The economic value of increased water security
Infrastructural and management interventions in water systems are costly
and so economic analysis has to provide insight into the costs and benefits of
interventions, comparing the present ‘state of the world’ with some planned
future state. Estimating costs is the easy part. Estimating the benefits requires
a sound understanding of the value of water to users, which is usually
context dependent. Moreover, some water use is often not fully consumptive
and so can be used again in the same basin. This makes the perspective of
a State (government), on the economic value of water, different to that of
households. The State should consider the value of the whole system while
households only look at the direct value that water has for them. Whittingtonet al. (2013) provides an overview of these issues:
• water security by itself cannot be expressed in terms of economic value
(What economists can provide is the economic value of moving from
one level of water security to another, i.e. increased water security.)