EEP101_lecture22 - Heterogeneity, Heterogeneity, incentives...

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Unformatted text preview: Heterogeneity, Heterogeneity, incentives and sustainable water use K a rin a S c h o e n g o ld D a v id Z ilb e rm a n R e n a n G o e tz Population trends and water Population G l o b a l w o r l d p o p u l a ti o n h a v e g r o w n fr o m 1Billion people in 1800 to 2.5 Billion in1950 to 6 Billion in 2000 to ? 11 Billion ? 17 Billion ? 6 Billion in 2100 With population growth came In c r e a s e i n w a te r u s e p e r C a p i ta Heterogeneity and conflict Some countries (Canada) are water richOther (Jordan) are water poor -but even Canada has deserts Provides opportunity to trade Diversity of interest drought prevention vs. flood control Conflicts about irrigated agriculture In dry regions Agricultural may use up to 80% of waterEnvironment and urban sector are expanding their demand B e n e f it s o f ir r ig a t io n Ir r i g a ti o n a l l o w e d u s to o v e r c o m e p o p u l a ti o n g r o w th Irrigated land has increased from 50 mha (million hectares) in 1900 to 267 mha today. Between 1962 and 1996 the irrigated area in developing countries increased at 2% annually. The 17% irrigated land is producing 40% of global food The value of output of irrigated cropland is about $625/ha/year ($95/ha/year for rain-fed cropland and $17.50/ha/year for rangelands). T h e h i g h p r o d u c ti v i ty o f a g r i c u l tu r e s l o w e d e x p a n s i o n o f d e fo r e s ta ti o n . Perception water supply crisis W a te r c o n s u m p ti o n i n 2 0 0 0 i s 4 - 5 ti m e s a s in 1 9 5 0 Most the “obvious” sources for d iv e rs io n a re u s e d W e w i l l n e e d m o r e w a te r to a c c o m m o d a te m o r e p e o p l e T h e r e i s a p p r e c i a ti o n fo r e n v i r o n m e n ta l s e r v i c e s o f w a te r The capital costs of water projects have been underestimated. A recent study of 81 dams found that the average cost overrun was 56% Environmental cost - lose of habitat Increase of water and land salinity Soil Salinity reduce productivity of 20% of irrigated land 1.5 million hectares of these lands are deserted annually Water logging Costs 11Billion annually Ground water depletion 8% of India’s food produced with depleted aquifers In 1973 3% of India's groundwater pumped below 10 meters in 1994 46%. M ore b a d n e w s Social Concerns W a t e r b o r n d is e a s e s kill 4-5 million annually 40 – 80 million people has been displaced 1950-99. D is p la c e m e n t In t e r n a t io n a l c o n f lic t s a n d w a t e r s u p p ly . Sustainability and m anagem ent .T h e r e i s a p e r c e p ti o n o f w a te r s u p p l y c r i s i s ,b u t w e h a v e a w a te r m a n a g e m e n t c r i s i s . Im p r o v e d p o lic ie s a n d in c e n t iv e s c a n a d d r e s s w a te r s u p p l y a n d q u a l i ty c o n c e r n a n d l e a d to s u s ta i n a b i l i ty S u s t a in a b ilit y - E n v i r o n m e n ta l q u a l i ty l e v e l s a n d n a tu r a l r e s o u r c e r e s o u r c e s to c k s a r e a b o v e ta r g e t l e v e l s Causes & Solutions of water situation W a te r i n s ti tu ti o n r e s p o n d to s c a r c i ty and p o l i ti c a l e c o n o m y W e w i l l a r g u e th a t c h a n g e s i n c o n d i ti o n s r e q u i r e s i n s ti tu ti o n a l tr a n s i ti o n E c o n o m i c s i s c r u c i a l i n tr a n s i ti o n d e s i g n ,y e t i t has been under used H e te r o g e n e i ty i s e s s e n ti a l fe a tu r e o f w a te r s y s te m a n d s h o u l d b e i n te g r a te d i n a n a l y ti c a l fr a m e w o r k Factor affecting the emergence of water Institutions Water institutions are affected by Water Scarcity Government ability to tax and finance projects Policy objectives-growth vs. environmental quality Water abundance + Financially weak