3. Managing water quantity

Water quantity management relies on a combination of policies, at national and sub-national levels of government, to better manage demand for water, promote water use efficiency and allocate water, which varies across seasons and geographically, across uses where it is most needed.1 The OECD projected that demand for water is set to increase by 55% between 2010 and 2050 globally (Figure 3.1), due to growing demand from manufacturing, energy generation and domestic use (OECD, 2012[1]). There will be increasing competition for water amongst uses and users, putting ecosystems at risk. Groundwater depletion may become the greatest threat to agriculture and urban water supplies in several regions in the coming decades. Climate change will only exacerbate these tensions, as water availability becomes more variable and uncertainty rises about future water availability and demand. The ability to allocate water where it creates most value is a condition for sustainable growth, social equity and environmental performance.

Adherents to the Recommendation are encouraged to manage water quantity through “water demand management policies at national or sub-national levels of government, which reflect short and long-term projections and account for uncertainties on current and future water availability and demand”.

A 2012-2013 survey undertaken as part of the work on water and climate change adaptation showed that all Adherent respondents2 had already observed changes in freshwater systems due to climate change and were conscious of growing uncertainties in water availability and demand (OECD, 2013[2]). Adherents with arid climates, such as Greece, Israel, Spain, Turkey, along with Southwest Australia, the Northern part of Chile, and the Southwest US, are especially sensitive to even small changes in precipitation. In Turkey, the expected change in the quantity of water, combined with an expected growing demand for water, make the water sector highly vulnerable to the impacts of water scarcity (OECD, 2019[3]). Even Adherents considered relatively water abundant overall, such as France or the Netherlands, anticipate increased water stress in vulnerable regions due to the impacts of climate change (OECD, 2013[2]).

Several Adherents have made efforts to incorporate uncertainties associated with climate change in their plans and targets. For instance, Korea’s Ministry of Environment established the Long-Term Comprehensive Plan of Water Resources every 20 years considering climate change explicitly, to be updated every five years. The Netherlands has proactively worked to incorporate uncertainty into long-term planning for water management, including the revision of flood protection standards (OECD, 2014[4]). European member states are also required to renew their River Basin Management Plans, outlining objectives on water demand (the latest cycle ran between 2014-20).3

However, as of 2015, when the OECD survey on water resources allocation4 was conducted, less than 60% of survey respondents reported accounting for the potential impacts of climate change in their water resource allocation arrangements, even though doing so is essential to ensure that allocation regimes can cope with changing conditions. Even less common are efforts to review shifting eco-hydrological baselines as climate conditions continue to alter the water cycle (OECD, 2015[5]).5

Furthermore, Adherents have focused on better understanding the growing risks related to managing water quantity by building the scientific evidence base and disseminating information (see chapter 5 for more details).

The Recommendation calls on Adherents to ensure that water demand management policies are “based on water management plans that build upon an understanding of the ecologically sustainable limits of the system, account for all the social, economic and environmental functions of water while preserving water resources. Where needed, water supply can be augmented in sustainable ways, e.g. through modular, scalable approaches to green and grey infrastructure, or the use of reclaimed water.”

The importance of environmental flows is widely recognised and many Adherents have reflected their role in their water allocation regimes (OECD, 2015[5]). In the above-mentioned 2015 survey on water resources allocation a majority (76%) of respondents indicated that minimum environmental flows were defined (OECD, 2015[6]). In the 2019 OECD Implementation Survey, 78% of respondents reported that minimum environmental flows/sustainable diversion limits were defined in water allocation mechanisms (Figure 3.2).

The methodologies used to define minimum environmental flows vary. Israel sets aside a minimum quota of water for ecosystems in some places. In Slovenia, ecologically acceptable flow is based on hydrological, hydro-morphological and biological characteristics of watercourses, features of water abstraction and distinctive protection regimes. England and Wales (United Kingdom) use environmental flow indicators. In Portugal, minimum environmental flows are determined on a case by case basis. In France, the minimum biological flow and the reserve flow required are based on the observation of ecological needs (OECD, 2015[6]). In Chile the minimum environmental flows are defined in two ways: they are established by the General Water Directorate (DGA) when allocating new water entitlements and they are defined and included for every major project as part of the required environmental impact assessments.6 Overall, respondents take into account freshwater and terrestrial biodiversity as part of defining minimum environmental flows (Figure 3.3).

