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Water Resources Development, Vol. 11, No. 3, 1995
Water Resources Management: A New Policy for a
Sustainable Future1
ISMAIL SERAGELDIN
Vice-President for Environmentally Sustainable Development, The World Bank, 1818 H Street,
NW, Washington, DC 20433, USA
ABSTRACT To manage water more effectively, a new approach is necessary, incorporat-
ing a balanced set of policies and institutional reforms. Its core is the adoption of a
comprehensive framework for water management that recognizes the interactions among
the elements of a river basin’s ecosystem and incorporates cross-sectional and environ-
mental considerations in the design of investments and policies. The new approach also
calls for water to be treated as an economic good, for decentralized management and
delivery structures, greater reliance on pricing, and fuller participation by stakeholders.
A New Appreciation for Water
As representatives of governm ent, the academic and research communities, and
international development institutions we share the same objectives: improve-
ment of the lives of people and quality of the environment. There are few issues
that have greater impact on our lives and the life of the planet than the
management of our most important natural resourceÐ water. After decades of
water waste, water pollution and inability to provide basic water services to the
poor, we must fundamentally change the way we think about and manage
water.
Water is our `life blood’, literally . We are made mostly of water. Water is a
requirement for human life. We need water to maintain basic health and
sanitation. We need adequate supplies of fresh water to feed ourselves. Agricul-
ture uses some 70% of the world’ s fresh water, and a third of the world’ s food
crops are produced by irrigated agriculture. We need water to develop and
maintain vibrant economies. Industries use more than a quarter of the world ’s
freshwater supplies, often as a vital part of the production process. The natural
environment is also critically dependent on water.
We also have a new appreciation for how little freshwater there is on earth.
Less than 3% of the world ’s water is freshwater and most of this is in the
ground, ice caps and glaciers. Lakes and rivers account for only 0.014% of all
water.
Water is critically scarce in many places. Generally, a country will experience
periodic water stress when supplies fall below 1700 m3
per person. The global
average annual supply of renew able freshw ater is about 7400 m3
per person.
However, there are 22 countries that have renewable water resources of less than
1000 m3
per person and 18 that have less than 2000 m3
per person (see Table 1).
221
0790± 0627/95/030221± 12 1995 Journals Oxford Ltd
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222 I. Serageldin
Table 1. Availability of water by region
Percentage of population living in
Annual internal renewable countries with scarce annual per
water resources capita resources
Region Total (’000 km3) Per capita (’000 m
3) Less than 1000 m
31000± 2000 m
3
Sub-Saharan Afr ica 3.8 7.1 8.0 16.0
East Asia and the Paci ® c 9.3 5.3 , 1.0 6.0
South Asia 4.9 4.2 0.0 0.0
Eastern Europe and
form er USSR 4.7 11.4 3.0 19.0
Other Europe 2.0 4.6 6.0 15.0
Middle East and
North Africa 0.3 1.0 53.0 18.0
Latin Am erica and
the Caribbean 10.6 23.9 , 1.0 4.0
Canada and the
United States 5.4 19.4 0.0 0.0
World 40.9 7.7 4.0 8.0
By the year 2025, one out of every three peopleÐ almost three and a quarter
billion peopleÐ will live in as many as 52 countries plagued by water stress or
chronic water scarcity.
Issues of scarcity have placed water at the top of the international political
agenda. For example, agreem ent on access to water is an important part of the
peace accords between Israel and its neighbours. But water politics are not
con® ned to the Middle East. Today, nearly 40% of the world’ s people live in the
more than 200 river basins that are shared by more than two countries.
While we have a renewed appreciation for the multifunctional role of water in
our lives, we are also more aware of our failure to manage the resources
properly. The vast majority of poor people are still without safe drinkin g water
and adequate sanitation services. Our economies suffer because of poor water
management and inef® cient investment. We continue to ignore the critical role
of water in maintaining the health of the environment: already half our coastal
wetlands have been drained, and in many places groundwater is seriously at
risk from over-exploitation and contamination by urban and rural pollutants and
salt water intrusion.
Failure of Current Policies
Our water policies and management practices are not sustainable from any
perspectiveÐ social, economic or environmental. There are a multitude of prob-
lems, but they are all part of four principal failures.
