Book reviews / Resources Policy 27 (2001) 139–143 Decentralisation and Co-ordination of Water Resource Management Douglas Parker and Yacov Tsur (Eds); Natural Resource Management and Policy Series, Ariel Dinar and David Zilberman, series editors; Kluwer Academic Publishers, 1999, 451 pp., US$135, ISBN 0792399145 The book contains a collection of papers from two conferences hosted by the International Water and Resource Economics Consortium, a group composed of Australian, Israeli and US research and academic institutions. The aim of the book is to provide an interdisciplinary contribution to an already substantial body of literature dealing with the management of water resources. The central theme of the collected work is the role of coordination and decentralisation in the design and implementation of water management policies. Decentralised mechanisms—such as water markets—are analysed against the backdrop of the social, political, historical and physical actuality of water management institutions. Introducing the book, the editors state that “to operate properly, water markets require well-developed water conveyance facilities, appropriate institutions to define water rights and endowments (entitlements), and institutions to oversee trading.” It is suggested that market mechanisms may be an appropriate means of allocating water resources because they tend to transfer water from “low-value to higher value activities” and puts the “burden of information collection on the users.” The conceptual discourse is based for the most part in advanced economic theories and concepts supported and illustrated by mathematical formulae and graphical representations. The theoretical analyses are supplemented by actual case studies in the final portion of the book, allowing the reader to see their potential application. The book also contains very useful economic and scientific data on the regions studied. Both surface and ground water are considered, in developed and developing country scenarios. The content is highly technical, and terms are not always defined, leaving the non-economist behind in some parts. The thematic framework is primarily national policy, yet there are a few articles that treat the international dimension. The book is divided into three parts. Part I looks at “regional” water constraints in the Middle East, California, Florida and Australia. Part II presents examples of economic modelling of decentralised water management policies in three sub-categories: A. The political economy of water allocation; B. Water institutions: transition to markets and other decentralised allocation mechanisms; and C. Incorporating uncertainty in resource management models. Part III offers case studies focusing on the Jordan–Yarmouk River Basin, California’s San Francisco Bay/Delta estuary, and Australia’s Murray Darling Basin. 141 In Part I, Regional Water Constraints: Middle East, California, Florida and Australia, Dan Yuron (The Israel Water Economy: An Overview, p. 9) assesses the water potential and balance of water in Israel and examines issues related to the use of wastewater in agriculture. He evaluates the water allocation and pricing system and concludes by stating that further economic research is needed to develop more efficient water use. The emphasis of Janusz Kindler’s contribution (The Jordan River Basin: Beyond National Concerns, p. 23) is the need for transboundary co-operation in the Jordan River Basin, which is supported by data demonstrating actual and projected water use and supply. Erol Cakmak (Water Resources in Turkey: Availability, Use and Management, p. 33) discusses the water resource use practices in Turkey and highlights the problems arising from illdefined property rights, a situation he claims seriously impedes efficient water use. He argues that the historic focus on supply management should be modified through more active user participation in the decisionmaking process (i.e. transferring irrigation schemes to users for operation and maintenance) to compliance with existing laws. Douglas Parker (California’s Water Resources and Institutions, p. 45), describes California’s process of decentralising its water resources and comes to the conclusion that it is now necessary to change existing institutions and laws, which, in his view, have led to economic inefficiencies. William Boggess (Decentralised Water Allocation in Florida, p. 55) reviews the most recent (1994) rules adopted by the Southwest Florida Water Management District for increasing effective supply and reducing aquifer withdrawal. These adopt an incentive-based approach to voluntary reallocation through water markets and a permitting system founded on highest efficiency standards. John Pigram (Australia’s Water Situation: Resource Allocation and Management in a Maturing System, p. 67) discusses Australia’s “mature” water market performance and government reforms aimed at protecting environmental interests and ensuring sustainable development. The article provides insight into the historic evolution of Australia’s water resource development, the policies behind the reforms, as well as new options under consideration. Part II, Economic Modelling of Decentralised Water Management Policies, begins with Section A, Political Economy of Water Allocation. Richard Just, Sinaia Netanyahu and John Horowitz (The Political Economy of Domestic Water Allocation: The Cases of Israel and Jordan, p. 89) propose