Ismail Serageldin


Strategic Water Resources Management: Themes for a New Millenium

 13/08/1995 | Fifth Stockholm Water Symposium, Stockholm, Sweden

In the debate on managing the world’s finite natural resources, few issues have achieved the pre-eminence that water has. As an issue, water pervades society. It is critical for long-term economic development; for human health and social welfare, especially of the poor; and for environmental sustainability. Yet, Water Pervades Society. Water is an issue which "pervades society"--it is critical for long-term economic development; for social welfare, especially that of the poor; and for assuring environmental sustainability. The poor pay the most for water and suffer the greatest in terms of impaired health and lost economic opportunities. Over the availability of water is by no means assured for large sections of the world’s population. Today, more than a billion people lack do not have access to adequate supply of safe water and 1.7 billion people do not have adequate sanitation. Moreover, the poor pay the most for water and suffer the greatest in terms of impaired health and lost economic opportunities. Contaminated water causes millions of preventable deaths every year, especially among children.

Given the importance of this social interface, we must ask how effective water resources management can help to alleviate poverty and ensure that the poor are the beneficiaries rather than the victims of bad water management decisions and policies.

Emerging Trends. Review of current trends indicates that we are trends indicate that we are now approaching a "water crisis" in several regions, most notably the Middle East and North Africa where per capita availability of water is 1,247 cubic meters, one of the lowest in the world (compared to 18,742 in North America or 23,103 in Latin America) In the near future, availability of water, rather than land, will be the main constraint to agricultural production in many areas. In many countries, water shortages stem from inefficient use of water, degradation of available water due to pollution, and the unsustainable use of groundwater resources. Massive urban and industrial growth is creating unprecedented demands for water, often at the expense of agriculture, aquatic ecosystems, and the rural poor. Land degradation due to poor land use is exacerbating soil erosion and sediment transport in downstream areas, and is also affecting coastal ecosystems. As a result, proactive measures for managing demand for water will be as critical as are investments in new infrastructure.

The author would like to acknowledge with gratitude the contributions of Steven Lintner without whom this essay would not have been completed. Comments by John Briscoe, Guy Le Moigne, Randall Purcell, and Sarwat Hussain were helpful and are greatly appreciated. Any errors and shortcomings are purely my own.

The available data clearly indicates that we must adopt a proactive approach for the management of water resources. Current trends demonstrate that reactive approaches of the past cannot continue. $ Access to safe water and sanitation in rural and urban areas remains a major challenge. Moreover, 40 to 60 percent of water used by utilities is lost to leakage, theft, and poor accounting. Health risks will continue to be a major concern, especially in rapidly growing urban areas where population growth and the rise of megacities will further constrain the availability of water. For example, in 1950, there were less than 100 cities with a population in excess of one million; by 2025, that number is expected to rise to 650 cities. As urban populations grow, water use will need to shift from agriculture to municipal and industrial uses, making for difficult decisions between allocation for different sectors.

failure of current Policies

Presently, water resources management strategies are characterized by policies that are unsustainable from any perspective--economic, social or environmental. The multitude of problems, however, stem from four principal failures:

•$ Refusal to treat water as an economic good.

•$ Excessive reliance on the "government" for water and wastewater services.

•$ Fragmented management of water between sectors and institutions, with little regard for conflicts or complementarities between social, economic and environmental objectives.

•$ Inadequate recognition of the health and environmental concerns associated with current practices.

New Approach to water resources management

We must adopt new approaches to water resources management in the new millennium to overcome these failures, reduce poverty, and conserve the environment, all within a sustainable development framework. Hallmarks of the new approach are:

• $ Address quantity and quality concerns through an integrated approach

• $ Integrally link land use management with sustainable water management

• $ Recognize freshwater, coastal, and marine environments as a management continuum

• $ Recognize water as an economic good and promotes cost-effective interventions

• $ Support innovative and participatory approaches

• $ Focus on actions that improve the lives of people and the quality of their environment

A key element of the new approach is the recognition that all types of water, in freshwater, coastal and marine environments, should be considered as a management continuum with significant implications for strategy, planning, management, and investment actions (see Figure 1). These systems must be viewed as intimately interlinked and a much broader range of "downstream effects" from human interventions and development activities must be recognized. As a result of adopting this new approach, the management of river basins, coastal zones, and the marine environment become complementary issues. Water quantity and quality concerns--historically treated as separate issues--must now be seen as a global concern requiring a unified management approach.

