Water Auctions and Participatory Water Management
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Nexus Blog // Water Auctions and Participatory Water Management

Is decentralized decision-making key to Water Security?

Considering the obvious relationship between water, energy and food security, it has taken us remarkably long to express our resource challenge as a 'nexus' between the three.

How did managing our natural resources become a challenge? The general consensus is that the challenge is one of scarcity, arising due to indiscriminate use during times of abundance. This has been our outlook since Malthusian theories first came to fore in the early 19th century. Our actions, however, have been confined within institutions and systems of governance designed during the era of abundance.

A widely emerging view is that treating water resources/water rights as economic goods would be an apt reflection of their increasingly scarce nature. If we assign value and price to water, and provide the owners the means to buy/sell them, wastage would decrease and more water would be available for various uses.

This amounts to putting more of our water in the market, a suggestion that is known to evoke strong reactions. Critics contend that water is intrinsic to human life in a way like no other natural resource. Monetizing it further would be exclusionary and give big businesses the opportunity to control large parts of the world's water resources.

These are not mere apprehensions; these are valid concerns based on past experiences. Taking them into account, Water Economist David Zetland (Wageningen University) proposes "All-in-Auctions" to reallocate scarce water among owners. While enabling the buying and selling of water rights, the proposed mechanism operates within the context of traditional water rights and human rights to water.

Within this system, rights to common water resources would be distributed among members in a community based on traditional/legal rights, as well as human rights to a certain minimum amount of water. All the rights would then be put up for sale in a unit-price auction. Each of the community members can choose to buy back their rights for zero-payment, or sell some of them at the auction price.

Suppose there are 100 units of water up for auction in the community. The 101st bid (and not the highest one) would be set as the price for which water is eventually bought and sold. This is to keep the highest bidders from spiking prices.

(Mr. Zetland detailed the concept in {http://www.thewaterchannel.tv/en/videos/categories/viewvideo/1085/agriculture/water-and-food-agricultural-flows-and-water-markets|this recent webinar}, and stages a practical demonstration in {http://www.thewaterchannel.tv/en/videos/categories/viewvideo/1085/agriculture/water-and-food-agricultural-flows-and-water-markets|this short video}.)

The concept is a laudable exercise in identifying limitations of purely market-based mechanisms. Its viability, however, is conditional to clear, well-defined water rights and an equal community in which sociological/ political factors do not affect the bargaining powers of participants. This is not true for a large part of the world.

A set of real-life examples, where water-scarcity has been turned around to achieve water-security, involve end users participating actively in managing water resources. Over the years, many water users associations have come up across the world in a variety of contexts. While many of them have failed to be effective, many others have brought about remarkable change in improving water availability and distribution in their watersheds/ municipalities. Studying their successes and failures within their local contexts provides valuable insights into how such associations are best set up and managed.

A case in point is the 'Umatilla County Critical Groundwater Solutions Taskforce' in Oregon, United States. The body represents government officials, scientists and (perhaps most importantly) various communities and native tribes in the county. It was formed in response to a dual crisis - rapidly depleting groundwater, and impending conflict amongst various users in the county and neighbouring areas. The taskforce enabled water users and technocrats to work together, which resulted in comprehensive planning and effective implementation of groundwater management activities.

The taskforce put together a 2050 plan that was adopted by the county planning commission. Over the past five years, there has been a visible increase in groundwater levels and agricultural output in the area.

({http://www.thewaterchannel.tv/en/videos/categories/viewvideo/1072/groundwater/water-before-anything-crisis-and-transformation-umatilla-groundwater|This video} provides an overview of the process.)

A critical part of the process was an education and outreach campaign by the Oregon State University. It was targeted at local communities, native tribes and water managers, and sought to re-frame the issue of scarcity as a scientific problem with a set of possible solutions. Once the various stakeholders were on the same page regarding the nature of the problem, they could also see that it made more sense to cooperate on working out solutions, rather than stake competing claims.

This process is as easy to explain as it is difficult to achieve. It is predicated on the unsophisticated belief that water resources are best managed when end users play a part, and that potentially competing users can cooperate over a scarce resource once they understand why that's the right thing to do.

Both these cases – the proposed water auction mechanism and the observed water management system – seem to make at least one common suggestion: that water security demands efficient water management, which should be based on decentralized decision making. All-in-auctions run counter to the more centralized processes of reallocating water rights, represented by quotas and subsidies. Umatilla-like participatory planning and outreach brings water governance a notch closer to the end users.

We hope that the deliberations at the Bonn2011 Nexus Conference will help detail this further.

Abraham Abhishek is Program Coordinator at MetaMeta, The Netherlands and TheWaterChannel, an online portal for water-related videos, cf. {www.thewaterchannel.tv}. Contact: {aabhishek@metameta.nl}

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