Ecologically sustainable limits are often, but not always, linked to water management plans. This is the case of the Murray-Darling Basin Plan in Australia, which limits water use at environmentally sustainable levels by determining long-term sustainable diversion limits for both surface and groundwater resources. Australian jurisdictions also need to ensure that local environmental flow management and environmental objectives (e.g. on water quality, habitat and pest management) are coherent across complementary waterways (OECD, 2019[7]).

In addition to environmental sustainability, the design of water allocation regimes can incorporate economic efficiency and social equity objectives. To support economically efficient use of water resources, many countries’ allocation regimes allow transfer of water entitlements between users, so water can be used for higher value uses. Notable examples include Australia, Chile and parts of the United States. Israel’s allocation arrangements using differentiated pricing to promote economically efficient allocation among users (OECD, 2015[6]). Chapter 8 outlines more details on countries’ water pricing instruments.

Adherents to the Recommendation should manage water quantity through “the promotion of water use efficiency to alleviate pressure on all surface and groundwater resources, especially where water is scarce and competition between sectors intensifies, whilst taking into account the need for groundwater recharge and environmental flows. That promotion can include the consideration of economic instruments for water resources management (e.g. water abstraction charges), support for water-efficient technologies or for the use of alternative sources of water (e.g. reclaimed water).”

Appropriately designed and locally tailored economic instruments can help allocate water where it is most needed, incentivise its efficient use, and simultaneously generate revenues to manage water resources. Water abstraction charges can also be used to promote water use efficiency, as applied in Denmark, Latvia and Lithuania. Chapter 7 provides more detail on the use of economic instruments among Adherents.

Many Adherents have provided financial incentives, such as tax credits or subsidised interest rates, to support the use of water-efficient technologies.

In the context of agriculture, 28 Adherents reported using farm advice or research to promote water use efficiency in 2019.7 Adherents concerned with improving on-farm water use efficiency include Australia, Italy, Mexico, Spain, Turkey and United States. In Hungary, subsidies for irrigation are given conditional to a water saving objective. France supports the adoption of water-saving irrigation technologies through subsidised credits for purchasing meters and water saving equipment under its Plan Végétal Environnement (OECD, 2010[8]).

Government support for efficient technologies also exist for domestic water use. The previous section reported a series of policies to roll-out smart metering. In New York (United States), a reduction on water and sewer charges is given to buildings that maintain a Comprehensive Water Reuse System (CWRS) that can capture, treat and recycle black water (i.e. sanitary wastewater) or grey water (i.e. wastewater from lavatories, showers and clothes washers) (OECD, 2015[9]).

Adherents are also raising awareness of water efficient technologies. For example, Flanders (Belgium) set up educational centres to offer trainings for analysing water consumption, informing users about water-saving measures, and carrying out the installation and maintenance works (OECD, 2018[10]).

Caution is required to avoid possible unintended consequences of measures to support water use efficiency, notably in agriculture. There are three risks associated with water efficiency measures in agriculture (OECD, 2016[11]): (i) increased irrigation efficiency can result in increased water consumption and the diminution or elimination of return flows to aquifers or surface water bodies; (ii) farmers taking advantage of more efficient irrigation to switch to more water thirsty activities; and (iii) it can encourage farmers to keep on irrigating activities in the future. The first two effects can lead to a reduction in water availability for other users and the environment and an increased dependence on water resources and the risks associated with climate change (OECD, 2018[12]; OECD, 2016[11]). Water allocation regimes should account for the return flows of water abstracted through entitlements, otherwise, increased use efficiency can reduce overall water availability in the system (OECD, 2015[6]). This is a challenge found in Australia’s Murray Darling Basin where the national government and states and territories have worked hard to improve water provision for the environment through water plans and by acquiring entitlements. Water markets have helped deliver environmental outcomes through the purchase of water for the environment (e.g. about 20% of water entitlements in the Murray Darling Basin is managed for the environment). Yet there have been concerns about the appropriation of environmental flows in the state of New South Wales (Gruère, Ashley and Cadilhon, 2018[13]). Continued improvement in monitoring and reporting of water managed to deliver environmental benefits is important to help build public trust in water management and make best use of environmental water (OECD, 2019[7]). Indeed, appropriate water accounting at the basin scale that considers not just withdrawals but also water returning to the system is a first step for mitigating these unintended consequences of water use efficiency gains.

