publications on economics | relevant links

Effective water resource management requires that water be treated as an economic good. The 1992 Dublin Statement stipulates that "water has an economic value in all its competing uses and should be recognized as an economic good". Debate continues, however, over the theoretical and operational implications of this concept and its impacts on the poor.

At the macro level, W&S economics addresses issues associated with the management of water resources, including water rights, inter and intra-sectoral allocation, pollution and environmental protection.  At the micro level, W&S economics addresses issues associated with the efficiency of utility operations, delivery of water services in specific sectors, including rural and urban water and sanitation, irrigation, hydropower, navigation, fisheries, and tourism. For programs to achieve maximum impact, their macro and micro aspects must be considered together.

Economics offers powerful decision and management tools that help to:

• Measure the costs and benefits from water and sanitation investments and policies;
• Assess demand for water and wastewater services and evaluate their relationship to price, income, and other variables;
• Inform decisions regarding the use and targeting of public subsidies, and how to reform tariffs and improve utility finances;
• Evaluate sanitation alternatives and their tradeoffs (choosing, for example, between on-site and off-site systems);
• Assess the costs and benefits of water demand management options, including pricing, leakage reduction, and metering;
• Evaluate the desirability and feasibility of intra- or inter-sectoral water reallocation;
• Assess the efficiency of various modes of service provision (e.g. public vs. private, centralized vs. decentralized);
• Design regulatory and legal frameworks for private sector participation; and
• Evaluate the impact of project or reform on the different actors and stakeholders and devise ways to strengthen institutional frameworks.

Economics of water and sanitation (W&S) plays an essential role in the appraisal and the monitoring and evaluation of World Bank-supported projects and policies. The World Bank's appraisal principle is that economic efficiency must be a fundamental criterion of public investment and policy-making to maximize benefits from scarce resources.

Relevant Publications

Do Cross-Subsidies Help the Poor to Benefit from Water and Wastewater Services? Lessons from Guayaquil (PDF)

Guillermo Yepes, Water and Sanitation Program Working Papers Series, 1999.

 

Evaluating Water Institutions and Water Sector Performance

Ariel R. Dinar and Maria Saleth,  World Bank Technical Paper No. 447, 1999.

Available from the World Bank InfoShop.

 

Groundwater Markets in Pakistan: Participation and Productivity

Ruth Meinzen-Dick, IFPRI, 1996.

 

Intrahousehold Resource Allocation in Developing Countries. Methods, Models, and Policy

Lawrence Haddad, John Hoddinott, and Harold Alderman, editors, IFPRI, 1997.

Managing water as an economic resource: Reflections on the Chilean experience

John Briscoe et al., Environmental Economics Series #62, World Bank, 1998.

Available from the World Bank World Development Sources.

The value of water: A global perspective, in The Convergence of US National Security and the Global Environment

John Briscoe et al. The Aspen Institute, 1997.

 

Water Markets in the Americas

Klas Ringskog and Larry Simpson, World Bank, 1997.

Available from the World Bank InfoShop.