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CPWF TOPIC 2SYNTHESIS1

Changing the way we manage water for food, livelihoods, health and the environment

CPWF TOPIC 3

synthesis

Water Benets Sharingfor Poverty Alleviation andConict Management

Douglas White1, Flip Wester2, Annette Huber-Lee3,

Chu Thai Hoanh4and Francis Gichuki51CPWF, CIAT Colombia; 2CPWF, Wageningen University, The Netherlands;

3CPWF; 4CPWF, IWMI South East Asia; 5IWMI


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2CPWFTOPIC 2 SYNTHESIS Contents

AcknowledgementsCitation

White, D., Wester, F., Huber-Lee, A., Hoanh, C. T. and Gichuki, F. 2008. Water Benets Sharing for PovertyAlleviation and Conict Management: Topic 3 Synthesis Paper.CGIAR Challenge Program on Water andFood, Colombo, 15 pp.

CPWF 2008

All CPWF Publications can be found at www.waterandfood.org

Water Benets Sharing for Poverty Alleviation and Conict Management: Topic 3 Synthesis Paper

The authors are grateful to the following people for their feedback on various drafts of this document:Nancy Johnson of ILRI and Pieter van de Zaag of UNESCO-IHE..

CPWF Topic Synthesis Papers

In the second phase of the CGIAR Challenge Program on Water and Food, activities will be organizedaround Basin Development Challenges and Topics. Basin Development Challenges are water and food prob-lem areas of recognized importance in a river basin area. Topics are subject matter areas selected to supportresearch on basin challenges. Topics play two roles: to ensure the quality of science in research on basindevelopment challenges, and to facilitate the development of international public goods.

The process of jointly dening basin challenges and topics began with stakeholder surveys, and consulta -tions with Basin Coordinators, Basin Focal Project teams, Phase 1 Theme Leaders, and external experts.This process culminated in a series of one-on-one interviews with key basin stakeholders from research,development and policy arenas.

In their present form, the priority Topics are as follows: Improving Rainwater Productivity Multi-purpose Water Systems Water Benets Sharing for Poverty Alleviation and Conict Resolution Global Drivers and Processes of Change

The four synthesis papers describe these priority Topics: their present status, how they evolved, what waslearned about them in Phase 1, and the kinds of research likely to be needed on each topic in Phase 2.

These papers are not the nal word, however. Basin challenges and topics will continue to be re-dened.Topics are intended to support and serve the basins: as research on basin challenges unfold, the content ofindividual topics may be modied. Whole new topics may emerge and other topics dropped.

I wish to thank Theme Leaders who have put tremendous effort into these papers, as well as others in theCPWF community, who together have made this document possible.

Dr. Annette Huber-Lee

Science Leader

CGIAR Challenge Program on Water and Food


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CPWF TOPIC 3SYNTHESIS3Contents

ContentsIntroduction 4

Rationale 5

The many values of water 5

Institutions and scales 6

The dangers of inequity and inefciency 7

Contributions from Phase 1 7

Remaining gaps 8

Objectives 9

Scope 9

Key research areas and guiding questions 10 Diagnosing water benets sharing opportunities through collaborative identication, quantication and valuation of benets 11

Improving methods for generating credible information and for facilitating its use in consultation and negotiation processes 11

Design and implementation principles of site-specic water benets sharing mechanisms 12

CPWF niche and value added 13

References 14


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4CPWFTOPIC 2 SYNTHESIS4 CPWF TOPIC 3SYNTHESIS Introduction

IntroductionAs demand for water intensies, so does its value.Nevertheless, a large proportion of water is being used

as if its value were low. Waste is common when water isundervalued. This situation needs to change in order forwater to achieve its potential contribution to society.Changing the value of water, however, is not sufcient.

Many people appreciate and highly value water but theirvoices are not always heard. Sufcient water for domes-tic and productive needs can remain a luxury and dream.

For society to increase and share benets from waterresources, a process is needed. Existing rules andcustoms (institutions) on water ownership and use arenot only the pathway for change but are also a target forchange. By ensuring that voices are heard, change ismore likely. With adequate representation, the voices ofwomen and other citizens affected by poverty can bettercommunicate their needs. Identifying effective ways tocommunicate and share perspectives is essential.

