A ROLE FOR RIVER BASIN ORGANIZATIONS WITHIN
AN INTEGRATED WATER RESOURCES MANAGEMENT STRATEGY

Luis E. GARCIA

Environment Division
Social Programs and Sustainable Development Department
Inter-American Development Bank
Washington D.C., USA

FOREWORD

This paper refers to the role of river basin organizations as seen from the perspective of nation-wide integrated water resources management. As such, they are seen as a tool for management within a broader national perspective, and their role may be different from the more encompassing and familiar TVA-style regional development instrument, or from a simpler and more restricted mechanism through which a local watershed management and conservation program or project is executed. To illustrate the point, the path followed by the Inter-American Development Bank (IDB, or the Bank) in financing watershed management projects in Latin America and the Caribbean (LAC) as well as the strategy for its involvement in integrated water resources management in the region are briefly described¹.

KEY WATER RESOURCES ISSUES IN LATIN AMERICA AND THE CARIBBEAN

Although the region is in general well endowed with vast and diverse fresh water ecosystems, there are extreme variations in availability within and between countries. Due to rapid population growth and trends in urbanization, tourism, rural development, and other developments, water withdrawals in Latin America are expected to increase substantially by the year 2025 (Davis, 1996). Increased demand means that the region’s fresh water ecosystems are also under increasing stress.

In general, current water resources practices cannot deal effectively with these problems and are not sustainable from either an economic or environmental point of view (Serageldin, 1995). Elements that undermine the sustainable use of this vital resource are subsidized water delivery by centralized and overextended agencies; emphasis on regulatory approaches through centralized government, rather than market - or other incentive - based approaches; inadequate stakeholder participation; the absence or inadequate enforcement of legislation; inadequate data; scarcity of trained personnel; and a general emphasis on sub-sectoral, fragmented project-based water resource development without regards to integrated water resource management, including conservation of the environment (Lord and Israel, 1996; IDB San José Proceedings, 1996).

There is also a growing consensus in the international water resources community that fresh water is a finite and vulnerable resource, that its development and management needs an integrated participatory approach at all levels, and that water has also an economic value in all its competing uses and should be recognized as an economic good (UNDP, 1994; GWP, 1996; WMO/IDB, 1996).

THE NEED FOR INTEGRATED WATER RESOURCES MANAGEMENT

1. Beneficial Uses of Water

In this paper, the term beneficial use of water is applied broadly to any use that provides a service to society and/or the environment by removing water from its source, using its flow, or leaving it in place, such as potable water, energy, transportation, conservation of biodiversity and wetlands, waste disposal and dilution, deposition of fertile soils in flood plains, etc. None of these uses are a-priori « good or « bad ». Any of these uses may be complementary to other uses or may enter in conflict with one or more uses.

2. Water-Use Conflicts .

Water uses conflicts may be in volume and/or in quality. Conflicts are increased where water is scarce and the maximization of benefits from a single use - for example irrigation or hydropower generation - are attempted, without due regard for other possible uses of water from the same source, reservoir storage volume, or watershed.

As a result of the increasing water use trends in LAC, it has been estimated that investments in water resources infrastructure in the order of US$ 100,000 million will be required within the next 20 years (WWF, 1996). Many of these investments will be in new reservoirs to regulate streamflow, thus increasing water losses from evaporation. And as a consequence of the region’s patterns of water use, many sub-regional, basin, local and water use conflicts will appear or will be increased mainly in the region’s highly populated water scarce areas. For example, the number of Latin American cities with a population exceeding 10 million inhabitants will increase, and it has been estimated that by the year 2025, about 85 % of the total population in the region will be urban (United Nations, 1995), thus increasing water withdrawals and the instream use for transport of wastes.

The forecasted demand for human consumption and agriculture or industrial uses, as well as new and expanding uses associated with tourism in some countries, means that surface and ground water resources as well as coastal areas, will suffer from increased pollution, increasing conflicts between the established beneficial uses and between these and the new uses and the environment, endangering land, freshwater and marine bio-diversity. The small island states of the Caribbean, with their high reliance on ground water and interaction between inland and coastal resources, face a number of unique future challenges.

These trends will also cause serious effects in the region’s freshwater ecosystems. Extensive wetlands are being transformed into rice fields, and new technologies are being applied to drain native wet grasslands for plantations with little consideration for the long-term groundwater needs of these areas. Shrimp farms have also replaced once-extensive mangroves in certain areas and dams and channelization are also potentially undermining important wetland resources (Bucher et al, 1996).

