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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.
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Chapter 8: The Watershed Economics Management Approach: An Application to Cyprus

Ben Groom, Phoebe Koundouri and Timothy M. Swanson


* Ben Groom, Phoebe Koundouri and Timothy M. Swanson 8.1 INTRODUCTION Water scarcity occurs across many dimensions. First, there is growing demand for water in residential, industrial and agricultural sectors, stemming largely from population and economic growth. Secondly, supply-side augmentation options have become increasingly constrained, and restrictively costly in many countries. In combination, demand growth and supply-side interventions have stretched current water availability to its 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 (see Winpenny, 1994; Koundouri, 2000a, b; Koundouri and Groom, 2003; Pearce and Koundouri, 2003). In turn, water scarcity has become an important constraint on economic * This work was made possible by reason of a research grant from the European Commission DGXII on ‘Integrated Water Management in Cyprus: Economic and Institutional Foundations’. We are grateful to the Commission for its financial support, and to individual members of the Commission, especially Panayiotis Balabanis and Irene Gabriel, for their individual advice and support. We would also like to thank the Scientific Advisors to the Project Team, Anastasios Xepapadeas and Paul Herrington, who contributed as much to the project as the team members. Finally, we are also in debt to Alban Thomas (Director of Research, INRA, University of Toulouse, France) and Celine Nauges (Research Fellow in the Department of Economics, University College London, and INRA, University of Toulouse, France), our research collaborators, who...

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