First, most countries refuse to treat water as an economic good. Low-value
users are allowed to consume large quantities of water, forcing high-value users
to incur steep costs in securing water from long distances. The result is waste
and depletion and less than fully productive investments (see Figure 1).
Underpricing of water has also yielded a vicious cycle of unreliable service,
low willingness to pay and further decline in capacity to provide services. The
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WaterPowerGasTelecom0
20
40
60
80
100
120
140
160
180
Per
cent
age
of c
ost r
ecov
ery
Water Resources Management 223
Figure 1. Degree of cost recovery in infrastructure sectors.
result is that the vast majority of poor people are denied adequate water and
sewage services: 1 billion people lack adequate supply and 1.7 billion have no
adequate sanitation. Indeed, poor people must often get their water from water
sellers, and sometimes end up paying far more for water than do the rich.
Second, we rely too much on governm ent to collect, treat, distribute and
dispose of water. Governm ent involvement re¯ ects the understandable concern
that relying exclusively on unregulated markets would not work. However, the
delivery of water services is overly centralized, with little stakeholder or private
sector involvement. Users are rarely consulted or otherwise involved in planning
and managing water resources. As a result, government agencies are over-ex-
tended, and, lacking the proper incentive structure, are unable to provide quality
services.
Third , management of water is fragmented between sectors and institutions,
with little regard for con¯ icts or complementarities between social, economic
and environmental objectives. There are multiple agencies for different users,
and inter-sectoral interactions, including externalities and pollution, are ignored.
In many countries, indiv idual states may develop the same water source without
considering the impact on other states. Similarly, domestic, industrial, and
commercial supplies are often provided by local governm ents that are not
coordinated with provincial or national water departments. The result is fre-
quently excessive and unproductive investments with different agencies devel-
oping the same water source for different uses within an interdependent system .
The numbers of employees working in water-related departments in developing
countries re¯ ects the tremendous inef® ciencies in the water sector: most devel-
oping countries have 10± 20 employees per thousand water connections. This
compares with 2± 3 employees per thousand in Western Europe.
Fourth, health and environm ental concerns are badly neglected. Water is still
a life-and-death issue for millions of people. Some two billion episodes of illness
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224 I. Serageldin
Table 2. Effects of improved water and sanitation on sickness
Episodes of illness per Median reduction attributable
Disease year (in millions) improvem ent (%)
Diarrhoea 900 22
Roundworm 900 28
Guinea worm 4 76
Schistosom iasis 200 73
are caused by water-related diseases and nearly two million children die from
diarrhoea because they do not have access to clean drinking water (see Table 2).
National economies suffer when citizens are in poor health. But they also
suffer directly from water pollution. In Poland, for example, three-quarters of
the river water is too contaminated even for industrial use. In Peru, the ® rst 10
weeks of a cholera epidem ic caused US $1 billion in losses from agricultural
exports and tourism Ð more than three times the amount the nation invested in
water supply and sanitation during the 1980s.
Agricultural output and productivity are also declining because of environ-
mental degradation resulting from poor drainage and irrigation practices. In
India, a country which depends on irrigation for most of its food, waterlogging
and salinization have caused more than 7 million hectares of once productive
land to be abandoned. Today, 10± 15% of the world’ s irrigated land is degraded
by waterlogging.
New Stresses Require a New Approach
These are stark and terrible failures. But they are only an indication of what may
lie ahead. Current trends in population, income growth and urbanization will
not allow us to continue current practices without crippling our health and our
economies, and causing irrevocable damage to the environment.
World population is projected to increase by 50% over the next 30 years. Per
capita water supplies worldwide are already a third lower now than 25 years
ago because of the 1.8 billion people added to the planet since then. Based on
current trends, the demand for water can be expected to grow by over 650% in
the next three decades. There are already 26 countries with a population of
almost 250 million that can be considered water scarce. Many of these countries
have high population growth rates (see Figure 2). In Africa, there are 11
water-scarce countries, and it is estimated that by the end of the decade, four
more countries will be included in the list. By the year 2000 it is estimated that
300 million Africans will live in water-scarce countries, about one-third of the
projected population. In the Middle East, nine out of 14 countries are already
facing water-scarce situations and populations in many countries of the region
are expected to double in less than 30 years.