government+ Desire for growth lead to Water Water appropriation) rights (prior Water abundance + Financial resources availability+ Desire for growth lead to Public +subsidies supply projects T h e e m e r g e n c e o f w a te r Institutions Water scarcity l e a d s to water trading Privatization of supplies Environmental concerns lead to Water quality regulations + Environmental purchasing funds Equity concerns leads to regulated pricing+subsidies Financial crunch l e a d s to The Tricky Transitions T r a n s i ti o n fr o m w a te r r i g h ts to w a te r m a r k e t In tr o d u c ti o n o f w a te r q u a l i ty r e g u l a ti o n s In tr o d u c ti o n o f n e w i n n o v a ti o n s i s v e r y c h a lle n g in g Economists and scientist can recommend but Politician have to deliver Understanding of policy process can lead to effective designs Transitions are not alike Timing, History,Transaction cost , Political economy and preferences affect transitions Transition may be gradual-the transition towards water trading in most locations takes years Yet Crises trigger transitions Depletion of ground water leads to surface water projects San Fernando valley flood led to building dams upstream Long Draughts lead to migrations (American Indians), storage (Joseph and Pharaoh) Systems are rigid - a threshold have to be crossed (Dixit Pyndick) to overcome political economy constraints (Rausser Zussman) and transition costs (Shah &Zilberman) to introduce change Economics based approach to w a te r m a n a g e m e n t r e fo r m leading to sustainability W e w ill p r e s e n t in c e n tiv e s a n d p o lic ie s to im p ro v e : Water project design Water pricing allocation and conveyance Micro level choices Water quality I.Improved water projects design R e l y o n s o c i a l b e n e fi t c o s t a n a l y s i s C o n s i d e r p r o j e c ts w i th p o s i ti v e e x p e c te d N P V & r e s o u r c e s s h o u l d b e v a l u e d b y th e i r s o c i e ta l v a lu e Capital subsides and under-costing the environment llead to oversized projects e Learning is crucial-delay is worth while-invest when it is optimal not at first moment when NPV is positive Project design should include nonstructural solutionsbring the economists and biologists to the design process Consider future costs water logging cost and drainage Benefit cost analysis and project design Water projects make fortunes and political careers-”too importance to leave to economics”. Some yield high returns most do not Budgetary constrains led to economic scrutiny in U.S.projects require to pass benefit cost tests The application of benefits cost analysis reduced the number of new projects and reduced delivery of political pork Politicians and interest groups are working to exempt projects from benefit cost requirement D e s p i te fo r m a l r e q u i r e m e n t to u s e b e n e fi t c o s t a n a l y s i s - p r o j e c ts a r e n o t e ffi c i e n t E c o n o m i c s i s n o t u s e d fo r p r o j e c ts d e s i g n U n d e r e m p h a s i s o n n o n s tr u c tu r a l s o l u ti o n Need more ex post studies on return from projects. Beyond benefit cost analysis P r o j e c ts a s s e s s m e n t s h o u l d n o t o n l y d e c i d e i f to b u i l d o r n o t b u t a l s o w h e n t o d o i t, A d a p ti v e l e a r n i n g ( A L ) :A l l o w fl e x i b i l i ty to r e s o l v e u n c e r ta i n ty a b o u t p r e fe r e n c e s o r t e c h n o l o g i e s -d e l a y e d d e c i s i o n s a l l o w l e a r n i n g Care is especially important in cases of irreversibility P r o j e c ts s h o u l d b e a p a r t o f a m u lti to o l s tr a te g y . Incentives(water price) may be used to reduce project size or delay its start. For unique and new problems-Investment in appropriate R&D may lead to projects II.Improve water allocation II.Im and pricing T h e p r i c e o f w a