IWRA Proceedings

AbstractContemporary water policies have increasingly tried to combine traditional regulation with a range of economic incentives that aim to encourage water efficiency and market rationality. Market-based policy instruments, which include water user charges, the payment for ecosystem services and the trading of water permits, are consistent with the prevailing paradigm that the market is more successful than the government to allocate resources and resolve environmental problems. Despite the growing importance of market-based policies, most of the academic literature is still concentrated on the economic aspects alone, such as the monetary valuation, price-elasticity and cost-benefit analysis. There has been little consideration of the connection between market-based policies and the materiality of the ecological system, the institutional setting and the cultural context. This paper draws on case studies from Scotland, Northern Ireland and Brazil, countries that have recently introduced market-based water policies, to discuss the social and environmental consequences of ongoing water reforms. The main innovation of the research methodology is to offer a new understanding of the complexity of market-based policies in relation to the sustainability of managed water systems and the distribution of social opportunities. The research findings indicate that, notwithstanding rhetorical changes, market-based approaches have largely reproduced the contradictions and limitations of the past history of water management. The new policies have been unable to restore environmental quality and prevent the continuation of damaging activities. The results suggest that not always the best market-based policy leads to the most desirable social and environmental solutions. For instance, the new market-based policies try to introduce an economic rationality – epitomised by the ‘user-pays principle’ - that is blind to political legacies and power asymmetries. Likewise, instead of mobilising the catchment population, most of the effort has so far been concentrated on the introduction of water charges and on the establishment of a bureaucratic apparatus to oversee the charging scheme. The overall conclusion is that the sustainability of managed water systems depends much more on broader democratic reforms in the political system and changes in the economic patterns of production and consumption.