Between 1950 and 1990, the number of cities with populations of more than 1
million nearly quadrupled from 78 to 290, adding some 650 million people (see
Figure 3). Between 1980 and 1990, the number of people in urban areas without
sanitation rose by about 70 million (see Figure 4).
In the next few years, fully half the world’ s population will live in cities. By
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PeruIsraelIndiaEgyptCyprusChina0
1000
2000
3000
4000
5000
6000
Key: 1955; 1990; 2025
202520102000199019801970196019500
100
200
300
400
500
600
700
Year
Water Resources Management 225
Figure 2. Growing demand and resulting water scarcity: estimated water
availability, selected countries.
2025, 90% of population growth will have taken place in urban areas, increasing
the demand for water of suitable quality for domestic, municipal and industrial
use and for treatment of waste. Urbanization and industrialization will also
increase demand for energy and hydropower, and income growth will put
pressure on household water use, as those who are well off use more water than
those who are not (see Table 3).
At the same time, the ® nancial and environmental costs of tapping new water
supplies are increasing dramatically (see Figure 5), and they will rise even
further when adequate facilities are included as essential parts of investments.
Figure 3. Growth in number of cities with more than one million inhabitants.
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Rural sanitation
Rural water
Urbansanitation
Urbanwater
0
0.2
0.4
0.6
0.8
1.2
1
1.4
1.6
1.8
2
Bill
ions
ser
ved
Key: 1980 1990
226 I. Serageldin
Figure 4. Access to safe water and adequate sanitation in developing countries in
1980 and 1990.
Beijing must already consider drawing water from a source that is more than
1000 km away, while Mexico City may be forced to build schemes to pump
water over a height of 2000 m. These kinds of pressures explain why the average
costs of most new projects are already two to three times the costs of current
investments.
Population pressure will increase the demand for food, putting further press-
ure on water supplies. Some 40% of the world’s food already comes from
irrigated land but half of the growth in food supply in the past 30 years is due
to the expansion of irrigated agriculture. It is estimated that half to two-thirds
of the increment in food production in the future will have to come from
irrigated land.
The problem is that it is becoming increasingly dif® cult to sustain irrigation
expansion. Like other water-supply projects, the economic costs of new irri-
gation can be expected to double and triple existing costs. Water use in
agriculture can generally be characterized as high volume and low value. The
Food and Agricultural Organization of the United Nations (FAO) estimates that,
on average, only 45% of water diverted or extracted for irrigation actually
reaches the crop. (see Figure 6)
Table 3. Sectoral water withdrawals, by country income group
W ithdrawals, by sector (%)
Annual withdrawals per
Income group capital (m3) Dom estic Industry Agriculture
Low 386 4 5 91
M iddle 453 13 18 69
High 1167 14 47 39
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1.401.201.000.800.600.400.200.000.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
A
M
HL
AG
DB
S
1988 cost in US$/m3
Water effectivelyused by crop
45%
Farm distributionlosses15%
Field applicationlosses25%Irrigation system
losses15%
Water Resources Management 227
Figure 5. How the cost of supplying water is increasing .
The performance of irrigated system s has also generally been below expecta-
tions, producing low economic and ® nancial returns and discouraging invest-
ment. There are also growing environmental concerns about large projects, the
over-exploitation of groundwater and salinization. Finally, given the large
allocation of water to agriculture, many countries are under pressure to reallo-
cate water used for irrigation to other uses. All these factors suggest that the
Figure 6. Average irrigation water losses. Source: Water for Life (FAO, 1994).
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228 I. Serageldin
demand for food will have to be met by increased cropping intensi ties and
higher yields using less water.
Clearly, we cannot continue along our current path. There is an old Chinese
proverb that says `If we do not act now, we will surely end up where we are
headed’ .
A Framework for Improving Water Resources Management
The challenges are daunting. However, our successes and failures during the last
decades have taught us enough to be con® dent about the direction we should
take. We can identify four over-arching lessons.