te r i s e l u s i v e T h e a c tu a l p r i c e s o f w a te r ( w h e n e v e r th e y e x i s t) te n d to b e d i ffe r e n t fr o m e ffi c i e n t p r i c i n g B o th a c tu a l a n d e ffi c i e n t p r i c e s v a r y d e p e n d i n g on Time (within season and between season) Location Quality Use Institutions II. E nvironment Supplier 2 Supplier 1 Conveyance Supplier 3 Water Market I. Buyers Figure 1 presents a stylized water trading system. Elements of the economics o f w a te r s y s te m s B e n e fi ts ( M a r g i n a l b e n e fi ts = d e m a n d ) P r i v a te c o s t e x tr a c ti o n C onveyance co st E x te r n a l i ty c o s t F u tu r e v a l u e o f w a te r i n v e n to r y P R I C E MPC+MCC+MEC +MFC A MPC+MCC+MEC MC+MCC B M MPC N(subsidized} Optimal Vs subsidized water - water is over used and under paid Quanitity Optimal pricing P = MPC + MCC + MEC + MFC Price= Marginal extraction cost+ Marginal conveyance cost+ Marginal environmental cost+ Marginal storage cost Implication of optimal Im pricing in Ag Subsidies are not accidental, removal is painful O p ti m a l p r i c i n g w i l l r e d u c e w a te r u s e r e s u l ti n g i n : A d o p ti o n o f c o n s e r v a ti o n te c h n o l o g i e s T r a n s fe r s to c i ti e s - l o w e r p r i c e s i n c i ti e s R e d u c ti o n i n a c r e a g e o f l o w v a l u e c r o p s M o r e e n v i r o n m e n ta l b e n e fi ts L e s s w a te r p r o j e c ts c o n s tr i c ti o n o v e r ti m e M o r e s ta b l e s y s te m s Pricing under small provider Provider ignores environmental costs and dynamic pricing-oversupplies Need for intervention to prevent over provision Extra water tax to account for environment & storage Regulatory limit on amount consumed with tradable permits Buy back of water for environmental purposes P = MPC + MCC Current failures of water pricing C u r r e n t p r i c i n g s y s te m s a i m e d a t c o s t r e c o v e r y n o t e ffi c i e n c y R e c o v e r y o f o p e r a ti o n a n d m a i n te n a n c e c o s ts r a n g e s fr o m a l o w o f 2 0 - 3 0 p e r c e n t i n In d i a a n d P a k i s ta n to a h i g h o f c l o s e to 7 5 p e r c e n t i n M adagascar T h e m o s t c o m m o n p r i c in g s y s te m s a r e p e r - a c r e fe e s . S u b s i d i e s o f + 5 0 % a r e c o m m o n S y s te m l i k e ti e r e d p r i c i n g p r o v i d i n g s o m e s u b s id ie s b u t re ly in g o n s o c ia l m a rg in a l c o s t w ill l e a d to o p ti m a l i ty Improved Conveyance & water allocation Improved P o o r m a n a g e m e n t o f i r r i g a ti o n s y s te m s l e a d s to c o n v e y a n c e l o s s e s o f u p to 5 0 p e r c e n t Im p r o v e d c a n a l a n d v a r y i n g p r i c e w i th d i s ta n c e w i l l i m p r o v e e ffi c i e n c y - r e q u i r e n e w i n s ti tu ti o n s C a n a l s a r e p u b l i c g o o d s . P r i v a te u s e r s te n d to u n d e r i n v e s tm e n t i n c a n a l m a i n te n a n c e A w a te r u ti l i ty d e te r m i n e s s i m u l ta n e o u s l y o p ti m a l w a te r p r i c i n g a n d i n v e s tm e n t i n conveyance Spatial impacts of optimal conveyance Spatial Water use basic conveyance Water use improved conveyance Distance from source Optimal conveyance policy will •increase utilized acreage and water use in agriculture •Charge downstream farmer higher water prices which will lead to conservation •Empirical simulation find that optimal conveyance loss to be negligible C onveyance I Suppose Marginal productivity of water per acre is 10-2X Where X is water per acre We have 2 parcels of land locations 1 and 2 Water use at destination X1 and X2 Initial conveyance lose in location 2 is 50% pay for 2 units at source for each unit consumed at 2 Each unit consumed at location 2 requires 2 units at source D1=10-2X1 DEMAND LOCATION 1 D21=5-X21 DEM AND LOCATION 2 IN TERMS