Generating more value from water implies greater pro-ductivity with new opportunities for equitable economic

growth. For example, when women increase their accessto water, their productivity improves family welfare. Theirextra money or energies are delivered back into improv-ing family, nutrition, and education. Moreover, by attend-ing to critical water needs and improving fairness, socialtensions that lead to conict can be reduced.

Typical water sharing mechanisms focus on distributingquantities of water (e.g. m3). Nevertheless, allocatingspecic amounts of water may not be optimal. Sincepotential benets from different water uses are oftenunknown or not considered, conventional water usesmay be inefcient. In contrast, Water Benets Sharing

focuses on optimizing the values (economic, social, cul-tural, political and environmental) generated from waterin its different uses and equitably distributing the benetsamongst water users and suppliers.

How can benets be shared? Benet sharing mecha-nisms can be monetary or non-monetary and can beclassied as ways to: (a) compensate for lost assets orloss of access, (b) restore and enhance livelihoods, (c)develop communities, (d) develop basins, and (e) sharebenets. To achieve water benets sharing, a series ofoverlapping processes regarding water management and

policy need to occur: diagnosis, knowledge generation,consultation and negotiation, agreement and enforcement. Research has a key role throughout.

The premise of the CPWF is that participatory diagnosis,design and implementation of water benets sharingschemes can sustainably increase the total benets de-rived from water and help to reduce conict and poverty.Local and external insights are required to achieve betterunderstandings of current and potential situations. Sinceadvances in benets sharing require consideration ofdistinct social contexts, CPWF research will address site-specic issues while generating insights into where andhow best to foster water benets sharing agreementselsewhere.

Research is needed to develop and test:

guidelines on how to identify opportunities for water

benets sharing,

benet valuation and cost quantication methods,procedures on how to design and implement an eq-uitable sharing of benets with respect to gender andeconomic/social status.

Training key water stakeholders in the effective useof these guidelines, methods, procedures and principles

will occur via CPWF research activities, workshops andpublications.

Water Benets Sharing schemes are typically advancedwithin an international transboundary context (e.g.Milewski, et al., 1999; Sadoff and Grey, 2002). Never-theless, intranational settings such as upstream-down-stream transboundaries within basin and communitycontexts can also be candidates for benets sharing.Therefore, the CPWF will also examine the role of geo-graphic scale and associated political sovereignties inwater benets sharing.

In sum, the CPWF Water Benets Sharinghighlights re-

search on water values, benets distribution, institutionalstructures and implementation mechanisms.


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CPWF TOPIC 3SYNTHESIS5Rationale

RationaleThe diversity of needs for water are rarely understoodor acknowledged. As populations and economies grow,water-related conicts, inequities, and poverty may notonly persist but are likely to increase. In order to makebetter decisions regarding the use and management ofwater, the importance of water to human society must berecognized.

A central nding of the Comprehensive Assessment ofWater Management in Agricultureis that for many of the

worlds river basins, the core issue is how best to share

water supplies between competing users (Molle, et al.,2007). The sharing of benets from water enables aseparation between physical allocations of water froma distribution of benets from water use. This differentfocus on sharing the benets of water provides greaterscope for identifying mutually benecial cooperativeactions (Sadoff and Grey, 2005). Examples of whichinclude: (a) win-win situations where the overall benetsincrease (Fisher and Huber-Lee, 2005), and (b) the valueof water derived from a new use more than compensatethe losses of those who forego their use of water (Fisherand Huber-Lee, 2005, 2006).

Benets sharing of water can also be a way to developa viable alternative to the challenging issue of propertyrights (Qaddumi, 2008). With attention diverted awayfrom volumes of water toward the values derived from

water use, actors can view different levels of water

use (with possible adequate compensation for loss)

as achieving positive-sum outcomes. The prospect ofgreater overall benets enables the approach to down-play or even sidestep typical arguments against sharing,which tend to be raised by those with existing accessand ownership rights to water. Moreover, there is needto ensure that the water use rights of women are not

overlooked or minimized.

The many values of waterWater affects and shapes society. The importance orvalueof water is viewed and communicated differently asa result of cultural conceptions, philosophical views, dis-ciplines and schools of thought. Valueis the contributionof an action or object to user-specied goals, objectives,or conditions (Millennium Ecosystem Assessment, 2003).Numerous benets and associated values can bederived from water. Table 1 summarizes potential waterbenets drawn from analytical frameworks of internation-al river cooperation and ecosystem services (Sadoff andGrey, 2002; Millennium Ecosystem Assessment, 2003).

