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The Value of Water
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Economic Value and Water Accounting  

Data on water value provides decision-makers with essential information about

  • Efficient and equitable allocation of water among competing users, both within the present generation and between present and future generation;
  • Efficient and equitable infrastructure investment in the water sector (how much, where, when); and
  • Efficient degree of treatment of wastewater.

Water value information also helps to design economic instruments that may lead to more efficient and sustainable use of water. Such instruments include water pricing (tariffs), property rights, taxes and levies on water pollution, etc.

There is a need to treat water as an economic good.
Source: Khayat 2008
( click to enlarge )

Water accounting includes the description of quantitative water flows and management practices in an understandable manner. It is a standard procedure used to quantify:

  1. The major water flows;
  2. The consumption of water resources; and
  3. The productivity resulting from water consumption in river basins.

In the Water Accounts for Namibia (DWAF 2006) water productivity is defined as the ratio of the value added from each sector divided by the water use in each sector.

To maintain a desired ecological balance, a minimum flow within a specific system is determined. Such a minimum flow is often referred to as “instream,” “environmental,” or “ecological” flow. Instream flows were traditionally estimated based on hydrological and biological characteristics, rather than economic criteria. Recently however, there has been a shift in the focus of stream flow reserve estimations, using economic criteria and benefits (i.e. agricultural and biodiversity valuation as a measure of welfare impacts associated with modified stream flows) (Matete 2004).

Environmental flows are starting to be incorporated into the water accounts in the Kunene Region. In Namibia, environmental flow requirements are part of the Constitution (e.g. clause 95) but are currently not considered in water accounts due to a lack of information (Lange and Hassan 2006).

Environmental Considerations in Namibian Water Policy

Recent policy and legislative reforms have created a unique opportunity for Namibia to incorporate environmental sensitivity, such as environmental flows for river systems. The Namibian cabinet recently approved the Second National Development Plan and the National Water Policy White Paper that forms the basis for the new Water Act currently being finalised.

The National Water Policy includes a basic principle headed “Ecosystem values and sustainability” that stresses that the management of water resources needs to harmonise human and environmental requirements, recognising the role of water in supporting the ecosystem. One of the strategies given to ensure environmental and economic sustainability reads: “Ensure that in-stream flows are adequate both in terms of quality and quantity to sustain the ecosystem”.

Source: Amakali et al. 2002

In this respect valuation of ecosystems is of ever-increasing importance. Assigning a value to ecosystems services may be useful in cost-benefit analyses in the context of political decision-making (e.g., investments in water production/supply infrastructure).




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