Essential Elements for Action

Realizing the new approach requires four essential elements for action:

•Strategies, which must move from segmented to comprehensive

•Interventions, which must move from curative to preventive

•Investments, which must move from incremental to strategic

•Innovations, which must move from piloting to mainstream


Water issues need to be treated in a systemic manner. We must stop managing water sectorally by its separate uses, and instead develop a comprehensive framework for water resources management. Coordination between different sectoral users is critical for sustainable water resources management. A primary lesson learned is that land use policies and management need to be linked with water management. In addition, physical and institutional infrastructures must be complementary.

INTERVENTIONS: from curative to preventive

The new approach emphasizes interventions which move from curative to preventive. This prevents expensive problems from occurring, and allows for the effective application of resources. It also promotes sustainable use of diverse and fragile resources, and minimizes requirements for remediation, mitigation, and restoration. The justification for adoption of this new approach is well illustrated by the following examples. In China, Shanghai’s water intake had to be moved 40 kilometers due to degradation of river water quality around the city. Costs associated with this remedial action were estimated at $300 million. Similarly, costs of restoring the Aral Sea, presently a hypersaline dead water body, are prohibitive ($ 1 billion in estimated costs of rehabilitating salinized land, and $100 million for partial restoration of wetlands).

Cooperation to Avoid Conflict. Competing sectoral demands for increasingly limited water result in regional, national and local conflicts (e.g. the most recent example being the dispute over sharing of Cauvery river water in India). Transboundary water pollution is an important cause of conflict, given the dramatic impacts of both point and non-point source pollution on the usability of water.

An important policy lever to promote better management of scarce water resources is to change the incentive structure. Implementation of policies that work with markets, not against them, are required in the new approach. Environmental management in developing countries should be based less on regulations than on policies that use incentives to encourage efficiency and reduce environmental damage. A major opportunity for this approach is in the control of industrial pollution, where prevention and abatement can be highly responsive to well structured incentives. Measures that avoid "end-of-pipe" and "end-of-stack" solutions and emphasize prevention should be promoted. These measures include adoption of efficient process technology, waste minimization, recycling and resource recovery, and high operation and maintenance standards. The "Polluter Pays Principle" and "User Pays Principle" should be actively promoted to increase the commitment and performance of municipalities, industries and individual users in adoption of cost-effective control measures.


Investments, balanced between preventive measures to avoid further degradation and curative measures to rehabilitate degraded ecosystems, must be part of long-term, public and private sector development strategies. In making investment decisions, the balance between costs and benefits must be carefully analyzed. Special attention should be given to ensuring that long-term environmental costs are not neglected in the desire to obtain short-term benefits. In this regard, the importance of increasing user participation in program and project design is critical, especially to ensure the internalization of measures to promote the use of economic incentives. Given the need to mobilize resources, improve efficiency and increase the quality of services for users, the participation of the private sector in water management should be encouraged. Addressing water resources management issues under the new approach requires that a broad range of investments, both large and small, be made on a continuous basis.

The timely implementation of environmental programs and projects has often been constrained by problems in integration of priority concerns into national public investment plans. In addition, areas in which private sector investment should be encouraged have not been identified. An emerging instrument for planning and management of national investments from domestic and international sources are "Public Investment Programs" prepared on the basis of "Public Expenditure Reviews."

Public/Private Partnerships. Meeting long-term priorities for the improvement of water resources management, especially the provision of water and wastewater services, will require harnessing private sector investment to reduce the financial burden on government budgets and assure improved levels of service. A wide range of options exists for private sector participation that includes basic interventions such as service contracts for operation and maintenance, concessions, and varying levels of private sector ownership. An important principle of this approach is cost recovery for both the use of water resources and the provision of services. Successful examples of private sector participation in the water sector in Latin America include: service contracts in Chile; management contracts in Mexico; lease contracts in Bolivia; concession contracts in Argentina and Chile; Build-Own-Operate-Transfer (BOOT) options in Chile and Mexico; and joint ownership in Colombia (see Box 1).

