I find myself drawing from my last class in water economics and one of the reasons could be because our professor had us do mini projects after every topic. However, this is a follow up for the post I did last week on the Nile River and the conflict that surrounds it. One of our recommendations to the long standing conflict between the riparian States on the utilization and allocation of the Nile River was the establishment of a water market. Our conclusion, based on the research we carried out was that the population increase in the 10 riparian countries and the pressure caused by climate change in the region among other factors would only make the Nile politics more volatile and hence the need for a lasting solution or a compromise between all States.
Water market is a mechanism used to acquire and redistribute water and allows for water to be allocated according to the highest valued use. It involves the initial allocation of water rights specified in unit of measurement which based on the set regulations can be transferred to other user on a permanent or temporary basis. Water rights are based on the existing laws and could be land based or use based. Land based water rights are based on land ownership whereas use based rights are based on whether the user has legal access to the water source. Countries like the USA, Australia, and South Africa already have water markets set in place to help deal with water scarcity. Australia’s water market is estimated at 26 billion dollars and is considered to be the largest in the world. Here every user must operate within the set government limit on how much available water can be used. The large scale users of water also have to watch the water prices carefully like the stock market because each sector is competing with the other for a scarce resource. So can the same concept be employed to work between riparian States like in the case of the Nile?
Of course there are challenges that will need to be overcome before a water market can be established for the Nile River especially because it would involve the establishment of water laws that all States agree to. Currently, the Nile Basin Initiative has limited capacity in legal, expertise and financial abilities. Moving forward, therefore there is need for an establishment of a legal institution that has the power to settle conflicts between the States and an open forum for sharing of available data and knowledge something the Cooperation Framework Agreement of 2010 sought to do. The establishment of an institutional framework will help determine the feasibility of water market transactions and the guidelines. This will in turn reduce uncertainty and suspicion between States by providing a structure for securing water rights, enforcing them and ensuring an operational market. A good example on the continent is in South Africa where the water markets were introduced in 1997-1998. This has been applied in the Lower Orange River where a water market has allowed for a transfer of water use from low value crops to high value crops and use of better irrigation technology.
Water marketing can be seen as a way of allocating scarce water resources efficiently and offers empowerment to the users through property rights. In the case of the Nile, the water market would allow countries to decentralize decision making and involve other stakeholders who live along the river and rely on it greatly. This would also allow countries depending on the water rights allocated to know how much water they will use and what crops to grow. In the long run countries will have an opportunity to produce crops whose water need does not exceed the allocated amount and meet other water demands. This will not only promote water use efficiency in the basin but it will also promote agricultural and industrial trade between them and create better relations. Another possible scenario is that countries would have a chance to trade their water rights, for instance; Ethiopia could potentially trade some of its water rights to Egypt on a temporary or permanent basis based on the fact that they have other water resources available. Water is the most undervalued natural resource in my opinion even though we equate it to life and considering it an economic good could go a long way in improving how we allocate, use and manage it. However, this concept has its own challenges and critics but it could be a catalyst for better cooperation among the Nile riparian States.