OF WATER AT SOURCE X21=2X2 MC OF WATER AT SOURCE =.25(X1+X21) C o n v e y a n c e II S=X1+X21 P IS PRICE AT SOURCE P=10-2S FINDING AGGREGATE DEMAND FOR P=5 S=2.5 FOR P=0 S=7.5 AGRREGATE DEMADN IS P=7.5-S =.25*S HENCE S=6 P=1.5 S PRODUCTION AT LOCATION 1 IS 4 WATER PRICE 1.5 PRODUCION AT LOCATION 2 IS 2WATER PRICE IS 3 P=5-X21 NO C ONVEYANCE LOSE S=X1+X21 P IS PRICE AT SOURCE AND LOCATION 2 P=10-S AGRREGATE DEMADN IS P=10-S =.25*S HENCE X1=X2=4 S=8 P=4 ( 10-2X1=10-2X2) S PRODUCTION AT LOCATION 1 IS 4 WATER PRICE 2 PRODUCION AT LOCATION 4 IS 2 WATER PRICE IS 2 COMPARISON 50% CONVEYANCE LOSS P1= 1.5 Q1=4 P2=3 Q2=2 NO CONVEYANCE LOSS P1=P2=2 Q1=Q2=4 BETTER CONVEYANCE INCREASES PRODUCTION BENFIT DOWNSTREAM PRODUCERS DAMAGES UPSTREAM PRODUCERS ( PAY MORE FOR WATER) Water rights systems Water is allocated according to water right systems that are queuing system based on location or seniority Prior appropriation allocates water according to Use it or loss it First in use first in W a te r u s e p e r m i ts o p e r a te a s q u e u i n g s y s te m s a s w e ll Trading is restricted with other rights systems FROM PRIOR APPROPRIATION TO M A R K ET WATER SUPPLY PRICE AFTER TRADING DEAMND OF INITIAL WATER USERS GAIN FROM TRADING TOTAL DEMAND TRANSITION FROM QUEUING TO M A R K E TS • • • • • • • • • • D1 INITIAL DEAMDN 10-X TOTAL WATER SUPPLY 10 INITIAL SURPLUS 50 D2 LATER DEMAND 10-.5X PRICE IS 5, WHERE 10-.5*10=5 SURPLUS IS 75 IN CASE OF TRANSFERABLE RIGHTS SENIOT RIGHT OWNERS WILL SELL HALF THEIR WATER AND MAKE $25 THEIR SUPLUS 62.5 JUNIOR RIGHTS WILL HAVE $12.5 IN SURPLUS IN CASE FO GOVERNMENT OWNERSHIP GOVERNEMENT WILL MAKE $50 SENIOR AND JUNIOR RIGHTS WELFARE AT $12.5 R e fo r m :A tr a n s i ti o n to tr a d i n g w h e r e w a te r i s Transition from queuing to m a rk e t p r i c e d a c c o r d i n g to o p p o r tu n i ty c o s t It r e q u i r e tr a n s a c ti o n a n d tr a n s i ti o n c o s t G a i n fr o m tr a d e i n c r e a s e w i th s c a r c i ty T r a d i n g i s d e s i r a b l e w h e n g a i n > tr a n s a c ti o n cost T r a d i n g l e a d to c o n s e r v a ti o n o f w a te r a m o n g s e lle rs The gains/loses from trade Trading may be introduced in crisis situations-requires monitoring, expanded canal system Trading may be small but critical to adjust to shortages Trading may have negative third party effect-less runoff to environment & groundwater replenishment Reform allows new entrants to markets-new crop- Grapes in Chile Golf courses (high value farming) P u r c h a s e s fo r e n v i r o n m e n ta l p u rp o s e s water trading design issues Should permanent sales be allowed? Or should the trade be in rights (water rent) rights? Who will sell- the state or historical owners? What about Export outside the basin? Should the sales be of of effective or applied water? Applied water Effective water Field Residue go to Third parties Emerging arrangements Emerging T r a n s fe r a b l e r i g h ts - a n n u a l s a l e s o f w a te r i s e a s y - p e r m a n e n ts s a l e s o f r i g h ts i s fa c i n g c o n s tr a i n ts a n n u a l u p p e r b o u n d o n e x p o r te d v o l u m e fr o m a r e g i o n O n l y 7 0 - 8 5 % o f a p p l i e d w a te r c a n b e s o l d - to c o m p e n s a te th i r d p a r ti e s Pricing and information P r i c i n g i s p e r fe c te d w i th v o l u m e tr i c m o n i to r i n g P r ic in g s h o u ld c h a n g e b y tim e a n d s o m e tim e s b y c r o p a n d l o c a ti o n to r e fl e c t conveyance cost e n v i r o n m e n ta l s i d e e ffe c ts W i th o u t v o l u m e tr i c m e a s u r e m e n t- P e r a c r e fe e s m a y v a ry b y s e a s o n / c ro p . P r i c e s s h o u l d r e fl e c t c o s ts o f s i d e e ffe c ts o f w a te r - u s e o f g r e e n e r /c l e a n e r a p p l i c a ti o n te c h n o l o g i e s s h o u l d b e r e w a r d e d Improve