its Mediterranean coast where most of the population lives and where the water is used. There is an over-exploitation of fossil groundwater resources to meet the irrigation demands as a result of adapting a self-sufficing policy in food. Rapid development of agricultural activity, expansion of irrigated areas and over irrigation practices will lead to more depletion of water resources since most of the country's groundwater resources are non-renewable. The supply-driven approach for water management has demonstrated its inability to deliver a substantial degree of water sustainability on the national Libyan level. Despite the strenuous efforts made by the country, it still faces serious water deficits due to continuously increasing water demands beyond the limits of its available water resources. As pressure on water converges on the country's fossil water resources, an immediate reconsideration of agricultural water extractions is needed and appropriate actions have to be implemented in response to its huge consumption. This policy aims at rescuing the present water situation and at avoiding serious environmental and economical crises. Reorganisation of the water consumption pattern, to maintain the country's standard of living and to ensure the economical security for the future generation is drastically needed. This paper considers the country's water management that requires water policy reforms, with emphasis on supply and demand management measures and improvement of the legal and institutional provisions. This could be achieved by reviewing agricultural water policies in order to minimise some local deficits in water resources and to avoid water quality deterioration in the coastal areas. Developing additional non-conventional sources of water supply needs to be considered. This should be supported by creating authorised water institutions lead by a high-professional staff and enabling them in making the appropriate legislation and decisive measurements to allocate water among consumptive sectors as well as to ensure the protection of the environment.

Can water markets assist irrigators Managing Increased Supply Risk? Some Australian experiences

: Australia has undergone comprehensive water policy reforms since the mid‐1990s. These reforms have imposed considerable uncertainties with respect to future supply and passed the risk management burden from water authorities to irrigators. There is, therefore, an increased need for risk management tools to assist irrigators in managing this increased uncertainty. Water markets are seen as important tools for managing this uncertainty and in assisting irrigation communities in the necessary adjustment process. Australia, therefore, provides an excellent case study in the extent to which irrigators have used markets as a risk management tool. It is concluded that allocation markets have been used by irrigators to manage uncertainty and risk within and between seasons while entitlement markets have been used to adjust irrigators’ risk position in the long term, resulting in subsequent use of the allocation market to manage this new risk position. However, there is clear evidence that the substantial uncertainty with respect to future supply has made irrigators reluctant to use the entitlement market and has therefore seen them rely heavily on the allocation market to manage their existing risk position. Also, existing water trading arrangements are impeding new investments in high value, efficient production systems. To address these two issues and to remove these impediments a new National Water Initiative is presently being implemented.

Water Markets - Economic Instruments to Manage Scarcity

Australia has aggressively pursued water markets as an integral part of water policy reforms. Compared to most other countries, relatively active water markets have therefore emerged. Consequently, Australia provides an unique opportunity to study how markets have been introduced and adopted and their role in managing demand and scarcity. This paper discusses: a) how water markets have evolved in Australia, b) prices paid and volumes traded in water markets, and c) the increase in market participation. During periods of drought, scarcity is the main driver of price and market participation. Irrigators do not buy water in order to maximize their profits due to good commodity prices. Farmers with significant investments in long-term assets purchase water to protect their assets against long-term losses due to inadequate watering. This behavior drives prices to levels where no other agricultural users can compete. The price of water entitlements fluctuates with the price of water allocations, but irrigators do not capitalize scarcity-driven short-term increases in allocation prices into the price of entitlements. Once the region is out of this period of drought further research should be conducted to establish the water price/commodity price relationship during periods of more normal supply.

Spot water markets and risk in water supply

AbstractWater availability patterns in semiarid regions are typically extremely variable. Even in basins with a highly developed infrastructure, users are subject to unreliable water supplies, incurring substantial economic losses during periods of scarcity. More flexible instruments, such as voluntary exchanges of water among users, can help users to reduce risk exposure. This article looks at the effects of spot water markets on the economic risk caused by water availability variations. Our theoretical and empirical risk analyses are based on the random profits of water users. Profit probability density functions are formally and graphically characterized for both water sellers and buyers under several possible market outcomes. We conclude from this analysis that, where water supply is stochastic, water markets unambiguously reduce both parties' risk exposure. The empirical study is conducted on an irrigation district in the Guadalquivir Valley (Southern Spain), where there is a high probability of periods of extreme water scarcity. Water demand functions for the district representative irrigators and a spatial equilibrium model are used to simulate market exchanges and equilibrium. This programming model is combined with statistical simulation techniques. We show that the profit probability distribution of a representative irrigator is modified if water exchanges are authorized, leading to risk reductions. Results also indicate that if the market were extended to several districts and users that are subject to varying hydrological risk exposure, extremely low‐profit events would be less likely to occur. In sum, we show that exchanging water in annual spot markets can reduce farmers' economic vulnerability caused by water supply variability across irrigation seasons. These results support the water policy reform carried out in Spain in 1999 to allow for voluntary water exchanges among right holders.

Le modèle français de gestion de l’eau est-il toujours synonyme d’innovation ? L’exemple de la réforme de la politique de l’eau au Liban

Les principes du modèle français de gestion de l’eau se sont progressivement généralisés à l’échelle internationale à partir des années quatre-vingt-dix. Supports de la " bonne gouvernance ", ils guident désormais les politiques des principaux bailleurs de fonds et orientent les réformes entreprises dans de nombreux pays. L’analyse du cas Libanais montre la difficile transposition des différents principes guidant la réforme, placée entre opportunisme financier et blocages politiques.

