As population grows and economy expands, it is undeniable that the demand for water has been alarmingly skyrocketing. Yes, the financial and environmental costs of developing new water supplies has to begin to exceed the economic benefits in the least marginal uses of existing supplies.
Taking this fact into account, The Ethiopian Herald had a stay with Serkalem Seboka, who graduated from Arba-Minch University in water engineering, to have a piece of opinion about the firm tie between water resource and economic growth.
She said, “Water is an essential component of the economy of a given nation and is at the centre of economic and social development. As it is vital to maintain health, grow food, manage the environment and create jobs, there is a close link between water and economic growth of the country, too.”
According to Serkalem, improving water resource management requires recognizing how the overall water sector is linked to the national economy. Understanding how alternative economic policy instruments influence water use across the nation as well as between local, regional and national levels, the role of households, farms and firms is regarded as quite decisive. Yes, it is quite better to well recognize the connection between macroeconomic policies and their impact on, for example, technical areas such as irrigation.
“It is obvious that the water sector can have a strategic impact on resource allocation and aggregate demand in the economy. A country’s overall development strategy and use of macroeconomic policies – including fiscal, monetary and trade policies-directly and indirectly affect demand and investment in water-related activities. The most obvious example is government expenditures, fiscal policy, on irrigation, flood control or dams,” she added.
National development strategies can directly influence water allocation and use in other ways. In the case of a food self-sufficiency strategy, the government may subsidize water-intensive inputs to encourage farmers to produce more wheat. By providing financial incentives for wheat and rice producers, the government is influencing the demand for water and private irrigation investment through price policies, she added.
Water resources are a vital component of economic growth and development, and investing in water management and sanitation can have significant economic benefits. To mention but a few, she stated that economic growth—this entails that improved water resources management and sanitation can boost economic growth and help eradicate poverty. Productivity—better water management can increase productivity across economic sectors, health—improved access to clean water and sanitation can improve health and reduce healthcare costs.
Water resources can help protect biodiversity, improve soil, and mitigate disasters and helps create job opportunities, water projects can create jobs in the water sector.
She said, “As water resources are essential for many aspects of life, including growing food, managing the environment, creating jobs, supporting health and livelihoods, underpinning food and energy security as well as defending environmental integrity, these precious assets have to be well nurtured. However, water scarcity can be a barrier to sustainable development. Poor drainage can also lead to problems that are often perceived as water shortages.”
As to Serkalem, since water is increasingly recognized as a scarce resource, the use of economic arrangements for water resources management seems increasingly promising. Experiences show that economic arrangements can contribute to a more efficient use of water resources, but only if specific conditions are met, related to a well-functioning institutional framework and regulations that ensure that the use of economic arrangements is balanced with broader societal objectives, she added.
No doubt, she said, water is an essential element in a progressive strategy of economic development. The lack of access to sufficient quantities of adequate quality water can significantly hinder growth and human development but improved water management can generate huge benefits for health, agriculture and industrial production providing an opportunity for economic growth, poor eradication and social fairness.
“Using economic arrangements in water management can be useful as a means to capture certain important values in cash flows and to allow economic exchange mechanisms to support the allocation of water resources and the associated costs and benefits among stakeholders. Although the available examples show that economic arrangements can be successfully applied to deal with scarcity issues in water resources management, various authors have convincingly argued that water is not an ordinary economic good,” she opined.
The successful application of economic arrangements for agricultural water management is not straightforward but needs to be balanced with the use of institutional arrangements to safeguard broader societal interests and to reduce or mitigate the negative impacts of market failures.
Improved water supply and sanitation and water resources management boosts countries’ economic growth and contributes greatly to poverty eradication. Resolving water related challenges requires that the costs for improved water supply and sanitation and water resources management be seen as sound public and private investments and key to a strategy that boosts economies, enables individuals and businesses to explore new income opportunities and provides them with a fair chance to prosper.
According to Serkalem, there is also an awareness of increasing water demands and widespread cases of dwindling and mismanaged water resources and the inadequacy of water infrastructure. Water management is an important factor in economic growth and development because water is a vital resource for people and the economy via reinvigorating economic growth—improved water management can boost economic growth, reduce poverty, and make economies more resilient to rainfall variability. Productivity—better water management can increase productivity and efficiency across economic sectors, Health—access to clean water and sanitation services is a key strategy for economic growth and the health of a nation.
“Climate changes—water management can help adapt to climate change and reduce vulnerability to drought, flooding, and chronic water scarcity. Improved water supply and sanitation and water resources management boosts countries’ economic growth and contributes greatly to poverty eradication. The greatest potential gain for increased productivity and production within both households and economic sectors is found in the total convenience time saving – water collection and sanitation access,” she added.
What is now becoming increasingly clear to many governments is that reliable access to water resources is a competitive advantage and attracts business opportunities.
Water and related services must be a part of the economic development business. Better access to clean water, sanitation services and water management creates tremendous opportunity for the poor and is a progressive strategy for economic growth. Good management of water resources brings more certainty and efficiency in productivity across economic sectors and contributes to the health of the ecosystem.
“Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. To do this it must catalyze investment and innovation which will underpin sustained growth and give rise to new economic opportunities,” she opined.
It has been well attested that economic arrangements can offer useful tools for efficient, equitable and sustainable water resources management, but that they need to be accompanied by adequate administrative arrangements and embedded in an appropriate institutional framework. The journey to economic arrangements has been successfully implemented and exhibited that the economic arrangements have been the result of a negotiation process among multiple stakeholders.
Traditional economic valuation methods need to be complemented by stakeholder-oriented approaches that help to facilitate dialogue among stakeholders and that can effectively incorporate the broader societal concerns related to social equity and environmental sustainability, beyond mere monetary values.
In sum, further work in this area is needed, building on the experiences that have already been gained and from which a process for stakeholder-oriented valuation emerges. Besides, more insight is needed into these multi-stakeholder processes, to identify certain commonalities that can help support future negotiations among parties about the regulations and conditions required to put in place sustainable economic arrangements for water resources management.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD THURSDAY 5 DECEMBER 2024
