Valuing water

As the world's population grows and demand for water increases, we need to address the challenge by incorporating its values into policy decisions

Although water is essential for life, it is often taken for granted and wasted. The management of water resources is a source of contention around the world and can accentuate tensions between countries and inequalities between different segments of society. Understanding the values of different stakeholders is becoming increasingly important in a water-stressed world, particularly in China, where the pressure on water resources is increasing due to population growth and economic development.

In recent decades, China has made remarkable progress in water management, but significant challenges remain around water scarcity and environmental degradation, which, in turn, constrain economic development. China's national per capita water resource availability is only one-fourth of the global average, and it is distributed unevenly across different regions, with high variability seasonally and inter-annually.

China's water-use efficiency is low compared to upper-middle-income countries, with water consumption per unit of industrial added value being two to three times higher. Water policies such as stringent regulations, flood management strategies, market-based instruments for water resource allocation and pollution reduction, and reforms to better align the price of water with its economic value are evolving to address these challenges.

At the core of these policy decisions is the value of water. What spaces should be protected, what infrastructure should be prioritized, what prices should be set, and what trade-offs are acceptable between competing uses? Developing an understanding of water's values in ways useful for policy and price setting requires localized consideration of its contribution to people and nature.

The value of water is a function of context, and what it delivers in that specific context. Given the highly localized differences in water availability, usability, and risk, and given that water is relatively difficult to transport, the values of water vary widely by locality.

Incorporating the values of water in the decision-making process requires a paradigm shift toward a more holistic approach that acknowledges the interconnectedness of water with various social, economic, and environmental factors. One of the key steps toward achieving this paradigm shift is to raise the awareness about the value of water and its importance. Education and outreach programs that target different stakeholders can help in this regard. Such programs can include awareness campaigns, workshops and training sessions that highlight the values of water and their implications for society.

Another important step is to develop effective governance mechanisms that facilitate stakeholder participation and consultation. These mechanisms should be designed to accommodate the diversity of stakeholders involved and should provide them with sufficient information and resources to make informed decisions. This requires a commitment from governments and other relevant institutions to engage in transparent and inclusive decision-making processes.

Furthermore, it is important to recognize that the values of water are not fixed, but subject to change over time. This means that water policies and management strategies must be flexible and adaptable to the changing social, economic, and environmental conditions. Monitoring and evaluation programs can help in this regard by providing feedback on the effectiveness of different policies and management strategies and by identifying areas where improvements can be made.

Finally, realizing the diverse values of water requires changes to the underlying approach while making policies for water, including explicit articulation of water values during the policy design process, strengthening the requirements for consultation and public participation, and the application of adaptive policies. Institutional and infrastructure choices can also be used to balance economic uses with environmental and cultural values. Examples include legal tools that recognize and protect cultural and environmental values as well as infrastructure planning that optimizes reservoir operating rules to recognize ecological and recreational benefits.

Additionally, incentives such as pricing mechanisms and information-based approaches can incentivize conservation of water and encourage conservation behaviors, with potential solutions like ecological fiscal transfers and water markets to realize efficiency gains and reveal ecological values through price incentives. Prices in China tend not to reflect water scarcity, and rarely cover the cost of provision. The price of water in the wealthiest Chinese cities is well below the average urban water tariff of $0.82 for upper-middle-income countries.

The challenges of water management are not unique to China but global in nature. Water is an undervalued and poorly managed resource, with significant environmental and social consequences. As the world's population grows and water demand increases, it is essential that we better understand and address the challenges of water management, incorporating the values of water that are diverse and complex into water policy decisions. This requires a multidisciplinary and participatory approach for which political will and leadership are the foundation, as well as a commitment to prioritize long-term benefits over short-term gains.

The author is an associate professor at the Bay Area International Business School at Beijing Normal University (Zhuhai). The author contributed this article to China Watch, a think tank powered by China Daily.