TRADE AND MARKETS
By: Franklin M. Fisher: Massachusetts Institute of Technology (MIT), Department of Economics; Annette T. Huber-Lee: Tufts University, Department of Civil and Environmental Engineering
The article seeks to show that water is not beyond price and that thinking about water in terms of its value rather than in terms of quantities and ownership leads to powerful results.Together with colleagues, the authors have developed models on that basis: the first, called “WAS” for “Water Allocation System” was developed in the late 1990s for Israel, Jordan, and Palestine; the improved version, “MYWAS”, for “Multi-Year Water Allocation System” was, at the time of publication of this paper, in development and use by the Palestinian Water Authority. In both versions, water is treated as a special commodity with the user enabled to impose constraints reflecting social values that are not private ones. MYWAS takes a list of possible infrastructure projects and returns advice on whichones should be built, at what time, in what order, and to what capacity. It also can be used to guide aquifer management and to study the effects of climatic uncertainty and climate change. Beyond this, the models lead to a plan for cooperation in water — a plan in which all parties benefit, buying and selling short-term permits to use each others’ water. Water disputes thus become win-win situations rather than zero-sum games. Further, while use of this system does not affect any party’s ability to assert claims to water rights and water ownership, we show that participation need not wait for such claims to be settled. Water is a soluble problem. They illustrate results for Israel, Jordan, and Palestine.
The article is directly related to Water and hence is directly relevant. It gives a methodology by which a value can be place on Water and that value can form the basis for infrastructural investments, inter-region trade in water and sharing of water resources in the most economically efficient way with least economic and water wastage. The methodology also makes water a reason for countries and regions to co-operate with each other - as against the current trend where water disputes are increasingly becoming political weapons.
This article also presents a possible solution to the tricky problem of pricing virtual water embedded in products (also refer to network paper here) . It suggests a method that may use the price a region may have to pay to source water from an alternative source as the basis for calculating a standardized per unit cost for a region's virtual water. This could potentially be one of the most powerful ideas in virtual water pricing - an area that remains under-researched and controversial.
'WUE' EVALUATION AND CASE STUDY POSSIBILITIES
- A powerful evaluation would be that of evaluating the study results in the context of virtual water for products in a region
- evaluation of virtual water in terms of its value rather than in terms of quantities and ownership
- evaluation of alternative sourcing cost as a methodology of pricing virtual water cost for products in a region.