Global Water Issues and Insights (original) (raw)

The economics of water concerns the measurement and effective management of the trade-offs across its many competing uses (and non-uses) over time and in different locations. Measurement requires estimation of the costs, benefits and risks associated with alternative uses of water. For example, these alternatives could be: (i) keeping water in the river to support ecosystem services, (ii) extracting it for a town's water supply, or (iii) using water to irrigate a rice crop. Effective management ensures that society's objectives for water use (for example, environmental sustainability, sanitation and waste disposal, or food production) are achieved by supporting methods to allocate water that favours higher value uses (including non-uses) and ensures that basic water needs are met. Measuring the value of water The challenge of measuring the value of water across different settings is that it is used as an input or intermediate good in many production systems and, thus, has multiple and possibly competing values as a factor of production. But water can also be a final product, such as drinking water, washing, or waste disposal, and also has value in situ, such as when water is not extracted from a river to generate or retain ecosystem services and benefits. The market benefits of water in production processes or direct use can be determined from market transactions, such as the price at which water is traded in a market or water's derived demand in the production of a crop or product.