Workshop on Economic Instruments for Water Management

August 22, 2006 | Stockholm, Sweden

This Workshop was sponsored by the Centre with the International Water Resources Association.

Water services have largely been determined through decisions in national, municipal and other political and administrative bodies. The amounts of water and levels of service provided have been based on a supply-oriented perspective. Restrictions in provision and withdrawals have been attempted primarily through permits and quotas.

To influence water use and improve performance in the water sector, many countries have introduced various incentives and sanctions. Economic and other related instruments are more effective at making water management efficient than are flat rates, heavy subsidies or toothless punitive measures for unauthorized water use.

A combination of economic instruments, e.g. bulk and other water charges, tradable permits, polluters-pay principle, etc. and command and control systems may often provide an efficient approach to water management.

This workshop explored the range of incentives and sanctions that have been applied to improve performance in the water sector, both to reduce undue resource pressure and to stimulate a more worthwhile use within and across sectors and geographical areas. It also analysed the roles and the effectiveness of economic instruments in managing water quality.