The Economics of Water Management in Developing Countries

The Economics of Water Management in Developing Countries

Problems, Principles and Policies

Edited by Phoebe Koundouri, Panos Pashardes, Timothy M. Swanson and Anastasios Xepapadeas

The increasing scarcity of water resources (in terms of quantity and quality) is one of the most pervasive natural resource allocation issues facing development planners throughout the world. This problem is especially prevalent in less developed countries where the management of this valuable resource has become a critical policy concern. This authoritative new volume outlines the fundamental principles and difficulties that characterise this challenging task. The authors begin by detailing the significant problems of water management which are specific to developing countries. In particular, they highlight the political economy of water management in the context of both pricing and institutional reform.


Charles Howe and Phoebe Koundouri

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental sociology, management natural resources, water


Charles Howe and Phoebe Koundouri A. INTRODUCTION The scarcity of water resources is one of the most pervasive natural resource allocation problems facing development planners throughout the world. This scarcity can relate to the quantity of water, or the quality of water, or both. In arid developing countries this problem is especially acute and is faced each day in the myriad conflicts that surround water use. Water scarcity has several causes and dimensions. First, there is growing demand for water in residential, industrial and agricultural sectors stemming largely from population and economic growth. Second, supply-side augmentation options have become increasingly constrained and costly in both economic and environmental terms in most countries. In combination, demand growth and increasingly difficult supply-side interventions have stretched current water availability close to hydrological limits. In addition to these quantity constraints, the limits to the assimilative capacity of water resources for human and industrial waste have been reached in many places, and the quality of freshwater has been degraded, imposing huge human and ecosystem health problems and making great volumes of water unsuitable for many uses. Water scarcity is widely perceived to be an important constraint on sustainable economic development. It is important to identify the conditions under which this really is the case, because in many cases the perceived shortage is due to inefficient use and inappropriate investments, technologies and management. In the post-Second World War period, development aid became popular among the wealthier developed countries and water development was a...