(1) Water must ® t squarely into a long-term vision for national develop-
ment. Incorporation of water strategies within broader policy objectivesÐ food
security, health improvement, environmental protectionÐ is the sine qua non of
better water management. This will require an articulation of national water
policy from the very highest levels of governm ent.
(2) Water must be managed comprehensively. We must stop managing water
sectorallyÐ by its separate usesÐ and begin to treat water system ically; that is,
inter-sectorally. We have learned about the bene® ts of developing a comprehen-
sive framework for water resources management that recognizes the interactions
between various elements of a river basin’ s ecosystem and allows for the
incorporation of cross-sectoral and environmental considera tions in the design
of investments and policies. Here, the French and German system s of river-
basin-based management could serve as models. Under these system s, river
basin committees decide on long-term plans for developing water resources.
Regulation and enforcement are conducted by various national ministries, while
operation and maintenance of different components of the system s are left
primarily to regulated private entities and public utilities (see Figure 7).
The French and German system s owe their success to an adheren ce to four
fundamental principles of sound water management. First, the Institutional
Principle: stakeholders should help decide on balance between costs and bene® ts
and assignment of costs. Second, the Subsidiary Principle: never do at a higher
level what can be done effectively at a lower level. Third, the Technical Principle:
questions of trade-offs about costs and bene® ts and how best to expend
resources should bene® t from technical advice. And fourth, the Instrument
Principle: make the maximum use of market-based instrumentsÐ `user pays,
polluter pays’ .
(3) Decentralization and greater stakeholder participation are essential for proper water
management. Countries have achieved better quality service at lower cost by
decentralizing water- service delivery responsibilities to local governments and
transferring some functions to the private sector, ® nancially autonomous entities
and community organizations such as water-user associations. Greater stake-
holder participation has also served to improve design (by incorporating local
knowledge and circumstances), generate ownership , encourage cost sharing and
better maintenance, promote equity, build local capacity, and enhance transpar-
ency, accountability and institutional performance.
The Orangi Pilot Sanitation Project in Karachi is a good example of success in
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Water Resources Management 229
The French system of water resources management, adopted after many years
of study and debate could well serve as a model for developed and
developing countries as they look for the best way to put a comprehensive
approach into action. Key elements are:
Well-de® ned laws and regulations. The Water Acts of 1964 and 1992 are the
foundation of the French system. The earlier law established speci® c quality
objectives and regulations for pollution control, while the later act is designed
in part to meet stricter European directives on water management.
Hydrographic basin management. The system is organized around six major
hydrographic basins, with appropriate national policy oversight . These
correspond to the country’ s four main catchment areas and to two areas of
dense population and intense industrial activity.
Comprehensive management, decentralization and participation. Each of the six
basins has a basin committee and a corresponding executing agency, a water
board. The basin committee, also known as a `water parliament’ because of
its representation and powers, re¯ ects regionalÐ rather than centralÐ
governm ent control and is designed to promote the role and responsibility
of different interest groups in the basin. The water boards. while executing
the committee’ s directives, are also responsible to the central governm ent for
certain technical matters (e.g., upholding national standards). Water and
sewerage services are provided by either public or private ® rms (increasingly
through competitive bidding) and are chosen by communities.
Cost recovery and incentives. The companies and entities operating water
services deliver a portion of the charges they collect to the basin agencies. In
addition, a `pollution fee’ (i.e. a penalty) is collected by the basin agency. Most
of these revenues are reinjected to provide technical assistance and help the
public or private sector ensure safe, puri® ed water.
Supporting research. About 14% of the water board’s expenditures in 1992± 96
are budgeted for research and development.
Figure 7. France’s `model’ system .
providing services through stakeholder empowerment and ® nancial autonomy
and, in the words of its architect, liberating people from the demobilizing myths
of government promises. There, the task was to provide services which the
government had not been able to provide by reducing costs so that sanitation
systems could be developed and operated by the community. With an elim in-
ation of corruption and the provision of labour and management by community
members, the project is providing in-house latrines and street sewers for some
600 000 people at a cost of less than US$100 per household.
There are two key lessons from the Orangi experience. First, trust the people
and put them in command. Second, give the residents the support they need.