INNOVATIONS: from piloting to mainstreaming

Effective adoption and implementation of the "new approach" demands changes in principles and practices of water resources management programs. Grants should be used strategically to promote and test pilot innovations. Measures should be taken to effectively share and disseminate experiences to allow the benefits from new approaches to water management to be realized at the operational level. To provide for quality control, pilot activities should be carefully monitored and rigorously evaluated by independent parties.

The Bank's experience reinforces the importance of participatory approaches in the planning and implementation of projects. It is critical that planning take place at the lowest appropriate level, be demand-based, involve stakeholders in decision- decision- making and ensure the participation of women. The World Bank has recently begun to use social assessments as a new method for factoring the social dimension in the design of a number of projects and programs. Social assessments provide a framework for including social analyses and participation in project design. In recent water and sanitation projects in the Central Asian countries of Azerbaijan and Uzbekistan, social assessments have been used as participatory methods for factoring the human dimension into the project design process. These assessments have effectively influenced project design. The experience from Azerbaijan is summarized in Box 2.

Mobilizing Women. Women are important ecosystem managers, both in urban and rural areas, and make decisions concerning the use of water resources. In many rural and peri-urban areas, women are the primary purveyors of drinking water supply, and play a key role in promoting hygiene, sanitation, and human welfare. In many parts of the world, women play a vital role in subsistence agriculture and in utilizing forest resources for fuelwood and construction, factors which impact water resources. Their role in land use and water resources management is therefore critical and needs to be recognized and enhanced to promote development and equity. Significant support should be provided to empower them as equal partners in development.

Role of Civil Society. A major priority for all parties involved in the development process is the support for civil society. In the context of water resources management, this would result in an increased emphasis on dissemination and processes to support debate on water resources management issues. Such a process would assist in the creation of partnerships and empower people in the decision-making process. It would aid local communities in formulating and implementing local action programs. Appropriate emphasis should be placed on raising awareness and developing educational materials that promote proper management water resources.


Water scarcity and water pollution increasingly jeopardize the lives of millions of people in developing countries. The crisis will worsen unless countries improve their management of this essential and precious resource. Fortunately, an international consensus has emerged on the fundamental principles to improve water management. These principles have been endorsed at conferences on water and the environment in Dublin (1992) and Rio de Janeiro (1992). They include:

•Water is a scarce resource and should be treated as both a social and an economic good.

•Water should be managed at the lowest appropriate level, using demand-based approaches and involving stakeholders, particularly women, in decision making.

•Water should be managed within a comprehensive framework, taking cross sectoral considerations into account.

These principles were also included in the Beijing Declaration to mark World Water Day 1996.


Meeting the need for comprehensive water resources management in the future will require significant complementary policy actions and investments in institutions and infrastructure. Globally, the Bank estimates that at least $600 billion will be required for a broad range of water-related investments in the next decade. The majority of this amount will need to be raised by the countries themselves, but $60 billion must come from abroad for the developing world, of which the Bank will lend $30 to 40 billion. The role of the private sector will be critical in meeting the financing challenge. Citizens will need to use water more efficiently and expect to pay for the real cost of this precious resource.

Recognizing the need for comprehensive water management strategies, the Bank, United Nations Development Programme and the Swedish International Development Agency have established a Global Water Partnership which will have four main features:

•Integrated Programs at the Regional and National Levels. The key to success of the Partnership will be its ability to promote and support high quality, integrated programs at the regional and national levels that adopt the Dublin/Rio principles.

•Capacity Building. Capacity building involves policies, institutions, and people. At the policy level, the Partnership will help countries improve the "rules" governing the water sector in its broadest context. The Partnership will assist institutions to improve the ways in which they operate and collaborate. Training will be offered.