ground water management I n d ia in c re a s e d p u m p in g b y 3 0 0 % s in c e 1 9 5 1 86 F a r m e r s s h o u l d p a y u s e r f e e ( to r e fl e c t fu tu r e s c a r c i ty ) F u e l fo r i r r i g a ti o n s h o u l d n o t b e s u b s i d i z e d . E l i m i n a ti o n o f fu e l s u b s i d i e s a n d u s e r fe e w i l l r a i s e g r o u n d w a te r p u m p i n g - l e a d i n g to r e d u c e d a c r e a g e a n d c o n s e r v a ti o n T ie r e d p r ic in g m a y a d d r e s s e q u ity is s u e s M o n i to r i n g o f p u m p i n g i s n e e d e d - m a y n e e d r e g i o n a l g r o u n d w a te r a u th o r i ti e s . Conjunctive use of surface a n d g r o u n d w a te r P r e c i p i ta ti o n i s r a n d o m - r e l i a n c e o n r a i n fa l l o r s u r fa c e w a te r ( r i v e r fl o w ) l e a d to i n s ta b i l i ty T h e m a r g in a l v a lu e o f w a te r v a r i e s a c r o s s s e a s o n - h ig h a t d ry s e a s o n s L ow at w et seaso n G a i n fr o m s to r a g e G r o u n d w a te r c a n s e r v e s to r a g e fa c i l i ty W a te r i n g r o u n d h a s v a l u e th a t d e p e n d s o n V a r i a b i l i ty o f s u p p l y S to c k i n g r o u n d Reflection-reform will increase ag water prices Ag can survive with higher pricingbut it will have to changesReform requires Reliable information-facts not guesses Good economics Effective administrators Sophisticated legal understanding Excellent political skill&leadership Patience III.Conservation technologies Technologies that increase input use efficiency- the input actually consumed by crops Input use efficiency-depends on technology and specific situation The residue of unused input may be a source of environmental concern Residue = Actual input * (1 - input use efficiency) Smaller residue reduces environmental damages Basic model Y =a+ b E - cE 2 E= q i X E = e ffe c ti v e w a te r q i = i r r i g a ti o n e ffe c ti v e n e s s te c h n o l o g y i Profit(i)=Max p (a+b qiX -c qiX qiX) -wX-Ki Ki-fixed cost technology i Xi=(p b qi-w)/p c qi2 A d o p ti o n o c c u r a t l o w e r q i f 0 < q < 1 b c 6.25 q0 0.50 0.54 0.58 0.60 0.63 0.66 0.70 0.75 0.80 0.85 0.90 0.94 0.95 q1 0.60 0.64 0.68 0.70 0.72 0.75 0.79 0.83 0.87 0.91 0.95 0.98 1.00 p 1 100 x1 3.82 3.66 3.51 3.44 3.38 3.28 3.15 3.04 2.93 2.83 2.74 2.67 2.63 w 100 y0 8.77 8.91 9.02 9.07 9.14 9.19 9.26 9.32 9.38 9.42 9.46 9.48 9.49 k 50 y1 9.07 9.16 9.22 9.26 9.28 9.32 9.37 9.40 9.44 9.46 9.49 9.51 9.52 profit0 451.56 483.59 512.09 525.17 543.52 560.47 581.15 604.34 625.00 643.52 660.20 672.41 675.32 profit1 475.17 499.32 521.07 531.15 540.76 554.34 571.05 586.35 600.40 613.35 625.32 633.72 639.06 techn ology 1.00 1.00 1.00 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 x0 4.25 4.07 3.90 3.82 3.70 3.59 3.44 3.28 3.13 2.98 2.85 2.76 2.74 E x a m p le - ir r ig a t io n ( h y p o t h e t ic a l/ C a lif o r n ia ) Increase yield, reduce water reduce drainage, costs more Low cost version (bucket drip, bamboo drip) exists Impact greater/adoption higher on lower quality lands-sandy soils s te e p h ills technology traditional sprinkler drip I r r ig a tio n e f fi c ie n c y W a te r / d ra in a g e Y ie ld ( c o tto n ) .6 .8 .9 4.0/1.6 3.2/.64 2.7/.27 1200 1325 1400 Fixed cost/yr 500 580 650 Labor intensive conservation technologies available to Poor farmers. More needed to be invented Policies to introduce conservation technologies R e a l p r i c i n g a c c o u n ti n g fo r e n v i r o n m e n ta l c o s t T e c h n o lo g y s u b s id ie s E ffe c ti v e e x te n s i o n C om m on Them e R e s e a rc h a nd learning W e o p e r a te w i th m u c h i g n o r a n c e - n e e d to l e a r n and adapt W a te r p o l i c y r e q u i r e s c o n s ta n t l e a n i n g o f b o th n a tu r a l p h e n o m e n a a n d h u m a n l e a r n i n g W i th G IS a n d n e w i n fo r m a ti o n