Policy Choices and Challenges
5 Choosing the appropriate tools
It is recognised that policy makers rarely have unfettered freedom to choose amongst the range of notionally available tools. In some cases referred to above there are ‘immovable’ political or ethical constraints on choice, in others international trade agreements may restrict tool range. In still other cases countries may feel forced to take or eschew a particular ‘reform’ path by international economic conditions. For example, highly indebted countries may have to embrace Private Sector Participation (PSP) because the public sector cannot increase its borrowing and export dependent countries may continue to subsidise irrigated agriculture to help maintain their markets against the highly subsidised agricultural sectors in Europe and North America. In this latter case the water management future in developing countries will be critically dependent on recognition by the developed countries of the ramifications of their internal policy decisions on the global economy. The table below shows the range of tools available in the ToolBox.
As the ToolBox demonstrates there are numerous tools available to improve water governance; tools which differ greatly in their characteristics and the consequences of their use.
Variations in how Management Tools work
- Degree to which demand reduction, or other management objectives are met (ie. response in practice)
- Degree to which each management technique is effective, taken alone
- Time-span required for implementation
- Scope for implementation discretion, control avoidance and non-reinforcement
- Administrative costs, administrative competence required and complexity of system
- Cost structures (total expenditure – time path – factor input combinations)
- Who bears the costs from a management change ?
- Who bears the administrative burden and costs?
- Who benefits from the change?
It is, however rare for one tool alone to be able to address the identified problems. Given that multiple problem causes are commonplace, it follows that several reforms, using several tools, may be necessary. In addition, for a tool to be effective and acceptable it may often be necessary to embark on several changes at the same time.
Multiple changes are typically required in four situations:
- The tool itself has preconditions (eg. Pollution/abstraction charging or standard setting require the establishment of some form of monitoring/measurement agency)
- The tool needs to be accompanied by other measures to make it effective (eg. The introduction of irrigation charges to improve efficiency in use may need to be accompanied by an advisory service to give farmers information about conservation measures and the markets for higher valued crops)
- The tool creates losers who may need to be compensated to buy acceptance of the reform (eg. attempts to improve the efficiency of service providers may require payments to redundant labour)
- The tool may generate unintended and undesirable consequences (eg. private sector concessions may lead to monopoly power abuses without an adequate system of economic regulation or increased water charges may lead to civil unrest if not accompanied by measures to protect the poor).
It is now increasingly recognised that mixed management systems, using an array of different tools are likely to be most effective; employing, for instance, a mixture of direct controls, market instruments, information and education, assisted community participation or incentives for self-help.
A THE ENABLING ENVIRONMENT
A1 Policies – setting goals for water use, protection and conservation.
A group of tools in the ToolBox deal with water policies and their development. Policy development gives an opportunity for setting national objectives for managing water resources and water service delivery within a framework of overall development objectives.
A2 Legislative framework – the rules to follow to achieve policies and goals.
The ToolBox includes tools for use in the development of water law. Water law covers the ownership of water, the permits to use (or pollute) it, the transferability of those permits, and customary entitlements and underpin regulatory norms for e.g. conservation, protection, and priorities.
A3 Financing and incentive structures – allocating financial resources to meet water needs.
The financing needs of the water sector are huge, water projects tend to be indivisible and capital-intensive, and many countries have major backlogs in developing water infrastructure. The ToolBox has a group of financing and incentive tools.
B INSTITUTIONAL ROLES
B1 Creating an organisational framework – forms and functions.
Starting from the concept of reform of institutions for better water governance, the ToolBox can help the practitioner create the needed organisations and institutions- from trans-boundary organisations and agreements, basin organisations, regulatory bodies, to local authorities, civil society organisations and partnerships.
B2 Institutional capacity building – developing human resources.
The ToolBox includes tools for upgrading the skills and understanding of public decision- makers, water managers and professionals, for regulatory bodies and capacity building for empowerment of civil society groups.
C MANAGEMENT INSTRUMENTS
C1 Water resources assessment – understanding resources and needs.
A set of tools are assembled to assist water resources assessment. Assessment starts with the collection of hydrological, physiographic, demographic and socio-economic data, and setting up systems for routine data assembly and reporting.
