Applying Economic and Market-Based Instruments for Water Resources Management

On 4 August 2021, Dr. Pham Khanh Nam, the EEPSEA Director, presented to the ADB the topic “Applying Economic and Market-Based Instruments for Water Resources Management” in Southeast Asia.

The overview of market-based instruments for water management in Asia was presented through the policy instrument framework and elaborated methodology. They are the water markets, tradable discharge market, tax, fee or charges, subsidies, payment for ecosystem services, information provision, labels, and voluntary agreements, in accordance to the environmental management troubles in Southeast Asia, such as the inefficient use of irrigation water, poor inter-sectoral water allocation, surface water pollution or failure to protect and value ecosystems.

In the discussion, the study promotes that MBIs can be cost-effective tools to promote efficient water use and reduce water polÌution. In practice, MBIs in the water sector in Asia have often suffered from poor decisions, implementation, monitoring, and enforcement.

In the conclusive remarks, Dr. Nam suggests that behavioral nudges can complement MBIs to influence decision-making to address the water use inefficiency, a hybrid policy of information provision and effluent charges may achieve pollution reduction goals, creating and defining property rights is necessary for successful implementation of MBIs for water pollution, and finally, expanding PES schemes shows promise, under the right conditions.