Challenges for water sector reform in transition economies

This paper discusses the practical problems of implementing water policy and pricing reforms in transition economies by looking at the case of Odessa, Ukraine. Chief among the policy advice for the water and sanitation (W&S) sector in less developed countries is greater cost-sharing by customers through increased service prices, with the goals of encouraging more efficient water use by users, promoting a greater perceived stake among customers in the health of their W&S systems and enabling service providers to maintain and expand their networks as needed. While appropriate for much of the developing world, this policy advice has had limited applicability for many communities in transition economies. The complex existing water supply infrastructure in much of Central and Eastern Europe, along with residents' low effective demand for high-quality service, create an environment in which typical price reform strategies will initially be a minor component in sector reform efforts. We use the case of Odessa, Ukraine, to discuss the reasons why traditional advice on water pricing has been of limited use in the region.

Can a water market avert the “double-whammy” of trade reform and lead to a “win–win” outcome?

This paper focuses on the linkages between water and trade policies, using Morocco as a case. This country is typical of many in that policy protects its import competing agricultural and industrial sectors while water in irrigated agriculture is priced below its marginal value product. Changing water policy without correcting for these other distortions leads to a more inefficient allocation of water. On the other hand, reforming trade policy alone can make farmers growing crops protected pre-reform worse off. Using an intertemporal, applied general equilibrium model, we find that trade reform actually creates an opportunity to pursue water policy reform. Creating a water user-rights market post trade reform not only compensates for the decline in farmers’ profits caused by the trade reform, but also raises the efficiency of water allocation and hence benefits the economy as a whole.

Attitudes Toward Water Markets: An Australian Case Study

As part of water management reform, water markets and the role of water authorities are evolving in Australia as in other parts of the world. This article gives some insight into the social and cultural issues as yet largely unaddressed in water policy reform. The article explores farmers' resistance to trade, farmer and community attitudes concerning who should be allowed to trade, the role of the water authority in the marketplace, what role farmers see themselves and others playing in water markets, and perceived blockages to trade in the Goulburn-Broken catchment of Victoria. The findings of the article suggest that optimal market-based redistribution of water may not occur unless the social and cultural attitudes to trade are duly considered.

The Politics of Andean Water Policy Reforms. Local and Indigenous Rights in the Context of Privatization Policies

The Politics of Andean Water Policy Reforms. Local and Indigenous Rights in the Context of Privatization Policies

Why the TVA Remains Unique: Interest Groups and the Defeat of New Deal River Planning*

Abstract Although scholars cite the Tennessee Valley Authority as one of President Franklin Roosevelt's major reform programs, the valley authority model did not replace the limited‐purpose water programs of the Bureau of Reclamation and the Army Corps of Engineers. State‐centered theorists hold that reformers are most likely to succeed during periods such as the New Deal era, when they are supported by a democratized polity and when they dominate Congress and the administration. This paper shows that in river policy, the strength of opposing interest groups also mattered. The TVA bill was passed in 1933 because reformers skillfully coordinated action at potential choke points and weakened the already disorganized opposing lobbyists. In 1936, however, after regrouping, opposing river lobbyists and legislators took advantage of the New Dealers' spending mood by expanding the Corps' flood control program. They also helped defeat further valley authorities, the most promising of the New Deal water policy reforms.

An analysis of groundwater vulnerability and water policy reform in India

Water is a basic human need, a finite life support system and a key to prosperity. Unplanned industrialisation, urbanisation and impact of liberalised import of wastes intended for recycling have negatively affected the water environments in India. This is further exaggerated by lack of discipline and a weak obligation towards conservation and pollution prevention. Measures have to be especially taken to resolve the groundwater problems. While groundwater resources are quite well assessed, overexploitation still occurs frequently. There has been a considerable lack in implementing existing policies as well as developing new laws and policies. To mitigate the problems, co‐operation needs to be mobilised at all levels of the federal set up with the stakeholders and the people at the lowest appropriate level concerning planning and decision making. Water must be considered as a national asset and a basic human right to be provided to citizens in proper quantity and safe quality with equity and fairness amongst the users.

Grapes, Wine and Water: Modelling Water Policy Reforms in 
 Australia

The policies, incentives and management practices shaping the future availability, access, use and quality of water have enormous implications for Australia's wine industry. While grapes are a relatively high value, low volume irrigation activity, growers do depend on reliable supplies of good quality water at specific times throughout the year. This paper explores the key factors motivating change in national, regional and local water institutions and examines how the resulting policy reforms effect water markets, water use, and the profitability of grape growers. FEDSA-WATER, a national level CGE model of Australian is used to examine the removal of implicit subsidies on water usage in irrigation industries in New South Wales and Victoria, and the removal of small implicit taxes on usage in South Australia, for the various irrigation industries. A second scenario taxes producers for salinity. In the water pricing reform scenario, there is a redistribution of irrigation activity to South Australia with pricing reforms. There is an overall decline in agricultural output but this is outweighed by the benefit in terms of reduced salinity damage. Similarly, in the case of taxing producers for the full cost of salinity damage, the benefit of reduced salinity outweighs the reduction in national income.