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Water Valuation

Why water valuation matters?

Water contributes to human well-being in a variety of ways, including the supply to the agricultural sector, the largest water consumer, industry, access to drinking water and sanitation conditions in households and amenities such as the beauty of landscapes and enjoyment of ecology (Keyzer et al., 2009). Through these contributions water directly produces economic value but also contains an option value in case that water that is currently in plentiful volumes of good quality becomes scarce in the future (Pearce and Turner 1990).

It seems obvious that to avoid overuse and undersupply, water should be priced adequately, as for any other economic goods. Valuation of water influences management decisions and connects water to the 2030 Agenda for Sustainable Development and the human rights frameworks to assure efficient and equitable distribution of water. However, pricing water resources is not an easy task. In practice, the use of water is often free, because its extraction from natural waterways and aquifers is difficult to protect from unpaid use. This problem is known as ‘the excludability issue’, which implies that exercising property rights over water is difficult, and, conversely, when property rights are not well established, few will have an interest in acting as water custodians to counter depletion and degradation of water quality. Consequently, water markets for these resources will not function properly. This situation is known as the ‘Tragedy of the Commons’ (Hardin 1968).

Partner universities in Palestine, as well as the public sector, identified water economics/water valuation as an academic field that is hardly developed and deserves more attention. The field of water economics in general and specification of water tariffs in the agricultural sector (and beyond) was seen as a crucial element in CSA-related developments, practically in two ways. First water tariffs are key in evoking behavioral changes for water users who react to price signals that reflect the scarcity. Second, to create an economically viable water sector its users should cover the development, operational and maintenance costs. In both fields, behavioral changes as well as specifying the cost estimates serious knowledge gaps have to be addressed.

Clearly, stakeholders have different perspectives and interests and it will not be easy to agree on a common water valuation assessment but that is also not necessary. Divergence of perspectives retains the very message that different values should not be neglected. On the contrary, these various water valuation assessments need to be integrated into systemic and inclusive planning and decision-making processes that prioritise fair and equitable water allocations. This means active stakeholder consultation where society at large stands to benefit from a full water development planning.

The course Water valuation focuses on the application of valuing water for its various uses in a decision and policy-making environment. Course attendants will be versed in the principles and modern techniques of water pricing and learn to use the water prices as a viable instrument for policymaking. Practical assignments concentrate on numeric examples that reflect water scarcity and its adequate efficient and equitable distributions. The course includes case studies and looks at water rights, legislation and trading and quizzes to test your knowledge. The courses touch base on a variety of water value issues at the local, farm and watershed levels. Field examples will give practical information on the use of water valuation techniques.

Discover our online resources and tools in water valuation :