The ecosystem concept provides a useful framework foranalyzing and acting on the linkages between people

and the environment. Benets range from the moretangible and direct (benets to and from water) to theintangible and indirect (reducing problems/costs becauseof water and increasing benets beyond water). Similarly,the tangible and direct benets come from supportingand provisioning services; whereas the cultural services

Types of benet Water benets / servicesEnvironmental service /

Constituent of well-being

Increasing ben-ets to water

Water quantity, quality, regulation, soil conservation, ecology/biodiversity

Supporting/Regulating

Increasing ben-ets from water

Hydropower, agriculture, shing, ood-drought management,navigation, freshwater for domestic use

Provisioning

Spiritual and religious, recreation and ecotourism, aesthetic,inspirational, educational, sense of place, heritage

Cultural

Reducing costsbecause of water

Cooperation instead of conict, economic development, foodsecurity, political stability

Social relations and security

Increasing bene-ts beyond water

Integration of regional infrastructure, markets and trade,regional stability

Table 1. Water benets and services

Adapted from Sadoff and Grey, 2002; Millennium Ecosystem Assessment, 2003.


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6CPWFTOPIC 3 SYNTHESIS

along with social relations and security are less tangible

and direct. Considering such a range of benets helpsto develop a better understanding of the diverse benetsgenerated from water, to thereby present compelling,equitable and efcient water benets sharing schemes.

Research on Water Benets Sharingexamines wateruses and the values associated with those uses, bothpast and present, in order to understand future conse-quences and potentials. A key challenge is to achieve anoptimal value of water use. The concept of optimal valuedepends on the interests and preferences of many us-ers, who appreciate water for economic, social, cultural,environmental and political purposes. Valuation is aprocess of communicating the worth or importance for aparticular good or service, in terms of something that canbe counted, often money, but also via other methods andmeasures. Many benets and costs are not easily mon-etized but are equally important to humans. Examplesrange from religious and spiritual values of water (Prad-han and Meinzen-Dick, 2003) to increasing the resilienceof the poor and ecosystems. Research will explore thepotential for market-oriented approaches to encouragewater benets sharing, including water pricing and virtualwater trade. In addition, non-market approaches will beexamined. These alternatives, such as regulation and

negotiation, may be feasible and preferable approaches.

Institutions and scalesThe success of benet sharing depends, amongst oth-ers factors, on the capacity to effectively redistributethe costs and benets. Experience shows that strongand transparent institutions are needed to implement

re-distributing policies between different water usersand suppliers. An institutional capacity to redistribute isa prerequisite for benet sharing, not a result thereof.Achieving such institutions does not come about easily(Van der Zaag, 2007).

Water benets sharing requires investments andchanges in practice. Traditions of ownership rights anduse, however, can be difcult to change. Longstandinguses of water often prevent the possibility of attaining

higher values, whether dened in economic, social,environmental or political terms. Despite the possibility ofother water uses generating greater benets, existing so-cial institutions (laws, customs) often preserve historicalwater use patterns. Obstacles to change can arise froma range of actors including governments, communitiesand resource owners. To overcome such impediments,

CPWF research will develop principles on how to designand implement benets sharing mechanisms accordingto site-specic organizational and institutional contexts.

Before opportunities can be realized, incentives to coop-

erate must overcome fear of change such as potential

risks resulting from modication of water rights, accessor use. Therefore, benets sharing may require care-ful diagnosis and negotiation in some river basins. For

example, the sharing of transboundary water is chal-lenging for many countries and sub-regions around theworld. Some countries, particularly those upstream,perceive cooperation as being too risky; and therefore donot want to negotiate away future water uses (Phillips,et al., 2006) To reduce perceived risks, CPWF researchwill develop guidelines on (1) how to recognize benetssharing opportunities through comprehensive diagnosisprocedures, and (2) how to reduce impact of perceivedfuture risks on willingness to take advantage of currentopportunities.