To cope with this issue, a number of Adherents have set conditions on water efficiency investments or the delivery of water entitlements to ensure water sustainability. European Union member states, like Denmark, Greece or Hungary, deliver groundwater permits only under condition that it does not affect the ecological status of water resources. Italy discourages investment in irrigation infrastructure, like impermeable canals, in area where groundwater recharge is needed.8

Tapping into alternative water sources, such as rain and storm water, used water9, and desalinated sea or brackish water, can help alleviate water scarcity. Reused water, supplied from either centralised or decentralised distributed systems, is increasingly seen as a sustainable source for some uses of water, such as for irrigation, groundwater recharge, and possibly for non-potable domestic uses.

The European Union has just approved its regulation on minimum requirements for water reuse for irrigation. Spain has a water reuse regulation in force since 2007 and several reclaimed water plants operate in the east part of the country and the Canary and Balearic Islands10. The city of Barcelona (Spain), for example, manages three reclaimed water plants (OECD, 2015[9]). Spain is also implementing a National Plan of Water Treatment, Sanitation, Efficiency, Savings and Water Reuse (DSEAR Plan), which promotes and increases the use of reuse water. Israel is the largest user of recycled effluent water for agricultural and has increased freshwater prices for farmers to encourage this recycled water (OECD, 2015[6]). In Australia, wastewater recycling, desalination and storm water harvesting and reuse are increasingly part of the portfolio of best practices for providing and maintaining water supplies. In the city of Perth (Australia), desalination is the primary water source, contributing 48% of its potable drinking water supplies followed by groundwater (40%), dams (10%) and groundwater replenishment (2%).

Health-related risks (e.g. possible water contamination during domestic use, or salinisation of irrigated soils) need to be taken into consideration in the development of alternative sources of water. The National Water Quality Management Strategy in Australia, for example, addresses such risks by including quality guidelines and monitoring for the safe use of recycled water. The level of standards for reused water can influence the payback period of the additional investment costs required (e.g. equipment, or in-house dual plumbing) (OECD, 2009[14]).

The Recommendation encourages Adherents to manage water quantity through “water allocation regimes that define a sustainable resource pool”. These regimes are a combination of policies, laws and mechanisms to help determine who is able to use water resources, how, when and where. The Recommendation develops ways to strengthen water allocation:

The Recommendation calls for “allocat[ing] water and the risk of shortage in a manner that is non-discriminatory and that reflects wider policy objectives (e.g. access to drinking water, ecosystems health, food or energy security), under both average and extreme conditions, including through balancing all interests in basins and considering the cost-effectiveness of measures”. In the Recommendation, water allocation refers to the national parts of rivers, lakes and aquifers.

The 2015 water allocation survey documented that allocation regimes can exist at different scales within national contexts: some are set at national level (e.g. Costa Rica, Estonia, Luxembourg, Slovenia, Switzerland), others at province/state level (e.g. Canada, Brazil), or at river basin scale (e.g. Australia, Colombia, Spain). Allocation regimes may differ for surface and ground water systems (e.g. Austria). The 2015 survey also showed that in times of scarcity most allocation regimes have an established sequence of priority uses to determine which sectors or uses will be allocated available water prior to others (Figure 3.4). Unsurprisingly, domestic and human needs often rank as the highest priority (e.g. Australia, Brazil, Colombia, Israel, Portugal) (OECD, 2015[6]).