to o l s w e c a n im p ro v e p o lic y d e s ig n C r u c ia l - is p o li c y m a k e r e d u c a tio n a n d i n te r d i s c i p l i n a r y d i a l o g u e Specifics cases E c o n o m ic s p r i n c i p l e fo r p o l i c y r e fo r m a re v a lu a b le , b u t th e i r a p p lic a tio n is s u b j e c t to o b j e c ti o n s C a s e s tu d i e s m a y i l l u m i n a te fa c to r a ffe c ti n g w a te r p o l i c y r e fo r m Lessons of California Response to 1 9 8 8 -9 2 D r a u g h t Water storage matters. The storage facilities e n a b le d C a lifo r n ia t o su r v iv e t h e 3 e a r ly y e a r s o f t h e d r o u g h t w it h m in im a l im p a ct s o r c h a n g e s, a n d t h e la t e r y e a r s w it h m ild e ffe ct s. M u lt ip le R e s p o n s e s t o R e d u c e d W a t e r S u p p ly. 1 / 3 fr o m g r o u n d w a t e r p u m p in g , 1 / 3 fr o m c o n se r v a t io n (a d o p t io n o f d r ip e t c ), 1 / 3 fr o m la n d fa llo w . More lessons Conservation makes a difference.. After 1992, more than 50% of tree crops in the state used drip, sprinkler in cotton and alfalfa exceeded 40% in major areas. Trading was introduced through water bank The w a t e r b a n k - b o u g h t w a t e r in n o r t h so ld it in so u t h S u st a in s p e r e n n ia l cr o p s -a llo w s t h e ir e x p a n sio n p r o v id e s w a t e r r ig h t s o w n e r s h ig h e r in co m e s. T h e o p e r a t io n o f t h e b a n k is o p t io n a l o n ly d u r in g d r a u g h t y e a r s. O p t io n s so ld a n n u a lly C a lifo r n ia W a t er T r a d in g in st it u t io n s Cal water institutions The electronic water Market in the central valley “Electronic matchmaking” of buyers and sellers Districts facilitates trades-gradually installs volumetric pressurized system Disclosure of prices is optional Purchasing fund for environmental water The value of water to fluctuate, may vary from $5 to $200 / AF. VI. Incentive for water &environmental quality Introduce fee for quality-when measurable Polluter pay principle -make pollution control worth while Zero pollution is frequently sub optimal-use tradable permits in emission-to reach target Information is crucial-effective policy requires monitoring and valuation of environment When actual emission is unobservable-tax according to activities.Organic pay less than chemical farming Minimize use of direct control-allow flexibility Use carrot - payments for environmental services Categories of Environmental Services (ES) P o llu tio n P r e v e n tio n . F a r m e r s m a y b e p a id to m o d if y e n v ir o n m e n ta l d a m a g in g a c tiv itie s a n d engage in sustainable practices(farmers may have implicit historical rights to pollute that have to be bought). Conservation. of natural resources, life styles, e c o s y s te m s e tc . I n c lu d in g f o r e s t r e s o u r c e s a n d w e tla n d , a g r ic u ltu r a l c o m m u n itie s ( s lo w u r b a n s p r a w l) , tr a d itio n a l v a r ie tie s a n d s p e c ie s , e tc . A m e n ity c r e a tio n - r e s to r a tio n a n d b u ilt u p o f n a tu r a l r e s o u r c e s I n c lu d e c le a n u p a c tiv itie s , p la n tin g o f f o r e s ts , r e s to r a tio n o f w e tla n d s e tc . The dimensions of wetland services Local National Public Public Private Public Private Public Private Public Wildlife habitat Flood control Water purification Aesthetic value Recreation Existence Public Private Public Private Private Public International Public Public Private Public Private Private Public Public Private Public Mechanism to obtain ES Aggregate targets of ES with Tradable permits No reduction target led to wetlands banking in U.S. Kyoto targets may be attained by CO2 Sequestration Purchasing Funds-raise public & private funds to target & buy assets or pay for ES Nature conservancy buys lands & development right USCRP pays