WATER AS AN ECONOMIC GOOD

Abstract

This chapter discusses the idea of water as an economic good. In the past several decades, there has been greater recognition that how humans manage water scarcity and its competing uses must change. This new perspective is reflected in the International Conference on Water and the Environment's (ICWE) 1992 Dublin Statement on Water and Sustainable Development, which declared as one of its core principles: “Water has an economic value in all its competing uses and should be recognized as an economic good.” If water is an “economic good,” then the institutions for managing water should ensure that scarce water is allocated to its most valuable competing use. Rising freshwater scarcity would mean that all users of water would pay higher costs. Any increasing scarcity would be temporary and the resulting higher costs would be “an important way of achieving efficient and equitable use, and of encouraging conservation and protection of water resources.”