Benets sharing is an institutional arrangement for man-aging water. The effectiveness of institutional arrange-ments depends on a number of factors, including scale ofthe water system. Organized user management institu-tions have a comparative advantage at smaller spatialscales such as an irrigation system. Collective action andlocal knowledge of the water system can improve per-formance. In contrast, state institutions tend to performwell at higher scales. Substantial nancial resourcesand authority are typically required to coordinate across

larger areas (Meinzen-Dick, 2007). With varying degreesof success, research and policy on water managementhave promoted other institutional approaches (Svend-sen and Meinzen-Dick, 1997). Benets sharing can beimplemented in place of, or in conjunction with, statecontrol, management by water user organizations andmarket-based approaches (Milewski, et al., 1999; Sadoffand Grey, 2002; Phillips, et al., 2006).

Existing water benets sharing schemes are often linkedwith hydroelectric projects in an international transbound-ary context (e.g. Milewski, et al., 1999; Sadoff and Grey,

2002; Mokorosi an van der Zaag, 2007). Nevertheless,transboundary conditions also exist within nationalcontexts, such as distinct upstream-downstream con-texts. Water users at the community level can perceivetheir water rights and responsibilities much like nationalauthorities. These within-basin transboundaries canalso be candidates for benets sharing, especially viacompensation for environmental services (Appleton,2002; FAO, 2004). The principles of benet sharingremain the same but mechanisms vary by scale due todifferences in trust, degree of information asymmetrybetween parties, and ease of monitoring as well as the

form that the benets will take (e.g. monetary versus non

monetary). Therefore, the CPWF will also examine theroles of geographic scale and associated institutions inadvancing water benets sharing.


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The dangers of inequity and

inefciencyAccurate multi-benet and multi-perspective valuation ofwater is one of many challenges facing water benetssharing schemes. Other challenges include: (1) equitablesharing of value, especially with women and the less-wealthy, (2) potentially high costs of development andimplementation, (3) changing historical water institutions/traditions, and (4) overcoming perceptions of increasedeconomic or security risk.

Although efforts to change existing water use patternscan produce greater benets, simple mechanisms for

compensation to actors who lose rights are hardly usedin practice (Molle, et al., 2007). Often power relationsamongst water users greatly affect the outcome ofinternational transboundary water interactions (SIWI,2006). Given that many water users have little power orinuence, a high probability exists for unfair distributionof benets.

Benets sharing experiences with other natural re-sources have been controversial. With plant geneticresources, sometimes legal, technological, and marketconditions enable private rms not only to prot from

collective resources and knowledge, but also to privatizethem and even to prevent the original stewards and cre-ators from accessing them (Ribeiro, 2005). Researchersand policy makers, including international agencies, haveused the denition of benets sharing from the Conven-tion on Biological Diversity to advance industrial interestsand, in the process, overlook the rights of the nativecommunities who preserved the knowledge associatedwith the resources (Sharma, 2005). In order to avoidthese potential equity pitfalls, CPWF research will fosterprocedures on how to enhance enabling conditions andorganizational negotiation capacities for pro-poor andpro-environment benets sharing schemes.

Water Benets Sharing comes with a cost. Benetssharing can be dened as any action designed to changethe allocation of costs and benets associated withcooperation (Sadoff and Grey, 2005). Many proponentsof collaboration have argued that broad inclusion ofstakeholders can lead to better environmental solutionswhile also establishing legitimacy, building social capital,and overcoming conicts. Nevertheless, such broadinclusion may be inefcient in terms of time, energy, andresources, and may not yield the desired results (Koontzand Johnson, 2004). In some cases, the scale of benets

may not justify the costs of cooperative actions (Sad-off and Grey, 2002). To address this challenge, CPWFresearch will develop guidelines to examine ex-antethefeasibility of benets sharing opportunities.

Contributions fromPhase 1Research of CPWF Phase 1 examined numerous as-pects of Water Benets Sharingon water values, benetsdistribution, institutional structures and implementationmechanisms. Research was conducted in Africa, Asiaand Latin America. Although advances were made onunderstanding different values of water and methods to

improve the distribution of benets by including the poorin policy processes, previous CPWF research revealed

that few attempts to reform water policies and institu-tions have been successful (e.g. PN47African Models ofTransboundary Governance: Merrey et al, 2007).

Research on the quantication and valuation of eco-nomic, social and environmental impacts of diverse landuses within watersheds was a key element of the CPWFin the Andes. Impacts of current and potential land useswere assessed by the project Payment for EnvironmentalServices (PES) as a mechanism for promoting rural de-

velopment in the upper watersheds of the tropics (PN22).The project rened a multicriteria model (ECOSAUT) inwhich net income is maximized while considering farming

system and environmental constraints and effects.

