Executive Summary

The Republic of Korea (hereafter simply referred to as Korea) is the eighth-largest OECD economy and has been one of the fastest growing OECD economies over the past decade, driven by a large export-oriented manufacturing sector. However, urbanisation, industrialisation and population growth (at least until 2030) are increasing energy and food demands, which in turn, are exacerbating pressure on Korea’s scarce natural resources and ecosystems, including water and land. These pressures and others raise the stakes on how to allocate and re-allocate water and land resource uses across the water-energy-land-food (WELF) nexus for sustainable growth.

Korea faces a number of systemic threats to the water-energy-land-food-nexus, now and in the future

Water insecurity is often the main bottleneck in the WELF nexus which may limit economic growth across sectors, and affect human wellbeing and ecosystem health. Korea’s population density and water scarcity are both the highest in the OECD. Climate change, steep topography and increasing urbanisation increase the risk of water scarcity and flooding, and limit opportunities to generate energy from hydropower. An ageing population and recent slow-down in economic growth will limit available public funding for responding to increasing droughts and floods, including investment in climate resilient infrastructure. Furthermore, environmental taxes and charge rates on water abstraction and pollution, and land development are too low to compensate for the environmental and social costs of the mismanagement of water and land, or to encourage pollution reduction and efficient use of water and land resources.

Water resources in river basins are fully, or close to fully, allocated, meaning that new water allocations are not possible without some combination of water use efficiency and supply augmentation. Despite impressive improvement in wastewater treatment, diffuse pollution (predominantly from livestock and urban run-off) increasingly affects scarce water resources.

Korea’s advanced water infrastructure network could be made more effective and efficient

Korea has made the transition from an expansionary water economy to a mature water economy. The expansionary phase was characterised by engineering and technological interventions to expand water supplies, often at the expense of the environment. Now in the mature phase, Korea recognises that the interdependencies among water users (cities, industry, agriculture and ecosystems), can be addressed by a combination of water supply augmentation, water use efficiency and water conservation.

Demand-side interventions, options for water reallocations and pollution reductions, and further development of context-specific policy and institutional arrangements need to be developed as competition and pressures on water escalate. The methods for evaluating the choice and implementation of interventions also need to adjust, including anticipating and planning against future risks, reflecting basin-specific issues and institutional contexts, and valuing water and ecosystem services.

A long-term vision is necessary for the transition towards sustainable and resilient management of water within the water-energy-food-nexus

Traditional assumptions about the reliability of a rainy season and the certainty of reservoirs refilling each year, or the magnitude of floods, are likely to be misplaced under a changing climate and increasing development pressures on water and land. Korea would benefit from a long-term vision and plan, to deal with existing problems as well as anticipating and planning against future water risks. Improvements in water quantity and quality monitoring, economic analysis of policy measures, and the incorporation of climate change and socio-economic scenarios would assist in the development of such a plan. A critical element of planning is the assessment of water supplies and cities against a range of shocks, both natural and human. Addressing the nexus sustainably requires Korean policy makers to consider: (i) equity issues related to the allocation of risks and opportunities; (ii) creating more with less, and allocating scarce resources where they add value to society; and (iii) investing to sustain ecosystem services.

Economic instruments would help to manage demand for water, incentivise reductions in water pollution and alleviate pressure on the nexus

Korea has introduced some economic instruments for water management, but there is significant scope for expanding their use. There are ample opportunities for Korea to increase water use efficiency (including reductions in leakage and non-revenue water) and strengthen demand management, to minimise future investment needs in water infrastructure to augment supply and to reallocate water where it creates most value to society. Well-designed water pollution and abstraction charges that reflect the opportunity cost of using water, and which contribute to covering the cost of river basin management, have the potential to help manage demand and restore water quality.

Prioritising investment decisions to achieve water quality objectives is necessary in the context of limited funding. Korea should encourage land use practices that preserve water quality, compensate farmers for required investments or revenue losses, and create demand for added-value food and fibre produced on that land (e.g. through sustainable product labelling schemes). Korea should consider expansion of the Korean Total Water Pollution Load Control System - which has been successful in reducing point source pollution of biochemical oxygen demand and total phosphorus - to include other pollutants (such as nitrogen, heavy metals and pesticides) and to those who contribute to diffuse source pollution.

Korea would benefit from independent water regulation and greater enforcement of environmental compliance

While Korea recognises the importance of using regulation to limit the exploitation or pollution of its rivers and lakes, regulation fails to deliver expected outcomes when compliance is not monitored and enforced. There are opportunities to improve the level of compliance and enforcement of abstraction permits and effluent and discharge standards; currently, this is limited in Korea and penalties remain rare. In addition, there is a public distrust in the quality of drinking services due to historical pollution events.

Independent regulation in Korea for the protection of the environment, customers’ interests and drinking water quality may be an effective response to some of the challenges to regulating water services, including the fragmentation of roles and responsibilities in the sector, public distrust in drinking water services, and the limitations of the tariff setting process. A menu of institutional arrangements can contribute to independent and trusted water regulation.

The long-awaited reform of water governance at national level needs to be swiftly and effectively implemented to foster policy coherence, further engage with stakeholders and manage the WELF nexus at basin level

The recent water governance reform through the adoption of the revised Government Organisation Act, June 2018, merges the vast majority of responsibilities and capacities for water quantity and quality management under the Ministry of Environment. This merge is a step in the right direction for improved policy alignment and coherence. However, improved coordination does not come automatically from a reallocation of responsibilities. The Ministry of Environment will need to develop and implement a water quality and quantity “coordination” strategy for effective merging of responsibilities at national and sub-national levels and achievement of greater coherence between water, energy, land and food policies.

The adoption of the revised Government Organisation Act also provides a unique opportunity for Korea to move towards managing the WELF nexus at the basin scale and to strengthen stakeholder engagement.

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