C2 Plans for IWRM – combining development options, resource use and human interaction.
Tools are available for river and lake basin planning entailing the comprehensive assembly and modelling of data from all relevant domains. The planning should recognise the need for parallel action plans for development of the management structures.
C3 Demand management – using water more efficiently.
Demand management involves a set of tools for balancing supply and demand focusing on the better use of existing water withdrawals or reducing excessive use rather than developing new supplies.
C4 Social change instruments – encouraging a water-oriented civil society.
Information is a powerful tool for changing behviour in the water world, through school curricula, university water courses and professional and mid-career training.Transparency and product-labelling are other key aspects.
C5 Conflict resolution – managing disputes, ensuring sharing of water.
Conflict management has a separate compartment in the ToolBox since conflict is endemic in the management of water in many countries and several resolution models are described
C6 Regulatory instruments – allocation and water use limits.
A set of tools on regulation is includedcovering water quality, service provision, land use and water resource protection. Regulations are key for implementing plans and policies and can fruitfully be combined with economic instruments.
C7 Economic instruments – using value and prices for efficiency and equity.
The ToolBox holds a set of economic tools involving the use of prices and other market-based measures to provide incentives to consumers and to all water users to use water carefully, efficiently and avoid pollution
C8 Information management and exchange – improving knowledge for better water management.
Data sharing methods and technologies increase stakeholder access to information stored in public domain data banks and effectively complement more traditional methods of public information
Combining tools to fit local contextss
Policy makers should be wary of advisors with simple ‘one size fits all’ solutions to problems based on theories or the assumed success of a measure in another country. To judge the likely outcomes from a reform proposal, what matters are country specific conditions and the way that water users and other stakeholders will respond in practice. Even something as seemingly straightforward as improving training for service providers may have little effect if the workforce is unmotivated and there are no incentives to reduce corrupt practices (eg. taking kickbacks to ignore illegal abstractions, connections, waste dischargers or land use changes).
In judging the suitability of particular tools, four factors need to be taken into account:
- Political capacity (are there influential champions for the reform, can the reform produce results within a politically relevant time-scale, can opposing ministries be brought on board or isolated?)
- Professional capacity (are there the professional skills needed to draft legislation, provide regulation or adjudication, provide conflict resolution etc?).
- Implementation capacity (have the agencies likely to be charged with implementation the technical, financial and human resources necessary to fulfil the task?).
- Compliance capacity (many of the tools are designed to change water using behaviour; do users have the knowledge and ability to respond?)
If any of the capacities are lacking, reforms may either have to address these deficiencies first or other less demanding tools could be chosen. For example, newly industrialising countries may suffer greatly from water pollution, but lack the financial and human resources and the legal or institutional infrastructure to implement pollution control regulations. An alternative employed in Indonesia was the Program for Pollution Control, Evaluation and Rating (PROPER). This was based on information disclosure (see Box below) and according to a World Bank assessment it ‘increased compliance by over 50% in two years’ and ‘initial results suggest that public disclosure can play a powerful role in developing countries where conventional regulation is weak’
Using tools in IWRM compatible ways
All the tools within the ToolBox can be used to further the change from unsustainable to sustainable water management systems. However policy makers need to be aware that some tools could be implemented in non-IWRM compatible ways. For example, as noted earlier, decentralisation of responsibilities to municipalities or community groups could result in external costs being passed on (eg. through untreated wastes) to people in other jurisdictions. Likewise, tradable permits increase water use efficiency but have third party effects; they could exacerbate scarcity if bought by consumptive users or increase pollution if, for instance, the permits go to more intensive farmers employing more fertilisers and pesticides. Even the development of river basin organisations, which are often seen as an important IWRM tool, could produce non IWRM compatible outcomes, for example, if they become ‘captured’ by a powerful interest group or even a profession.
Making a start!
However, although it is logical to think that creation of policies and institutional frameworks should precede the use of specific management instruments, in reality the IWRM process may be started before all the policies, laws and organisations are in place. Institutional change, requiring new legislation, is typically a time consuming activity. It is often better to start somewhere, working as far as it is possible with existing arrangements, rather than waiting for the more wide-ranging reform measures to be enacted.