3. Fragmented Approach

When population and economic development pressures were relatively low and water use conflicts both in quantity and in quality were relatively rare, most countries in LAC reacted to the different types of water resources problems, specially the scarcity problem, by increasing investments in water resources development, as reported by ECLAC (119). That is, by developing new sources of fresh water and increasing the supply for the corresponding beneficial uses. Emphasis was on sub-sectoral project-based water resources development, rather than on integrated water resources management.

4. A Change of Paradigm

In LAC, the changes in political and economic policies which have taken hold in countries in response to the conditions of the « lost decade » of the 1980s, have had a noticeable impact on the treatment of water resources problems. More than in other regions in the world, some important characteristics and trends have started to appear (Lord and Israel, 1996). The central government’s role is being redefined through a series of structural reforms, such as the expansion of market principles and privatization of state run enterprises, aimed at reducing direct government intervention in the economy. The decentralizing and liberalizing policies have given LAC water managers room to experiment and test new options, pioneering in many market-oriented, incentive-based measures. A number of incentive-based instruments are available to water managers and policy makers, including marginal cost pricing, groundwater use charges, water rights markets, effluent charges, etc... Many have been contemplated or implemented in LAC and their adoption is likely to increase in coming years with the continued encouragement and support of international lending institutions and the accumulation of local experience.

This is causing a shift emphasis in the treatment of water resources problems, in accordance to generalized international and LAC consensus² . The shift has been initially from an emphasis on water resources development (supply-oriented) to water resources management (supply and demand oriented), within the major water resources sub-sectors, mainly water supply, irrigation and hydropower.

However, recent sub-sectoral attempts at piece-meal decentralization, decision making by isolated user groups or sectors, and privatization experiments in hydroelectric power generation, irrigation and water supply, have increased the fragmentation of sub-sectoral water resources administrative entities, making it more difficult for them to manage the process and reinforcing the need for coordination and for taking a more integrated approach to water resources management (Davis, 1996).

Thus, many water resources organizations in LAC also favor a shift from a sub-sectoral approach in which projects and demands for uses such as water supply, irrigation or hydropower generation are considered in isolation, to an integrated water resources approach. This does not mean that all problems are to be solved at the same time, but rather favors a « thinking globally but acting specifically » approach, in which individual projects are confronted against a hydro-economic-social end environmental system framework, where demands for all beneficial uses of water from a given source, including ecological uses, are given due consideration. Integration occurs at the framework, not necessarily at the individual project level.

Paradigm Shift

BANK FINANCING IN WATER-RELATED PROJECTS

The Bank belongs to what is called the IDB Group of financial institutions that provide support for the development efforts of its Latin America and Caribbean member countries. These institutions are :

the Inter-American Development Bank (IDB) which gives loans to Governments (95% of its lending program) and loans and guarantees to the private sector (up to 5% of its lending program);

the Inter-American Investment Corporation (IIC) which provides loans and equity to the private sector in small and medium sized investment projects; and

iii. the Multilateral Investment Fund (MIF) which provides grants to Governments and non-profit private institutions, technical assistance and training, and equity to small and micro enterprise venture capital.

Total annual lending from the Bank has increased from US$ 3.9 billion in 1990 to US$ 7.2 billion in 1995. Bank financing of water-related projects has been substantial during the past 35 years (approximately US$ 33 billion), and it is expected to remain so, according to the 1997-1998 US$ 2.6 billion water-related investment project pipeline.

BANK ROLE IN WATERSHED MANAGEMENT

Approximately eight years have elapsed since the Bank approved its first watershed management project (Basterrechea, Dourojeanni, Garcia, Novara and Rodriguez, 1996). Since then, more than fourteen additional projects have been considered, about half of them already approved and the rest are in different stages of preparation and approval. Each one of these projects have incorporated distinct elements which, taken as a whole, allow to trace the evolution of the Bank’s conception regarding watershed management projects.