•Sustainable Investments. The Partnership will support the preparation and testing of innovative, integrated approaches to sustainable investments. A key concern will be planning projects that deal with competing demands for water from various user groups.

•Global Orientation for Learning Across Frontiers. The Partnership's global orientation offers significant opportunities for learning across frontiers. The lessons from the regional, national and local levels will be disseminated to target audiences through a variety of traditional and innovative, user- user-friendly mechanisms.

To be formally established at the Stockholm Water Symposium on August 9, 1996, the GWP will consolidate existing UNDP-World Bank programs, and bring together key partners, not just from water supply and sanitation, but from irrigation, the environment, and other subsectors. It will help pool resources for "upstream" development, thereby contributing to more effective country-level programs and projects. It would also identify strategic gaps and develop tools, expertise, and specialized programs to address them. More effective use of water will occur as the result of actions at all levels.

Participants from developing countries and the international community will plan the Partnership’s work program and mode of operation. The success of this venture--and of its objective to improve the management of water as a scarce resource-- resource-- ultimately depends on the participation of key actors at all levels. We must not fail because the well-being of humanity, indeed the planet, demands cooperation.

Box 1

Private Sector Provision of Water and Wastewater Services

In Latin America and the Caribbean

The World Bank is undertaking a major initiative to support private sector provision of water and wastewater services in Latin America and the Caribbean. This initiative is being adopted successfully by World Bank member countries in the region and provides a wide range of experiences which may be transferred to other locations. Central to the success of the initiative has been its focus on active dissemination of practical information to national and municipal decision makers, utility managers and experts concerning the opportunities provided by a wide range of private sector involvement.

The Example of Buenos Aires. The Government of Argentina embarked in 1990 on an ambitious privatization program of major public services. This included the transfer in 1993 of the operation of the water supply and sewerage services of the larger Buenos Aires Metropolitan area from an inefficient public company to a consortium of private foreign operators and local investors. The Government remained the owner of the assets and granted a thirty-year full concession for operating, maintaining and managing the system, investing in rehabilitation and expansion works, and alleviating contamination of water resources caused by the disposal of domestic sewage. Regulation and control of the concession were accomplished through a regulatory agency established specifically for this purpose.

Based on the successful privatization of water supply and sewerage in Buenos Aires, four main stages are recommended for achieving a successful transition from a public company to a private concession:

Stage 1. The initial activities, which are undertaken prior to the decision on how to privatize.

Stage 2. The preparation of bidding documents and background material required for selecting a qualified operator.

Stage 3. The bidding and contracting process, which culminates with the signing of the respective contract.

Stage 4. The actual transfer of services to the private operator and the setting up of the regulatory agency.

Box 2. Social Assessment:

An Innovation for Factoring in the Human Dimension

Massive water shortages in Azerbaijan's capital city led to the design of a World Bank-financed water supply project. In preparing this critically needed investment, the Bank with local assistance carried out a social assessment to help identify socioeconomic factors that would influence project design and implementation as well as to gain a better understanding of the potential impacts of the project on city residents, particularly the poor. The assessment also was intended to initiate a dialogue between the Baku Water Department and its clients. The social assessment provided a framework for incorporating social analysis and participation into the design of the project and involved:

•Rapid survey of 400 households to determine water availability and quality.

•Rapid survey of 410 additional households to characterize water consumption, water conservation, and water leakage.

•Rapid survey of 51 Baku enterprises focusing on water consumption, recycling, metering, and cost recovery.

•Institutional assessments and discussions with civil society and various stakeholders.

•Interviews with private sector providers of water and water supply equipment.

•Case studies of a small sub-set of households and enterprises.

•Stakeholder workshop with 72 participants representing all sectors of society and user groups as well as government ministries, local NGOs, members of the academic community, local experts, the media, and donors.

In addition to confirming that the project's objectives and priority interventions were acceptable to the intended beneficiaries, the findings of the social assessment and related participation made significant contributions to the policy dialogue on key environmental issues and led to the inclusion of two components supporting water conservation: community-based household leak prevention and public education. The project also included provisions for developing a master plan for waste water management to deal with the increased amount of water to be supplied by the project.

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