Relationship Between Macro-economic Policies & Water Allocation Among Sectors, Water Management and Uses

cheapecuadorianManagement

Oct 28, 2013 (3 years and 5 months ago)

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Relationship Between

Macro
-
economic Policies & Water
Allocation Among Sectors, Water
Management and Uses

Professor

Dr. El
-
Sayeda

I.
Moustafa

Chairperson of the Economic
Department

University of Alexandria

1

Macro
-
economic policies can have
significant
influence
on demand for water
resource
(uses), water supply and
allocation, and ,hence, water
management.

Other policies
include:



Transboundary
water
policies,


E
nvironmental policies,


Sectoral

policies,


Agricultural and irrigation polices,


Population policy
,


Industrialization policy,


Food self
-
sufficiency policy,

etc.



2

What are the macro
-
economic
policies that may affect various
Water aspects?


Fiscal policy (taxes, subsidies and
government spending schemes)


Monetary policy (interest rates and
availability of credit)


Trade policies (
openess

vs. restrictions
through tariffs, quotas, etc.)


F
oreign direct investment (
FDI
) policy.


Foreign exchange rate policy


3

Fiscal policy and water aspects

Subsidies


Highly
subsidized
(free) irrigation water
affects water allocation to other sectors in
the economy.


Input subsidies (
cheap fertilizers,
pesticides
, energy, ) motivate farmers to
raise output of water
-
intensive products
and
reduce
farmers’
incentives
to improve
input use
efficiency.


C
rop price support (cotton , for instance).


4


General under
-
pricing of water
provision in the household and
industrial sectors.


Unsanctioned
illegal connections.


Output
taxes

do not directly target
water consumption


Government spending
on capital
investment

may be divorced
from
management of
water resources.


5

Monetary policy and water aspects


Subsidized credit to certain crops may
influence the
allocative

efficiency of
water.


Lack of cheap credit to invest in new
water saving facilities
.


The problem of land fragmentation and
inability of small farmers to acquire
adequate finance for any facility
improvement.


Specialized banks do not play a
significant role (due to lack of interest or
ignorance of the water problem).

6

Trade policies and water aspects

Trade
liberalization:



may
induce a strong positive
investment
in new irrigation system
and
a reallocation of water and land
resources to the production of
less
water intensive agricultural products
(fruits
and
vegetables) in
which
the
country may have
a strong comparative
advantage
.


had a partial role in reducing cotton
cultivation in Egypt lately .



7


May motivate the country to
increase its imports of several
water intensive products instead of
producing it domestically (the idea
of virtual water).

8

FDI

policy and
w
ater aspects

A country that saves no efforts to
achieve a significant increase in (
FDI
)

to increase employment and economic
growth
-

may ignore or relax restrictions
related to some vital issues such as
water use and sustainability.

For instance,
FDI

may be allowed in dirty
industries or sectors that contribute to
the increase in deterioration of water
quality, water shortage, or further
mis
-
allocation of water resources..

9