New land use opportunities (i.e., conservation agricul-ture) affecting water availability and sediment retentionwere identied, tested and promoted in selected water-sheds. In Fuquene Colombia, the PES project helpedstakeholders determine costs and benets of modifyingenvironmental externalities. The ex-ante analysis showedthat conservation agriculture will increase net income,potato production, social benets, sediment retention,increase employment and reduce production costs. Nev-ertheless, the analysis revealed that the initial investment

cannot be covered by the small farmers current cashows. Therefore, innovative nancing mechanisms wereexplored. In the Altomayo basin (Peru), the PES projectsimulated current land uses and compared them withchange scenarios of deforestation, reforestation, imple-mentation of live barriers, and agroforestry systems.

The ECOSAUT model predicted livelihood outcomesfor different land-use interventions. Results indicate thefeasibility of a PES scheme to promote agroforestry sys-tems or to introduce sedimentation reduction measuresinto traditional farming practices. At present the municipalwater-supply company is concerned about high sedi-ment loads and is preparing a payment for environmental

services scheme.

CPWF Phase 1 included research on collective action


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and institutional innovations that created links between

stakeholders in water management. The project Sustain-ing Inclusive Collective Action that Links across Econom-

ic and Ecological Scales in Upper Watersheds (SCALES PN20) worked to strengthen the ability of the poorto participate in collective processes at multiple scalesin watersheds. The projects conceptual frameworkproposed a new way of looking at social and ecologicalinteractions within watersheds. Watersheds are inher-ently multi-scale, therefore collective action can occursimultaneously within and across scales. Resource owsin watersheds are not limited to lateral ows of soil andwater but also include reverse ows of economic, social

and political resources that can go from downstream toupstream in response to actual or potential hydrologicalexternalities. In such a context, decisions with importantimplications for resource management can be made inmultiple fora or action arenas. Projects that seek tostrengthen the role of the poor in watershed manage-

ment need to work in and/or create spaces in which theaction resources of the poor have value.

The project also examined incentives for cooperationin a watershed context and the impacts of potentialpolicy interventions. Economic experiments (based oneconomic game theory) were conducted under eld

conditions with over 600 residents in four watersheds.The results revealed that communication rather thanregulation is the most effective way for people to improvelevels of cooperation, though there may be exceptions tothis in cases where there are deep social divisions withincommunities. Upstream communities have an importantrole to play in initiating watershed dialogue. Downstream

people, both in the games and in reality, appear to have

a deep distrust of upstream residents. Their willingness

to initiate cooperation is limited, but they are willing toreciprocate - if upstream people make the rst move.There is also need for further research to analyze the

gender differences, if any, with respect to incentives forcooperation.

In the Mekong, the Companion Modeling and WaterDynamicsproject (PN25) used multi-agent systems(MAS) and the companion modeling method to facilitatewater management negotiations, demonstrating that this

methodology helped resolve a conict over the sharingof water resources by establishing a concrete agree-ment and creating an institution for collective watershedmanagement. Research in Thailand, for example, led toreal changes in nancial decision-making in communi-ties, as well as transforming the ability of relatively poor

farmers/groups to communicate effectively with morewealthy farmers at the local scale. Companion modelingis expanding now to look beyond a single community

to groups of communities. Also in the Mekong, PN 50

M-POWER (the Mekong Program on Water, Environ-ment and Resilience) is a network of people committedto improving local, national and regional governance.The objective of M-POWER is to improve basin levelwater governance in the Mekong Region through actionresearch, practical policy support, and facilitation. Re-search points to the need to recognize that stakeholdersmove at different paces during dialogue and consultationprocesses.

Phase 1 research also identied opportunities forenhancing benets through increased water productiv-

ity with respect to both quantity and quality. The impactof such research can be enhanced through appropriatebenets sharing schemes. For example, water savingtechnologies such as aerobic rice (developed by PN16)may be appropriate for farmers who are responding to

decreased irrigation water availability. The adoption ofwater-saving technology may benet downstream waterusers. Opportunities may exist for farmers who reducetheir water use to receive a share of the benets realizedfrom other water users. Associated research questionsarise. Can/should downstream water users, who benetfrom additional water, reward those adopting water sav-

ing technologies thereby making these more worthwhile

for them? Additional environmental benets may also begenerated such as biodiversity and carbon sequestra-tion for which those adopting water saving technologiesshould be compensated. There is an inadequate under-standing of how changes in water allocation and agricul-tural practices alter the spatial and temporal distributionand extent of these losses and gains.PN40 or other Theme 4 projects?

