4.4 How governments can respond

4.4.1 National governments are the most important players in the water sector. Their principal task is to establish national water policies and laws (the first target in section 2.3 of this paper). Water policies should not be imposed by donors but developed internally by the governments.

4.4.2 Within the framework of these national legal and policy frameworks, government agencies are responsible for allocating water between uses - such as domestic water supply, agriculture, fisheries, forestry, environmental services, industrial, transport, power and recreation. They must utilise appropriate legal and financial instruments to balance economic development priorities with impacts on social structures, livelihoods and the environment. In doing so, they should protect the rights of the public (especially the poor) and ensure their access to water services, while being aware that allocating water to one section of society may reduce the water security of another section. They should also allocate sufficient base flows of water to support ecosystem functions. Such an assessment requires good supply and demand data.

4.4.3 Ranking priorities of use, and setting water prices, are politically sensitive and economically important processes in which governments should involve stakeholders at all levels of water resources management. Demand management, including water pricing, is a particularly important concept, and should complement demand-responsive approaches. It can play an important role in reducing wasteful consumption of water, in allocating water efficiently between sectors, and in ensuring that water can be reallocated to the uses to which higher value is attached by the governments and the other stakeholders.

4.4.4 With increasing involvement by civil society and the private sector, governments may lose some, or all, of their direct responsibility for providing water services. Their task of leadership, coordination and regulation within the sector will then become more significant. This covers many subjects, from water testing and tariff structures to public education and capacity-building. Government agencies will also be responsible for providing incentives to ensure equity between regions and communities. These may include an element of cross-subsidy, while avoiding misdirected subsidies.

4.4.5 Governments will need to introduce financial incentives for water users and polluters to change their behaviour: users should pay for the water they abstract and polluters should pay according to the pollution they cause. The costs of removing pollution, in particular, are enormous. The demand for water quality rises with increasing income. Yet, in countries in which many people do not even have access to basic water and sanitation, sewage treatment is unlikely to be a priority and improving the quality of water in rivers and lakes may seem to be a luxury. Improvements should be incremental and affordable, and set in the context of a long-term strategy. In due course, preventing water pollution will play a major role in reducing required expenditure on water treatment.

4.4.6 Effective public sector institutions, with established accountability, representation and transparent decision-making, are essential to fulfil all these roles for governments. They will need to address new and unfamiliar problems. They must be capable of planning the protection of water resources and the mechanisms to regulate a demand-responsive working environment including private sector organisations, and applying legal instruments. These government institutions will also encourage market-based incentives, innovative actions, and participation and commitment by all sectors of society. All this work will place a real strain on these institutions. Governments may want the international community to help build their capacity to cope with that strain.

4.4.7 Public servants responsible for licensing and service provision can be pressured by illegal payments to give taster or preferential treatment to particular users. Public procurement can also be subverted by bribery and illegal payments by contractors to secure contracts. Governments are now more aware of the costs of corruption and more willing to address the problem through legislation, preventative measures and prosecution. The international community can help governments to make more progress in eliminating corruption by building appropriate systems of financial management and accountability, while civil society organisations can help to expose and investigate it.