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230 I. Serageldin
In the United States industrial water use in 1980 stood at 45 billion gallons
per day. By 1990 it declined 33% to 30 billion gallons per day, largely as
a result of tightening controls on ef¯ uents and ef¯ uent charges imposed
over this period.
In a study of industrial plants in SaÄ o Paolo water use in manufacturing
dropped between 42 and 62%, depending on the industry , between 1980
and 1982, after ef¯ uent charges were introduced.
Consumption of water in the former East Germany dropped from 400 to
120 litres per capita per day, or 70%, between 1989 and 1994, primarily as
a result of cost-based pricing.
Figure 8. What can the market achieve?
Markets and prices improve the allocation of water among competing users. Many
countries have shifted from regarding water as a free and renew able resource to
understanding its economic value and its growing scarcity, and they are chang-
ing policies to emphasize proper incentives, pricing and regulation (see Figure
8). For example, the city of Bogar in Indonesia increased fees for water by 30%.
As a result, the consumption of water declined by a similar rate and expensive
investments in new supplies were postponed. Similarly, some 18 months after
Guinea turned over responsibility for supplying urban areas with water to a
private supplier, the fee collection rate had increased from 15% to 70%, and
services had improved signi® cantly. The market also works on the farm. Even
farmers who are very poor are often willing to pay for good-quality services that
raise and stabilize their income. In Bangladesh, it is not uncommon for farmers
to agree to pay 25% of their dry season irrigated rice crop to the owners of
nearby tubewells who supply their water. Studies of farmer-owned and man-
aged irrigation systems in Nepal show that farmers contribute large amounts of
cash and labour to pay the annual costs of operations and maintenance.
The World Bank, with assistance from organizations in the United Nations
and intensive consultation with international and developing country NGOs, has
taken the lead to de® ne the elements of a comprehensive approach to water
resources management that emphasizes economic behaviour, overcoming mar-
ket and government failures, more ef® cient water use, and greater protection of
the environment. The Bank is working actively with its developing country
partners to encourage implementation of these objectives. With support from the
Bank, Brazil is ® nancing water-quality and pollution-control projects that create
basin authorities and institutional, legal and regulatory frameworks which
facilitate cross-sectoral and cross-governm ental coordination while delegating
many responsibilities to municipalities. In Bangladesh, the Bank has encouraged
the creation of an enabling environment that allows the private sector to take
responsibility for selling and maintaining low-lift pumps and shallow tubewells.
The number of tubewells has grown substantially, with a subsequent increase in
market activity for water. With the Bank’s assistance, Pakistan is developing a
delivery mechanism whereby rural communities would provide, operate and
maintain the service themselves. And in Mexico, the Bank is supporting the
transfer of almost 2.5 million hectares of irrigated agriculture to water-user
associations that will be responsible for operating and maintaining canals and
water distribution.
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Water Resources Management 231
As these examples demonstrate, efforts towards implementing a new ap-
proach are feasible. The ® nancial requirements, however, will be substantial. For
water supply and sanitation and irrigation and power, these are estimated to be
US$600± 800 billion over the next decade. The World Bank will continue its
extensive support for water resources. The Bank has lent about $40 billion for
water-related investments in the last 30 years. Over the next 10 years, it will lend
an additional $35± 40 billion. This will represent about half of all external agency
funding for water. Governm ents must ® nance the balance. However, they will
not be able to do so from central budgets alone. Part of the capital will have to
come from water users themselves. Therefore, as recommended in the new
approach to water management articulated here, emphasis on cost recovery and
private sector involvement will be crucial.
Conclusion
The lessons of collective experience compel us to make a decisive break from
past policies to embrace a new approach that is comprehensive, market-orien-
tated, participatory and environmentally sustainable. This approach is consistent
with the consensus that has emerged in Agenda 21. Its applicability to all
countries was reaf® rmed at the International Conference on Water and the
Environment in Dublin in 1992. Implementation of the new approach will
require dif® cult decisions on the part of all of us. But one fundamental point is
clear: we have no choice. At stake are our health, our economies, our ecosystem s,
our children . Water gives life to all these things.
Note
1. The source for all graphs, charts, tables and ® gures is the World Bank, unless otherwise noted.
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at 0
8:00
10
Nov
embe
r 20
14