Three « stages » can be identified in this process (Basterrechea et al, 1996) :

the initial stage comprised projects whose main purpose was to protect previous Bank co-financed investments in hydroelectric power generation, whose useful life was endangered by increasing erosion in the upper watersheds. Critical areas to be managed were thus selected on the basis of their potential to produce sediments that contributed to higher than anticipated siltation rates of the reservoirs. This approach, although theoretically correct, proved to be disappointing in terms of evaluating the benefits that were expected from controlling the erosion and sedimentation processes in the upper watersheds. Attention had then to be diverted to the in-situ negative effects of erosion in agricultural activities;

 

a second stage concentrated on these in-situ effects in the upper watersheds, forcing a redefinition of the critical areas. These were now defined as those sustaining agricultural production or presenting potential for production, in danger of being lost if no soil conservation measures were taken. This approach also represented moving away from a more holistic approach in which all natural resources and environmental aspects of the watershed were considered, into a more restricted economic benefit-oriented approach in which the more robust components were emphasized;

 

a third stage moved downstream and incorporated the improvement of water quality and concerns for the well being of urban populations, through basin wide waste water treatment programs within a more comprehensive environmental system framework. Sanitation projects and programs that previously were considered in isolation, were now linked to other watershed management activities. This trend continues, although important problems still need to be solved for this approach to be considered successful.

 

With the Bank’s involvement in integrated water resources management, watershed management is seen in a new role, as several countries are adopting the approach of water resources management by river basins through river basin councils or agencies. The trend is also to integrate coastal management with watershed management, especially in areas such as the Caribbean, where coastal and marine resources are important.

A PROPOSED BANK STRATEGY FOR INTEGRATED WATER RESOURCES MANAGEMENT

According to the Eight General Increase in the Resources of the Inter-American Development Bank (IDB-8), Bank programs in the water resources sector must reflect the socioeconomic and environmental needs of the borrower countries and serve the interests and needs of water users at the local and community level. Due regard must be given to conservation and sustainable use of all sources of water, taking an integrated management approach using the watershed as the basic management unit. IDB-8 also calls for development and implementation of guidelines on integrated water resources management (IDB, 1994).

The strategy being developed by the Bank poses a comprehensive, incentive-oriented, participatory and environmentally conscientious approach, and intends to give operational guidelines for Bank operations in support of the efforts in the region towards a shift from an emphasis on fragmented (sub-sectoral) to an integrated (sectoral) approach and from an emphasis on development to an emphasis on sustainable management, recognizing the social, economic and environmental value of water, with due participation of the communities and the private sector and due consideration of social equity. It is expected that these guidelines will enable the Bank’s operations in water-related projects, to support more efficient ways to allocate water and better ways to solve conflicts among competitive uses, and to conserve the ecosystems.

GOALS

The proposed external goals of the Bank’s Strategy are to support a process of changes regarding water resources issues following internationally accepted principles.

These changes - already initiated in LAC - aim to :

More efficient ways to allocate and conserve water with due consideration of social equity ;

Better ways to solve conflicts among competitive uses and users, including environmental uses;

Account for the social, economic and environmental value of water in the process of sustainable development; and

Give due participation to the communities and the private sector.

 

 

CHARACTERISTICS

The proposed focus of the strategy is intended to be on principles and on the application of instruments, not on the instruments themselves, such as privatization, tradable water rights, river basin councils, community participation, watershed management, or investments in civil works. How these instruments will be used to reach the chosen objectives, needs to be clearly identified and agreed with each country on a case by case basis. However, the dialogue with the countries is not proposed to be passive, in the sense that at the same time that information on the local conditions is obtained, information about how these instruments operate will be given to the countries.

Although some guidelines for analysis of water-related Bank projects are intended to be provided, the strategy is intended to be flexible, and thus, it cannot be a « cookbook ». Different countries and regions within countries may be at significantly different levels of development and management with respect to water resources, they may have very different needs, and may have very different resources available to address water problems. It is proposed that the Bank strives to work within the existing political, legal economic and socio-cultural frameworks and management practices to the greatest extent possible, but will propose institutional changes in the water resources sector, when necessary.

The strategy is also intended to be adaptive and recognize that different water use problems as well as conservation of fresh water ecosystems may be structurally different, each type requiring drastically different approaches. It is intended to be a problem-solving strategy that recognizes the substantial assistance that the Bank can provide to water resources decision-making in LAC.

GUIDING PRINCIPLES

Six principles are proposed to serve as a guide for the development and implementation of Bank assistance programs in the water resources sector (Lord and Israel, 1996; IDB, San José Proceedings, 1996). These are : promoting comprehensive national water resources policies and strategies; focus on institutional innovation and capacity building; attention to both short-and long-term efforts for Bank action; conforming to Bank’s and countries objectives and to internationally accepted principles; incentives for country involvement and for internal Bank coordination; and cooperation and coordination among international financial organizations.

Priority will be given to institutional analysis and change - both within the water-use sub-sectors and the water resources sector - over or at par with building physical infrastructure. Not only does water resources management consist mostly of institutional design and implementation, but even the successful operation of individual projects depends fundamentally upon having appropriate institutions in place (Lord and Israel, 1996).