Remaining gapsResearch in the Water Benets Sharingtopic examinesways to expand and equitably share the benets derivedfrom water while increasing the resilience of ecosystemsand rural livelihoods. Although water benets sharingholds great promise (Milewski, et al., 1999; Mostert,2003; Sadoff and Grey, 2005), it is crucial to understandthat maximizing the economic returns from water is justone of many water management goals. Other benetsare not easily measured or monetized such as social andenvironmental concerns, but are recognized by humansas equally important. With a diversity of water uses crop production, livestock, sheries, navigation, domesticuse and recreation, the protection of sufcient watersupplies and the benets from water for the poorest andmost vulnerable populations is a fundamental concern


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(Molle, et al., 2007; Castillo, et al., 2007).

Each benets sharing example is unique. Cultures,ecosystems and institutions vary across sub-basins tobasins. Despite a scheme not being a panacea, suchefforts comprise a promising approach that needs furtherspecication (Heinke and Wirkus, 2006;). Given theuniqueness of each benets sharing scheme, the per-sistence of myths for and against benets sharing, andthe slow change from unilateral to cooperative action,research is needed to:

clarify under what conditions cooperative actions

can increase water benets sharing in a way that ispolitically, socially and nancially acceptable, genderequitable, and feasible;

raise awareness of how cooperative action can in-crease overall benets which can be used to improvethe livelihoods of the poor without further degrading

natural resources, thereby enhancing social andecological resilience; and

provide guidelines on how to scope, design andimplement benets sharing schemes - includingphysical, economic and institutional elements - that

are equitable and take the resilience of the poor andecosystems as a high priority.

ObjectivesThe objective of the CPWF Topic 3,Water Benets Shar-ing,is to contribute to productive and sustainable wateruse through supporting innovative research in basinsthat shows how the benets derived from water can beincreased and shared more equitably, with a focus on

increasing the resilience of women, the poor and eco-systems. This CPWF research supports scientists andstakeholders at the basin, sub-basin and local levels byimproving knowledge of benets and costs of water withrespect to different water users across scales.

Experience and knowledge gained will contribute toefforts both within the CPWF and internationally. Re-search efforts will generate knowledge that is site andcontext specic. In order to generate global public goods,research will also contrast and synthesize the advancesrealized within distinct socio-economic and bio-physicalcontexts, including development of analytical frame-works.

Research in collaboration with basins will investigate

the social mechanisms by which water benets can be

shared more widely to enhance equity (gender and so-cial/economic status) and sustainabili ty. The objective ofincreasing water productivity is to increase the total netbenet, which can open possibilities of sharing new ad-ditional benets, not just existing benets. Research willexplore the potential for the emergence of market-orient-ed approaches to water benets sharing such as waterpricing and compensation schemes, as well as non-market approaches such as regulation and negotiation.Research under Topic 3 will improve the understandingof (a) positive and negative externalities generated; (b)how those externalities are modied according to how

water benets are shared; (c) how changes in water al-location affect benets and costs along the transmissionpathway; (d) who and what inuences these processes;(e) how the current dynamics will be affected by futurenatural and human factors; (f) value attached to differentbenets by different stakeholders at different times andin different locations; and (g) what are the most effec-tive water benets sharing schemes for increasing theresilience of the poor and ecosystems.

ScopeThe potential for water benets sharing requires a shiftfrom decision-making by unilateral authorities to col-laborative change processes (Waalewijn, et al., 2005).In order to enhance the capacity of water users to actcollectively and negotiate, Topic 3 scientists will workwith organizations at different scales. Researchers willcoordinate efforts with the Basin Teams and donors,community based organizations, government ministries,utilities (public and private), international water and foodresearch communities, and national and internationaldevelopment NGOs.

Who is likely to gain or lose from changes in water usedepends on existing rights and access to water, bothlegal and actual. Therefore, Topic 3 researchers willidentify and facilitate policies and institutions that achieveoptimal allocation of water that increases water produc-tivity and equitably generates and shares the benets.These efforts will be based on research that estimatesthe costs and benets of current and alternative wateruse arrangements.