Most allocation regimes impose an overall limit (“cap”) on water that can be abstracted from a resource pool; although in practice this limit may not be respected (OECD, 2015[6]). There is variation in terms of how that cap is defined. A large majority of respondents surveyed put a limit on the volume of water that can be abstracted (57%), some put a limit on the share of water that can be abstracted (14%), while some others restrict who can abstract water, but without limit on how much water can be abstracted (11%) (OECD, 2015[6]). For groundwater, setting an abstraction limit requires consideration of the amount of water that should be left in the aquifer to meet non-extractive uses (e.g. flows for ecosystem needs, protection of water quality) and future uses. Examples from Denmark, Mexico, United States (Texas) and France illustrate approaches to limit the long-term abstraction of groundwater (OECD, 2017[15]).

The Recommendation also encourages Adherents to ensure that water allocation regimes “are dynamic, flexible and adjusted to shifting circumstances at the least social cost”. Flexibility can be delivered through the design of regulations (e.g. unbundling of abstraction licencing arrangements from land titles in Australia and most other Adherents particularly for surface water) or in the design of the cap (a proportional cap as a share of available water, rather than a fixed volume). Further, many Adherents (i.e. two-thirds of allocation regimes surveyed in 2015) allow for water entitlements to be traded, leased or transferred, under specific conditions and with approval of the responsible authority, to provide an incentive for efficient water use and innovation. This occurs in formalised water markets such as in Australia (Murray-Darling Basin), Chile or Spain. It can also take place with an abstraction licensing system such as in the United KingdomNo source specified..

Furthermore, the Recommendation calls for water allocation regimes to “promote efficient water use, investment and innovation, with due regard for social consequences and the ecosystem-support function of water”. This requires an allocation regime that provides incentives for efficient resource use and removes perverse incentives for inefficient use. This can be done through appropriate abstraction charges or fees, a key part of allocation regimes. Chapter 7 provides an overview of the adoption of abstraction charges based on the results of the OECD Survey on the Implementation of the Recommendation on Water.

The Recommendation also calls for water allocation regimes to be “responsive to the customary practices of traditional communities”. Where these exist, valuing traditional knowledge through the recognition of indigenous peoples’ stewardship of land and water and customary water arrangements can potentially be an effective means to enhance sustainable development in a river basin. This is a component of the Murray-Darling Basin Plan in Australia (OECD, 2019[7]). It is also prevalent for the Fitzroy River basin (Australia) where an indigenous community has developed a political declaration aiming to protect the traditional and environmental values and calls for greater stakeholder engagement and ultimately joint management of the river between the government and aboriginal communities (OECD, 2018[10]).

Finally, the Recommendation encourages water allocation regimes to “promote compliance and enforcement (i.e. of water entitlements) in national and sub-national contexts”.

Compliance systems are an essential tool to strengthen public confidence in the management of water resources, to discourage illegal activity and drive positive action. The 2015 water allocation survey showed that most Adherents monitor water withdrawals and enforce allocation rules in their allocation regimes. Industrial users are the most frequently monitored (91% of respondents), followed by agriculture and domestic users monitored in 88% of cases. 18 survey respondents reported that they conduct metering, monitoring and reporting activities for agriculture but often they are not undertaken nationally but in areas where significant abstractions occur. In Belgium, declaration of water consumption is necessary as an agricultural water monitoring activity. An additional monitoring is obligated for larger abstractions to assess the impact on groundwater level. 11

Two-thirds of surveyed regimes include sanctions for non-compliance with the rules and regulations of allocation regimes. With the introduction of statutory instruments for Environmental Civil Sanctions in 2010, United Kingdom can now use a variety of civil sanctions in addition to criminal sanctions. Monetary fines are the most common type (OECD, 2015[6]). Figure 3.5 shows the number of countries that use different data sources to enforce quotas, rights, entitlements or abstraction charges. In Cabo Verde, the water quantity control for agriculture is conducted on a monthly basis and a more consistent database is being set up. In Italy, the Ministerial Decree of Ministry of Agriculture “guidelines for the regulation by the regions of the methods for quantification of water volumes for irrigation”, promote the use of water metering and the application of water prices based on the volumes used. The guidelines use National Information System for the Management of Water Resources in Agriculture as the reference database for the collection of data for quantifying irrigation volumes and also information related to permits.