Many of the activities involved in integrated water resources management (demand management, community participation, or the preservation of ecosystems, for example) have little to with building projects, and a continued focus solely upon infrastructure projects will fail to identify the needed institutional changes. The need for capacity building is not a one-shot affair. The process must be sustainable and thus, it needs to be systematic and continuous.

Developing an institutional structure - both within the water-use subsectors as well as in the water resources sector - which will lead to improved water resources management is a long run, indeed never-ending process of experimentation, adaptation, learning, and improvement (Lord and Israel, 1996). Public and private decision makers need time to change ways of thinking and acting that have been long established. Likewise, the water users themselves need time to adapt to changing water management measures, practices, and rules. But there will be certain projects which are so obviously and urgently needed, community water supply or municipal wastewater treatment facilities for example, that no national strategy or river basin management plan will be required to confirm their desirability. Nevertheless, current knowledge concerning what constitutes good water resources management should play an increasing role in generating and evaluating proposals for such projects. An analytical framework such as the one proposed by Lord and Israel (1996) and described below could be useful for this purpose.

ANALYTICAL FRAMEWORK

The application of the strategy requires the assessment of two situations. The first is the context in which policy is pursued and programs developed. It is composed of actors, whose actions are shaped by the environment, whether natural or man-made, and by rules. The rules define the relationship between actors and the environment and describe, for example, how costs and benefits are allocated among actors, how authority is distributed, who makes decisions and how, or who has access to what information. The second is the level at which actions and decision-making occur and, by extension, where integration occurs. For this purpose, three levels are considered : the operational or water use level, the organizational or water resource management level, and the constitutional or water policy and law level (Lord and Israel, 1996).

Actions at the operational or water use level affect the environment and are aimed at social well-being and the preservation of ecosystems. These actions include most of the water supply and sanitation, irrigation and drainage, hydroelectric and other internationally financed projects. The fundamental problems to be solved by improved water resources management also occur at this level. In a simplified manner, these problems can be classified as scarcity, externality, open access, or public interest. Examples of these types of problems are, respectively: farmers and the hydroelectric entity competing for the same streamflow volumes, a municipality discharging raw sewage into a stream, excess ground water pumping driving down the water table, and the preservation of a wetlands ecosystem (Lord and Israel, 1996). Solving them is what water resources management basically is, and requires changes in water use rules, which must occur at the water resource management level. At this level, plans and programs for utilizing water are designed, adopted, and implemented. It may be impossible in some LAC countries, given the water resource management rules now in place, to adopt and implement the operational rules which could effectively address the scarcity, externality, open access, and public interest problems.

Creating an effective set of water resource management rules may require action at the water policy and law level. These higher level actions are important because a resulting ineffective set of water resource management rules virtually assures that basic water-use problems cannot be solved. Changing water policies and laws requires country-wide action at the highest political level. Changing water resource management and water-use rules, on the other hand, is often best accomplished at the individual basin level, where greater specificity is possible and where stakeholder involvement is more easily gained. Attempts to improve water resource management at the basin level, however, may be frustrated by inappropriate water laws and policies at the national level. These constraints need to be identified and addressed before major expenditures of scarce resources are allocated to making water resources management and water use changes at the basin level (Lord and Israel, 1996).

STRATEGIC INSTRUMENTS

It is proposed for the strategy to use the following instruments for integrated water resources management :

Cost recovery;

Capacity building :

Institutional reform and innovation;

Human resources development;

Stakeholder participation;

Decentralization;

Private sector participation;

Tradable water rights; and

River basin councils.

 

Much of the literature on water resource management advocates either one or a combination of several of these instruments to solve a wide range of water-use problems. There is little discussion about the soundness of searching for cost recovery mechanisms as a basis for financial sustainability, and that capacity building is the topic of the day. There also appears to be a general agreement that certain instruments, such as stakeholder participation, should be part of all integrated water management strategies, and decentralization is a reality which these strategies must cope with. However, there is a plurality of opinions on the inclusion of other instruments, like water markets and privatization, or river basin councils.

WATER MARKETS AND RIVER BASIN COUNCILS

It is not the purpose of the strategy to specify how and when to use each of these measures, nor to encourage or discourage their use. These concerns should emerge from the national assessments and evaluations of local conditions and problems.