for farmland use modification for a period Utilities pay for carbon sequestration in Costa Rica &Iowa Utilities Incentives-payments for ES, penalties for damages Direct controls Zoning: restricting land use to certain activities Permitting:conditional approval of development activities Institutional setup to create ES In P r i v a te p a r ti e s m a y i n v e s t i n e x c l u d a b l e a m e n i ty c r e a ti n g E S ( h a b i ta t to b i r d s o r fi s h ,r e c r e a ti o n a r e a ) N G O ’ s m a y fi n a n c e a n d c o n tr o l s p e c i a l i z e d E S N a ti o n a l & L o c a l g o v e r n m e n ts m a y Pay directly for or subsidize private provision of amenity creating ES Establish legal framework to require generation of resource conserving or pollution preventing ES G l o b a l E S m a y b e g e n e r a te d & c o n tr o l l e d b y International agreements (Kyoto, Debt for nature) Voluntary agreements initiated by NGO’s Take h om e m essages U s e B e n e fi t c o s t to e s ta b l i s h p r o j e c t Take the option to wait and learn It must not be uniform Trading appropriate when gain >transaction cost M a k e th e p r i c e r i g h t A l l o w tr a d i n g P o l l u te r s h o u l d p a y - w h e n fe a s i b l e B e n e fi c i a te s p a y fo r e n v i r o n m e n ta l s e r v i c e s Consistent Risk management-same value of life saved Conclusions I Water resources management reform can increase economic and environmental benefits environmental Irrigation crucial to food production-some systems are not Irrigation sustainable because of over pumping There is much potential to increase water productivity through incentives A priority is to increase trading within regions and to improve maintenance-through institutional changes Irrigation technologies and improvement in varieties are another sources of improved water productivity in agriculture. Conclusions II W a te r d e v e l o p m e n t n e e d s w i l l p o p u l a ti o n g r o w th D e v e l o p m e n t p r o p o s a l s s h o u l d b e s c r u ti n i z e d b y s o c i a l - c o s t b e n e fi t te s ts P o l l u ti o n p a y s w i l l b e u s e d to r e d u c e p o l l u ti o n C o n s u m e r p a y s s h o u l d b e u s e d to c o n tr o l ) P u b l i c p a y fo r c o n s e r v a ti o n a n d p u b l i c g o o d a c ti v i ti e s M o n i to r i n g a n d k n o w l e d g e m a k e p o l i c y e ffe c ti v e Political will is crucial to utilize new knowledge b e d e te r m in e d b y About sustainability TH E P R O B LEM L A R G E S C A L E P O V E R T Y IN M A N Y D E V E L O P IN G C O U N T R Y N E E D T O U P G R A D E A N D IM P R O V E S T A N D A R D O F L IV IN G O F B IL L IO N S G R O W IN G E N V IO R O N E M N T A L C O N C E R N S CLIMATE CHANGE LOSE OF BIODIVERSITY DEPLTED FISHERIES DEGRADED WATER REOURCES Perceived Causes of environmental crisis P O P U L A T IO N G R O W T H - IT IS A C AUSE BUT ALSO A B Y PRODUCT OF HUM AN S U C C E S S IN C O N T A IN IN G D IS E A S E A N D F E E D IN G O U R S E L V E S O V E R C O N S U M P T IO N T E C H N O L O G Y A N D M O D E R N S C IE N C E R E G U L A T IO N Basic point te c h n o l o g y a n d s c i e n c e c a n s e r v e fo r better or worse- it is the role of incentives p o l i c i e s a n d i n s ti tu ti o n s to s te e r s c i e n c e a n d s o c i e ty to a g r e e n e r fu tu r e w e h a v e p r o g r e s s e d - b u t w e n e e d to m a k e th e e x tr a s te p to ta k e a d v a n ta g e o f o u r c a p a c i ty Need conservation & adaptation Sustainability requires peacepeople who are threatened and starved do not preserve -pay for preservation Sustainability requires global solutions We need creative incentives and take advantage of technology Sustainable water management is part of a sustainable future Sustainability &climate change ...
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