that project and water valuation must consider non-economic public concerns (food security, industry motivation, settlement policies, as well as national security, and equity), and demonstrate that appropriate price structures could be more efficient than sourcing “new” water. The authors compare the economic benefits of internal reallocation and international 142 Book reviews / Resources Policy 27 (2001) 139–143 co-operation and examine the synergies of combining the two policies. They conclude that “…if lasting international water agreements can be found, then the longterm success of peace is more likely, which in turn, facilitates reduced security needs and more internal water efficiency”. George Frisvold and Margriet Caswell (Transboundary Water Agreements and Development Assistance, p. 115) analyse development assistance, transboundary water agreements and strategic bargaining between countries for development project financing. It is argued that “aid agencies may balance bargaining asymmetries by providing disadvantaged countries with expertise, data, or other services to improve their negotiating capacity”. Pinhas Zusman (Informational Imperfection in Water Resource Systems and the Political Economy of Water Supply and Pricing in Israel, p. 133) discusses optimal regulatory structures in Israel chosen so as to minimise social loss due to imperfect information. Terry Roe and Zinshen Diao (The Strategic Interdependence of a Shared Water Aquifer: A General Equilibrium Analysis, p. 155) address the very sensitive issue of the strategic interdependence of a shared aquifer in Israel, Jordan, Gaza and the West Bank. Their results are most interesting, demonstrating that a subsidy in one country results in a drop in GNP in both, “but the indirect effect on the other country is greater than the negative direct effect on the country imposing the subsidy” (p. 156). Tax policy effects are also considered and it is suggested that the taxing country’s GNP falls while the sharing partner’s GNP rises, unless both countries impose environmental taxes. Their model is hypothetical and uses only “stylised facts” from the region. The authors advocate for a detailed investigation using actual country information. Section B, Water Institutions: Transition to Markets and Other Decentralised Allocation Mechanisms, begins with a contribution by James Roumasset (Designing Institutions for Water Management, p. 179), which offers a conceptual framework to derive system designs for effective water policy. Roumasset distinguishes three levels of analysis for discerning an appropriate conceptual framework: first-best optimisation models (transaction costs and political economy), second-best (incorporating organisational and administrative difficulties, costs of information and enforcement), and thirdbest (rent-seeking strategic win–lose behaviour of agents, violations of process justice, special privileges). The author advocates using all three levels of analysis. Nir Becker, Naomi Zeitouni, and Mordechai Shechter (Employing Market Mechanisms to Encourage Efficient Use of Water in the Middle East, p. 199) analyse the efficiency of water utilisation under market allocation in two instances: market in percentage claims and a market in priority claims. While their results suggest that the former model yields higher regional benefits, the latter mechanism may be preferred by the owners of the water resources, and in situations of surplus. David Zilberman, Ujjayant Chakravorty, and Farhed Shah (Efficient Management of Water in Agriculture, p. 221) suggest that the crisis in water quantity and quality is a result of inappropriate allocation and management policies caused by outdated water rights doctrines. They advocate the creation of transferable rights and market mechanisms, presenting models of political solutions to transition problems. Norman Dudley and Bradley Scott (Deriving ShortRun, Multistage Demand Curve and Simulating Market Prices for Reservoir Water under Weather Uncertainty, p. 247), use stochastic dynamic programming to quantify environmental supply and demand schedules throughout the year, taking into account the problem of weather uncertainty. This article is quite technical, involving modelling and computer simulations. K. William Easter and Gershon Feder (Water Institutions, Incentives, and Markets, p. 261), propose unbundling the various water service activities to incorporate private sector service contracts, water user associations and financial management making them autonomous from political pressure as successful management models. Decentralised water management and privatesector incentives offer benefits, but governments also have to be actively involved in assuring a socially optimum distribution of water. Part C, Incorporating Uncertainty in Resource Management Models begins with a contribution by Yacov Tsur and Amos Zemel (On Event Uncertainty and Renewable Resource Management, p. 283) presenting a framework for managing resources under a variety of potential risks, in particular for seawater intrusion of groundwater resources. Norman Dudley and Bradley Scott (Quantifying Trade-offs Between In-Stream and Off-Stream Uses Under Weather Uncertainty, p. 299), look at the net benefits of wetlands and irrigation uses, utilising long-run and short-run opportunity cost analyses. Amy Thurow, William Boggess, Charles Moss and John Holt (An Ex Ante Approach to Modelling