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water conservation

New approaches in water resource economics

Susanne M. Scheierling's picture
In many parts of the world, changing demand and supply patterns are contributing to an increasing physical scarcity and competition for water resources. Historically, new demands have been met by developing additional supplies—with the incremental cost of water remaining relatively constant over time due to the ready availability of water development project sites to meet growing demands. As the water economy moves from an expansionary to a mature phase, incremental costs are sharply rising, and interdependencies among users and uses are greatly increasing. With this move, the issues to be addressed by water economists tend to become more pressing, broader and more complex. While in the expansionary phase structural or engineering approaches to water management tend to be the main focus, in a maturing water economy nonstructural or institutional options for solving water problems receive increasing attention. In particular, resource allocation and valuation issues move to the forefront of economic inquiry.