Groundwater specificities make it much more challenging to enforce water allocation systems, particularly in rural areas with a large number of water users. In 2019, illegal groundwater abstractions were reported to occur in twelve Adherents (Gruère, Shigemitsu and Crawford, 2020[17]). Also past studies estimated that there may be tens of thousands of unregulated wells in selected OECD countries (OECD, 2015[18]). Metering of wells is not systematic in agriculture and politically challenging to introduce (Gruère and Le Boëdec, 2019[19]). To cope with this, regulators in the United States (Nebraska) have encouraged self-metering by farmers, which has proven to induce positive results, and other Adherents have used indirect measures, such as metering energy use or the estimation of water consumption with remote sensing data.

The Recommendation promotes collective management approaches - defined as collective entitlements – where applicable, in areas “where little information is available on water availability and use, or where the transaction costs of managing individual entitlements are too high (e.g. for groundwater management)”. This is particularly important for groundwater management, where aquifers can operate as common resource pools (OECD, 2015[18]).

Collective management is widely used in the management of irrigation. Water user associations or irrigators groups are operating in Japan, Korea, and EU member states (like Estonia, Sweden or Portugal). In the United Kingdom, water abstractor groups have the potential to share abstraction licences to effectively manage water resources in a more efficient and sustainable manner. Examples of self-regulated groundwater management in the states of Kansas and Colorado in the United States show that this mechanism can be effective. 12

France institutionalised collective management bodies, the organismes uniques de gestion collective (OUGCs), whose role is to provide a structure and incentives for irrigators to devise their own rules to allocate a set volume of water among themselves at the catchment level. However, some challenges emerged with their implementation due to the conflictual relations between those exercising the tasks of the OUGCs and those who are meant to benefit from them (OECD, 2017[15]). In Costa Rica, the Ministry of Energy and Environment grants water abstraction permits (called concessions) to an entity that has the authority to decide internally on the form of water distribution amongst their members. They are required for surface water or groundwater uptake (Gruère and Le Boëdec, 2019[20]).

Adherents to the Recommendation are encouraged to manage water quantity through “improved knowledge of water use and sustainability limits, and improved monitoring of water resources and uses, watershed conditions, ecosystems health and the interconnections between surface and groundwater, to better assess environmental needs and future water availability and make more robust decisions.”

All Adherents monitor their water resources and uses to a certain extent to help understand how much water can be used for varied and competing demands, while still preserving water resources on which many social, economic and environmental functions rely. Figure 3.5 shows the different data sources used to facilitate water quantity management by respondents, whereby reporting obligations as well as in-situ monitoring by public authorities remain the most frequently used sources for collecting monitoring data.

There have been efforts across OECD to improve mapping of surface and groundwater. This has been done using innovative data sources such as earth observation data (see further details in General water policy, chapter 2). Good information should be collected on local contexts and the dominant drivers (and their projected impact) on groundwater resources in the future. Such information needs to be converted into knowledge in order to enable public authorities and stakeholders to take informed management decisions; develop effective rights and allocation regimes; prevent conflicts; and protect and groundwater quality in the long term (Akhmouch, 2017[21]). For instance, the United States NASA’s Gravity Recovery and Climate Experiment (GRACE) was the first satellite mission of its kind to changes in these groundwater resources over time (OECD, 2017[15]). A mapping exercise has been undertaken in France to identify ground and surface water stressed areas and defines zones where policies aim to restore sustainable volumes of water abstraction (OECD, 2015[6]). The water information system is under development in Turkey is to gather data, maps, statistics and policy documents, and is to be based on a spatial mapping tool to improve data visualisation and make the system more user-friendly to the broader public (OECD, 2018[10]). Many challenges remain in monitoring the use and sustainability of water uses. For example, it remains difficult to monitor aquifers because it is technically demanding and costly (OECD, 2017[15]). Well metering requirements are only a recent development (see above) and therefore groundwater markets may be more difficult to establish than surface water markets (OECD, 2019[3]).