Investment in New Technology, p. 317), extend the Dixit–Pindyck modelling with a conceptual framework that accounts for irreversible or uncertain technology investments, using the general case of agricultural investment for complying with environmental regulations. Yacov Tsur (The Economics of Conjunctive Ground and Surface Water Irrigation Systems: Basic Principle and Empirical Evidence from Southern California, p. 339), studies the Arvin–Edison water District in California and puts forward a theory of conjunctive management of ground and surface water when surface water supplies are uncertain. The study examines profit increases where maximised when employing irrigation efficiencies, as opposed to over exploitation of ground water resources. Integrated management also allows for use of water stor- Book reviews / Resources Policy 27 (2001) 139–143 age banks as buffers against surface water fluctuations, exploiting considerable economies of scale. The principles related to conjunctive management and its importance are supported by empirical evidence. Richard Just, John Horowitz, and Sinaia Netanyahu (Peace and Prospects for international Water Projects in the Jordan–Yarmouk River Basin, p. 365) start the Case Studies section with an examination of international co-operation and water sharing applied to two potential international water projects between Israel and Jordan. The authors conclude that bargaining and international cooperation, rather than water markets, is a more suitable mechanism to facilitate water transfers. They assert that: “water markets tend to allocate all incremental water to the country with highest marginal value and, hence, do not reflect the potential of international projects given political realities of international negotiations” (p. 385). David Sunding, David Zilberman, Neal MacDougall, Richard Howitt and Ariel Dinar (Modelling the Impacts of Reducing Agricultural Water Supplies: Lessons from California’s Bay/Delta Problem, p. 389), present a methodology for measuring the impacts of water supply reductions on irrigated agriculture in the Western US. The authors advocate the simultaneous use of several complementary models for impact analysis. The models are applied to irrigation reductions for the improvement of estuary water quality, and illustrate that the cost of improving water quality for the agricultural sector can be reduced through a water market. Peter Gleick (Water and Conflict in the Twenty-first Century: The Middle East and California, p. 411) gives an overview of the hydro-politics of the Middle East in several international basins, and suggests ways to reduce conflict over scarce water resources. The author recommends a shared management scheme for regional waters, utilising basic international legal principles such as establishing mechanisms for conflict resolution, sharing of data, and joint management institutions. Warren Musgrave (Decentralised Mechanisms and Institutions for Managing Water Resources: Reflection on Experiences from Australia, p. 429) discusses the comprehensive programme of decentralisation and privatisation in the Murray–Darling Basin in Australia. From a water lawyer’s perspective, it appears the ediPII: S 0 3 0 1 - 4 2 0 7 ( 0 0 ) 0 0 0 4 8 - 9 143 tors have successfully presented a mostly economists’ view(s) of water resource management in an interesting series of theoretical and applied analyses. The work meets their goal of providing a concise and current perspective on important water resource management issues. The editorial statement of the book series, and indeed most of the authors, recognise the importance of an interdisciplinary approach to these key issues and include water law as an integral element of the discourse. Achieving “true” interdisciplinarity is a difficult but necessary challenge, especially in the area of water resources management. A possible shortcoming of this book is the lack of intellectual input by water lawyers on themes central to many of the discussions. Notions such as “rights”, “laws”, “regulation”, “enforcement”, “institutional mechanisms”, “compliance” and “water conflicts”, are terms of art in in the legal profession and should be used with accuracy to avoid potential misunderstanding or even misinterpretation. Although legal terminology is not the exclusive domain of lawyers, the persuasiveness of expert analyses based mostly on economic foundations can be compromised if this terminology is used incorrectly. Thus, professional input from water lawyers could have contributed to the overall quality of the work, on such relevant issues as legal entitlement, framework for allocation, institutional mechanisms, compliance review systems, and so forth. That being said, in fact, there is much for lawyers to learn from the work collected in this book—although a background in economics would help the uninitiated! The future management of the world’s decreasing water resources requires innovative, proactive responses. The way forward will not be found in “business as usual”. Creating real partnerships between and among water resource experts across the disciplines—economics, law, management and science—is a compelling task for the future. This book is one step in the right direction. P. Wouters P. Jones University of Dundee Water Law and Policy Programme, Department of Law Dundee, Scotland DD1 4HN, UK E-mail address: p.k.wouters@dundee.ac.uk E-mail address: p.a.jones@dundee.ac.uk