Countries have individual characteristics and specifics, thus there are no universal « cookbook » approaches to water management, appoint policy makers and advisers should bear in mind when implementing schemes for water resources management.

When water is truly scarce, current systems of administration based only on public administrative decision making usually result in inefficient allocations of water and alternative mechanisms for reallocation should be considered. Water markets are an economic tool that, if adequately implemented, provides a method to reallocate water from low value uses to high value uses, resulting in economic efficiency gains (IDB Washington DC Proceedings, 1996).

For example, identification of a water scarcity problem in a national assessment^{3 3}, supported by feedback from previous experiences and good practice analyses, could lead to a recommendation for institutional changes to facilitate water marketing, and, thus, allow scarce water resources to flow to their economically most valuable uses. It might then be required that the changes in water resource management rules which would permit water marketing also contain provisions for long term viability, for avoiding monopolistic tendencies by effective beneficial-use clauses, for avoiding environmental degradation, and for assuring maintenance of adequate potable water supplies for the poorest users; goals which unconstrained free markets might fail to achieve.

Also it is not always clear how a water market would account for social and cultural effects; how the market would protect the environment; how monopolies and cartels could be avoided; and how to cope with externalities created by out-of-basin transfers (IDB Washington DC Proceedings, 1996).

The watershed or river basin council approach (equal to or similar to « France‘s Model »), is another example of incentive-based participatory mechanism for solving conflicts and allocate water between competitive users or uses, which in some instances has been considered as an alternative to market allocation (Kelman, 1996) - such as allocation by consensus. However, it is not entirely incompatible with market allocations, since the councils may decide - by consensus - to leave water allocation to the market within the irrigation sub-sector, for example, or between the irrigation and the water-supply sub-sectors.

The watershed or river basin council approach is recommendable to establish integrated water resources management strategies and to plan for water resources assessments nationally and subregionally. In the subregional domain, this approach may be useful in solving problems related to water resources management of transboundary river basins, as a vehicle to promote subregionally coherent water policies and legislation, which may become increasingly needed with present globalization and integrating efforts and trends.

SOURCE : Serageldin, 1995.

However, it does not mean that basin committees or councils must be established across the board.

While it is true that most of these strategic instruments have been underutilized in LAC, it is also true that none is a panacea. Each is feasible in some situations and infeasible in others. Each is a promising solution to some problems, and is likely to be ineffective in solving others. And, each is really a general term, within which considerable variation may occur⁴.

What is too often absent in the literature is a discussion about how and in what contexts to adopt and implement these strategic instruments, and in what specific forms. Their potential success or benefits of these measures should be evaluated relative to existing conditions in LAC countries and the possible long-term impact they could have on integrated water resources management, not on theoretical or academic models. As recommended by Lord and Israel (1996), the solution process should assess how local political, institutional, technical, economic and financial conditions match the requirements of the instrument under consideration.

REFERENCES

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Bucher, Enrique; Gonzalo Castro; and Vinio Floris (1997). « Integration of Freshwater Ecosystem Conservation into a Comprehensive Water Resources Management Strategy for Latin America and the Caribbean ». Draft, IDB/WWF, Washington, D.C.

Davis, D. (1996) « Water Resources Assessment - The Tool for a Sustainable Future », in Water Resources Assessment and Management Strategies in Latin America and the Caribbean, Proceedings of the WMO/IDB Conference, San Jose, Costa Rica.

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IDB/Washington DC Proceedings (1996). Seminar on Economic Instruments for Integrated Water Resources Management. Proceedings, IDB, Washington, D.C.

IDB (1996). Public Utilities Policy. Washington D.C.

Kelman, Jerson (1996). « Building a Water Resources Management System in Brazil - A Status Report ». Paper presented at the 6th Stockholm Water Symposium. Stockholm, Sweden.

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Serageldin, Ismael (1995) « Toward Sustainable Management of Water Resources ». The World Bank, Washington, D.C.

UNDP (1994). Statements and Recommendations from Major International Meetings on Water Resources, Water Supply and Sanitation. Science, Technology and Private Sector Division, UNDP, New York,

United Nations, Population Division (1995) « Word Urbanization Prospects : the 1994 Revision ». U.N., New York.

WMO/IDB (1996). Report of the Conference. Conference on Water Resources Assessment and Management Strategies in Latin America and the Caribbean, San Jose, Costa Rica, WMO, Geneva, Switzerland.

World Wildlife Fund (1996). «  Un Futuro Incierto : La Crisis del Agua y sus Impactos en America Latina y El Caribe » WWF, Washington, D.C.