Is the Glass Half Empty Or Half Full?: Issues in Managing Water Challenges and Policy Instruments
Staff Discussion Notes, June 2, 2015
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- Is the Glass Half Empty Or Half Full?: Issues in Managing Water Challenges and Policy Instruments
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Bibliographic details
- Authors: Kalpana Kochhar, Catherine A Pattillo, Yan M Sun, Nujin Suphaphiphat, Andrew J Swiston, Robert Tchaidze, Benedict J. Clements, Stefania Fabrizio, Valentina Flamini, Laure Redifer, Harald Finger
- Published: June 2, 2015
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781484391198.006
Key findings
- Water challenges are a growing global concern with adverse economic and social consequences.
- Water subsidies provided through public utilities are estimated at about $456 billion or 0.6 percent of global GDP in 2012.
- Reforming water pricing and getting economic incentives right can encourage more efficient water use and support needed investment, while enabling policies that protect the poor.
- Managing water effectively requires an integrated and holistic approach that goes beyond the water sector itself.
Analysis of economic policy instruments
- Pricing reform is emphasized as a central tool to correct incentives and promote efficiency in water use.
- The paper discusses pricing reform options and mechanisms for protecting vulnerable populations while enhancing cost recovery.
- Demand management and internalizing externalities are highlighted as important elements of an effective policy mix.
Role of macroeconomic and IMF engagement
- The IMF can play a helpful role in ensuring that macroeconomic policies are conducive to sound water management.
- Macroeconomic frameworks should be aligned with water-sector objectives to facilitate investment and sustainable resource use.
Policy recommendations (summarized)
- Reform water pricing to better reflect scarcity, costs, and externalities while designing mitigating measures for the poor.
- Adopt integrated, cross-sectoral approaches to water management rather than treating water policy in isolation.
- Use a combination of demand management, pricing, and targeted support to achieve efficient allocation and protect vulnerable groups.
Content in this bundle
- _sdn1511 — Executive Summary
- _sdn1511tn