References

[21] Akhmouch, A. (2017), Assessing and monitoring groundwater governance, https://doi.org/10.1201/9781315210025.

[13] Gruère, G., C. Ashley and J. Cadilhon (2018), “Reforming water policies in agriculture: Lessons from past reforms”, OECD Food, Agriculture and Fisheries Papers, No. 113, OECD Publishing, Paris, https://dx.doi.org/10.1787/1826beee-en.

[19] Gruère, G. and H. Le Boëdec (2019), “Navigating pathways to reform water policies in agriculture”, OECD Food, Agriculture and Fisheries Papers, No. 128, OECD Publishing, Paris, https://dx.doi.org/10.1787/906cea2b-en.

[20] Gruère, G. and H. Le Boëdec (2019), “Navigating pathways to reform water policies in agriculture”, OECD Food, Agriculture and Fisheries Papers, No. 128, OECD Publishing, Paris, https://dx.doi.org/10.1787/906cea2b-en.

[17] Gruère, G., M. Shigemitsu and S. Crawford (2020), “Agriculture and water policy changes: Stocktaking and alignment with OECD and G20 recommendations”, OECD Food, Agriculture and Fisheries Papers, No. 144, OECD Publishing, Paris, https://dx.doi.org/10.1787/f35e64af-en.

[7] OECD (2019), OECD Environmental Performance Reviews: Australia 2019, OECD Publishing, http://dx.doi.org/10.1787/9789264310452-en.

[3] OECD (2019), OECD Environmental Performance Reviews: Turkey 2019, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264309753-en.

[10] OECD (2018), Implementing the OECD Principles on Water Governance: Indicator Framework and Evolving Practices, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264292659-en.

[12] OECD (2018), Managing the Water-Energy-Land-Food Nexus in Korea: Policies and Governance Options, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264306523-en.

[15] OECD (2017), Groundwater Allocation: Managing Growing Pressures on Quantity and Quality, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264281554-en.

[11] OECD (2016), Mitigating Droughts and Floods in Agriculture: Policy Lessons and Approaches, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264246744-en.

[18] OECD (2015), Drying Wells, Rising Stakes: Towards Sustainable Agricultural Groundwater Use, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264238701-en.

[9] OECD (2015), Water and Cities: Ensuring Sustainable Futures, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264230149-en.

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[6] OECD (2015), Water Resources Allocation: Sharing Risks and Opportunities, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264229631-en.

[5] OECD (2015), Water Resources Governance in Brazil, OECD Studies on Water, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264238121-en.

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[14] OECD (2009), Alternative Ways of Providing Water: Emerging Options and their Policy Implications, OECD Publishing, http://www.oecd.org/env/resources/42349741.pdf.

Notes

← 1. In the Recommendation, water allocation refers to the national parts of rivers, lakes and aquifers.

← 2. Survey answers were received from all Adherents that were OECD members at the time of the report in 2013, plus the European Commission.

← 3. 2019 OECD Survey on water and agriculture policy changes.

← 4. The OECD survey covered 27 OECD and key partner countries, documenting 37 distinct water allocation regimes. For further details, see (OECD, 2015[6]).

← 5. Moreover, the 2019 OECD Survey on water and agriculture policy changes showed that only 41% of Adherents that set quantified national planning targets for the use of water resources in the agriculture sector (sixteen Adherents), account for climate change.

← 6. 2019 OECD Survey on water and agriculture policy changes.

← 7. 2019 OECD Survey on water and agriculture policy changes.

← 8. 2019 OECD Survey on water and agriculture policy changes.

← 9. Reused water (either reclaimed water or grey water from wastewater from domestic uses such as laundry, dishwashing, or bathing)

← 10. Royal Decree 1620/2007: https://www.boe.es/buscar/pdf/2007/BOE-A-2007-21092-consolidado.pdf

← 11. 2019 OECD Survey on water and agriculture policy changes.

← 12. 2019 OECD Survey on water and agriculture policy changes.

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