The research under Topic 3 will also examine water man-agement and use organizations, social institutions (rules

and norms), physical infrastructure, and the allocation ofpublic and private investments related to water. Policyanalysis will be used to explore private arrangements


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that can generate greater overall benets from water

but share these benets equitably, such as compensa-tion for environmental services. Both public and privateinstitutions will recognize the need to reimburse thosenegatively affected by (a) changes in rights and accessto water, or (b) investments required to comply with newwater use standards. Efforts will also be made to ana-

lyze the differing water rights and priorities of men andwomen, where appropriate.

The geographic focus of benets sharing research isat the river basin and sub-basin scale. Based on theexperience of Phase 1, we have only seen success with

benets sharing schemes at the sub-basin scale withina single country (international boundary remain to beachieved). Regardless of scale, the strengthening ofinstitutions is essential for improved communication, un-derstanding and incentives to negotiate. Such upstream-downstream institutional linkages can generate mutuallybenecial outcomes. In addition, such institutions mayalso be a pre-requisite for improving management athigher scales, especially in terms of increasing the proleof basin stakeholder organizations via enhanced wateruse accountability and citizen participation.

This topic will work closely with the other CPWF Topics

(Table 2). Topic 1 Rainwater Management and Topic 2

Multiple Water Use Systems emphasize technical solu-tions to water use, thereby identifying opportunities for

benets generation with an emphasis on fostering equity.These Topics tend to focus on plot and community levelsof analysis. In contrast, Topic 4 on Drivers and Pro-cesses of Change provides important social and politicalcontextual information priorities and opportunity at largerglobal and national scales.

Topic 1

Rainwater

management

3Water Benets Sharing

4

Drivers and

Process

Subtopic

a b c

KeywordsDiagnosis

Participation

Water values

Externality

identication

Valuationmethods

Institutions

Governance

Benets

distribution

Design

Implementation

ConsultationNegotiation

Monitoring

Evaluation

Enforcement

mechanisms

Research

issue

Technical

Institutional /Political

Scale of

analysis

Plot/Community Community/National National/Global

Watershed River basin Transboundary

Table 2. Topic 3 Water Benet Sharing within the research topics of the CPWF


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Key researchareas and guidingquestionsThe Water Benets Sharing Topic Working Group will

develop research based on the CPWF Basin ResearchQuestions so that research efforts achieve broader un-derstanding and impact in the CPWF basins. Researchquestions in the sub-sections below are considered

guides for the topic of Water Benets Sharing.

Because water benets sharing (biophysical, socio-eco-nomic and institutional) schemes can take many forms,an integrated and easily accessible knowledge base onexperiences and methods are needed to aid stakehold-ers1to navigate the complex process of diagnosing, de-signing and implementing effective water benets shar-ing schemes. Research will build on the existing (CPWF)knowledge base by focusing on the following sub-topics:

Diagnosing water benets sharing opportunitiesthrough participatory identication, quantication andvaluation of benets,

Improving methods for generating credible technicaland institutional information and for facilitating its use inconsultation and negotiation processes,

Design and implementation principles of site-specicwater benets sharing mechanisms.

Diagnosing water benets sharing

opportunities through collaborative

identication, quantication and

valuation of benetsAt community and watershed levels, agriculture gen-erates both positive and negative externalities2thattranslate into off-site gains and losses. Some externali-ties are felt far away. Agriculture is a major contributorto: (a) soil erosion and reservoir siltation, and (b) risingnutrient pollution in rivers. Two examples illustrate theseproblems. In the Yellow River basin, soil erosion threat-

1 The general public and politicians, policy makers

and planners, benet providers and receivers, negotiators,

researchers and other practitioners who directly or indirectly

inuence the enhancement and sharing of benets.

2 For example, externalities associated with (a)

conversion of forest, grassland and wetlands to cropland andits effect on the quantity and quality of ow in lower reaches of

a river or in groundwater and on wildlife habitats; and (b) loss

of habitat essential to the life cycle of commercial sh species

that can trigger a collapse of the sh stock and associated

livelihoods.

ens the future supply of electricity and increases the cost

of ushing sediments in reservoirs, irrigation canals andriver reaches. In Lake Victoria, pollution has disruptedthe delicately balanced aquatic ecosystems and threat-ens the quality of drinking water.

Women and children (who are usually responsible forcollecting water for domestic use), the poor, and the envi-ronment are particularly vulnerable to such losses. