Towards a green economy

5 Enabling conditions – Overcoming barriers and driving change

The first half of this chapter focusses on the case for investing in the provision of ecosystems services and in the water supply and sanitation sector. In the second half, we focus on the institutional conditions, softer approaches, which have the potential to speed the transition to increase the return on investment and reduce the amount of money that needs to be invested in the water sector.

Without significant water policy reform to enable the reallocation of water from one sector to another, financially reward those who make water use more efficient and so forth, a global analysis by the 2030 Water Working Group (2010) suggests that some nations will not be able to avoid the emergence of a water crisis in many regions. If wide ranging reforms are adopted, however, then the group’s analysis suggests that most water crises can be averted. Investment in water policy reform and governance enables greater engagement and use of local knowledge and for investments to be made at a multitude of scales. When such approaches are taken, the 2030 Water Working Group estimates that the global amount of money that needs to be invested in the water sector can be reduced by a factor of four.

5.1 Improving general institutional arrangements

Arguably, the greatest impediment to investment in water infrastructure and management arrangements has been the difficulty in establishing high-level governance and political support for arrangements that support effective governance (Global Water Partnership 2009a). Problems range from a simple lack of institutional capacity to the presence of widespread corruption12

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opportunities to gain political favour. Building upon these observations in a background paper prepared for this chapter, Ménard and Saleth (2010) report that governments are learning that improvement in arrangements for the administration of water resources offers one of the least-cost opportunities to resolve water-management problems in a timely manner. Long-

12. The 2008 Global Corruption Report found that corruption in the water sector is likely to increase the cost of achieving the Millennium Development Goals by US$ 50 billion (Transparency International 2008). US$ 50 billion is about the same amount of money as the 2030 Water Resources Group’s estimate of the annual cost of implementing the least-cost solution to the resolution of global water problems.

term solutions such as the establishment of reliable, stable governance arrangements for the supply of water are central to a green economy.

A parallel issue is the question of rights or entitlements to use land and water. When these rights are insecure, the incentive to take the long-term perspective necessary to encourage green approaches to investment is weak. When land tenure, water entitlements and other forms of property rights are well-defined, far more sustainable forms of resource use can be expected. Early investment in the development of land registers and other similar processes are simple ways to expedite the transition to a green economy.

Increases in the capacity of a nation to collect taxes will clearly make it easier to move to full-cost pricing arrangements and, where appropriate, provide rebates and other forms of assistance to the most needy without having to resort to inefficient cross-subsidies.

Another example of an enabling condition is the use of education and information programmes designed to increase awareness of opportunities to act in an environmentally responsible manner. If members of a community feel obligated to look after the environment then they are more likely to do so.

5.2 International trade arrangements

The Enabling Conditions chapter discusses the role of international trade and trade-related measures in influencing green economic activity. Whether or not freer trading arrangements will ultimately be to the benefit of water users depends upon the degree of trade liberalisation that occurs and what exceptions are made. As agriculture uses around 70 per cent of all water extracted for consumptive purposes, and large amounts of water are embodied in many of the agricultural products traded (Figure 14), this policy option deserves careful consideration. When trade is unrestricted and all inputs priced at full cost, communities have the opportunity to take advantage of the relatively abundant sources of water in other parts of the world. When trade in agricultural products is restricted, water use is likely to be less efficient. Fewer crops can be grown per drop of available water. As a

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