Essay Example on Water pricing would enhance the more efficient allocation









However the above mentioned benefits are not without trade offs although a consultative and all inclusive approach in decision making can minimize the impacts of the tradeoffs For instance 40 more water would be withdrawn to attain the 55 contribution of a total value of food supply from irrigated agricultural production This poses some threats to the aquatic and marine ecosystems in many areas around the world The Comprehensive Assessment 2007 further highlights examples on some costs and benefits of various trade offs These include the tradeoffs between water storage for agriculture and water for the environment reallocation and overallocation of water resource basins upstream and downstream management effects equity and productivity effects as well as the tradeoff between this generation and generations yet unborn Payments for water related Environmental Services PES are also gaining greater attention Empirical studies attempt to assess the benefits people derive from receiving PES For example Kosoy et al 2007 compared three schemes of PES in three different countries in Central America The study found that payments received are less than the opportunity costs incurred by beneficiaries hence violating the economic rationale of PES schemes

 The study also suggests the importance of intangibles such as social relations perceptions negotiations and conflict resolutions as crucial instruments of inducing local participation in protecting and managing PES schemes related to water resource issues Kosoy et al 2007 further questions PES scheme s multipurpose claim in enhancing environmental improvement promoting rural development and reducing poverty at community levels However the study results noted possible overestimations of upstream opportunity cost based on the method used as well as possible downstream overestimated Willingness to Pay WTP Kosoy et al 2007 Other studies cited by Kaseya et al 2007 indicates that PES schemes are anticipated to enhance the redistribution of resources and alleviate poverty Similarly Kosoy et al 2007 own study notices that PES schemes may also benefit the community as a tool for conflict resolution in that it solves problems between downstream and upstream stakeholders Notwithstanding this may create resistance from some actors and lead to changes in community perceptions of property rights Besides Kosoy et al 2007 analysis shows that one of the main benefits of upstream forest cover expansion based on local perception is better downstream water provision and availability 

According to some sources cited by Kosoy et al 2007 study this perception is not uncommon among rural dwellers in Latin America and other tropical regions of the world In contrast other empirical studies cited show that upstream forest cover expansion results to lower availability of water downstream Kosoy et al 2007 Hence Kosoy et al 2007 concludes that PES schemes aim at increasing water availability through tropical forest cover expansion should be avoided as precautionary approach Unlike Latin America Payment for Watershed Services PWS is uncommon in Africa Ferraro 2010 regional review highlights Working for Water WfW program a PWS initiative in South Africa as one of the very few PWS success stories on the continent hence generated some benefits to the program s target group The program hired low skilled laborers to remove invasive plants which are reported to affect streamflow and water usage on nearly 10 of South Africa s total land area Consequently the program has been evaluated to contribute to improving the standard of living of unemployed laborers low skilled workers and historically disadvantaged individuals rural women youth and the disabled in South Africa Water availability and access have also been reported to be beneficial for domestic use Kayser Moriarty Fonseca and Bartram 2013 review indicates that sufficient water supply for productive household activities can enhance household income and reduce household poverty 

Additionally the effects of water supply improvement are also said to reduce the spread of waterborne diseases including skin and eye diseases Kayser Moriarty Fonseca and Bartram 2013 Similarly Olmstead 2010 review highlights that insufficient access to clean drinking water supplies can have significantly negative welfare implications on human health Moreover water may be available but unaffordable in many regions of the world Hence water pricing can influence people s water use and its associated benefits For instance reducing water price in a water scarce or water rationing region allow farmers to grow highly valued crops with high water requirement Bozorg Haddad et al 2016 Another study by Arbués Garcıa Valiñas Martınez Espiñeira 2003 also notes that water pricing would enhance more efficient allocation public health social equity financial stability environmental efficiency and public acceptability and transparency Therefore reducing water price in a water scarce environment could optimize farmers income and positively contribute to their quality of life 

Finally an analysis on the review of dam construction and removal is reported to have significant welfare implications Olmstead 2010 For instance a study conducted in India Duflo and Pande 2007 cited by Olmstead 2010 indicates that dam construction seems to increase farmers vulnerability to rainfall shocks and has no substantial effect on agricultural production in the districts they are located The study finds an increase in poverty upstream in the districts where dams are constructed Whereas the opposite is true for downstream residents in faraway districts Unfortunately the cost of upstream poverty increase exceeds the benefits gained by downstream residents However the analysis excludes benefits gained from electricity generation Other studies find a positive net value when the benefit from electricity generation is included For instance a study Lipscomb et al 2008 of hydropower dam construction in Brazil finds positive net impacts as electricity provision accelerates housing stock value increases employment enhances average income reduces the poverty headcount ratio and improves the country s UNDP Human Development Index score Olmstead 2010

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