WATER MARKETS AND DECENTRALIZED WATER RESOURCES MANAGEMENT: INTERNATIONAL PROBLEMS AND OPPORTUNITIES1

ABSTRACT: Because of its importance and the perceived inability of private sector sources to meet water demands, many countries have depended on the public sector to provide water services for their populations. Yet this has resulted in many inefficient public water projects and in inadequate supplies of good quality and reliable water. Decentralization of water management, including the use of water markets, cannot solve all of these water problems, but it can improve the efficiency of water allocation. When given adequate responsibility and authority, water user associations have effectively taken over water management activities at a savings to tax payers. Moreover, water markets add the potential benefit of improving water efficiency within a sector as well as providing a mechanism for reallocating water among sectors. The key question involves developing innovative mechanisms for reducing the transaction costs of organizing water users and of making water trades. Water rights need to be established which are recorded, tradable, enforceable, and separate from land if markets are to operate effectively. Also, institutions are needed that effectively resolve conflicts over water rights, including third party impacts and water quality concerns.     

Harvesting Freely Roaming Public Resources: Can Property Owners Harvest Kangaroos Utilizing Their Land Without Impacting Neighbors?

In Australian semiarid rangelands, there have been suggestions that kangaroo harvesting should be given much more serious consideration as a supplement or even replacement to income from domestic stock like cattle and sheep. The possibility of kangaroo harvesting ever being economically viable, however, is often dismissed due to the impossibility of constraining these freely roaming animals to a particular property. In this paper, we explore the extent to which landholders do have control of their harvests regardless of the activities on neighboring land. Three scenarios are investigated: a property with a porous border that is surrounded by a reserve, like a national park, that is much larger and where harvesting is prohibited; a pair of properties with porous borders where harvesting is permitted and landholders act cooperatively; and finally two properties with porous borders where harvesting is permitted and landholders act competitively. The results indicate that despite the freely roaming nature of kangaroos, private property owners can obtain harvests proportional to the extent to which their land and grazing resources are utilized.     

The use of choice experiments in the analysis of tourist preferences for ecotourism development in Costa Rica

Many nations promote nature-based tourism in order to promote the dual goals of nature conservation and income generation. To be most effective in providing services that facilitate achievement of these goals, decision makers will need to understand and incorporate tourist preferences for nature appreciation, infrastructure, use restrictions, and other attributes of national parks and protected areas. This paper presents the use of choice experiments as a mechanism to analyze preferences of national and international tourists in relation to the development of Barva Volcano Area in Costa Rica. In this section of the Braulio Carrillo National Park, managers are faced with an immediate need to plan for greatly increased visitation rates due to a new road, which will greatly improve access. Choice sets were developed in collaboration with park managers. A survey was conducted of 171 Costa Rican and 271 foreign tourists who visited Poás Volcano, a well-visited alternative site to Barva Volcano. Survey data was analyzed using conditional multinomial logit models. Results of the study demonstrate, that both sets of tourists preferred: (i) improved infrastructure; (ii) aerial trams with observation towers and picnic areas; (iii) more information; and (iv) low entrance fees. Foreign tourists demonstrated strong preferences for the inclusion of restrictions in the access to some trails, whereas Costa Ricans did not show any significant preference for restrictions. Marginal willingness-to-pay for greater information was estimated to be $1.54 for foreign tourists and $1.01 for Costa Rican visitors. The study concludes that choice experiments are a useful tool in the analyses of tourist preferences for the development of protected areas in developing countries.     

Evolving Water Management Institutions in the Red River Basin

Institutions are the rules and norms that guide societal behavior. As societies evolve—with more diverse economies, increased populations and incomes, and more water scarcity—new and more complex water management institutions need to be developed. This evolution of water management institutions may also be observed across different constituencies, with different societal needs, in the same time period. The Red River of the North basin is particularly well suited for research on water management issues. A key feature of water management in the Red River Basin is the presence of three completely different sets of water law. Minnesota’s water law is based upon riparian rights. North Dakota’s water law is based upon prior appropriation. Manitoba has a system of water allocation that features provincial control. Because the basin is fairly homogeneous in terms of land use and geographic features, its institutional diversity makes this an excellent case study for the analysis of local water institutions. This article reviews the local water management institutions in the Red River Basin and assesses the ongoing institutional evolution of local water management.     

Private sector participation in urban water and sanitation: Realising social and environmental objectives in developing countries

There has been a large increase in private sector participation (PSP) in the urban water supply and sanitation (WSS) sector in recent years. However, even with increased PSP, public authorities will still have to: ensure that the service providers do not use their market power to exploit customers; internalise public health and environmental externalities; provide mechanisms whereby water consumption is sustainable and allocated efficiently between alternative uses; and stand as a guarantor of a level of service provision that is consistent with a basic standard of living. While there is considerable literature addressing the first of these four issues, the latter three are rather less adequately addressed. Through a review of a number of case studies (Abidjan, Buenos Aires/Cordoba, Mexico City and Manila), this paper provides an overview of the issues involved and some of the mechanisms available to the authorities responsible for the regulation of the sector.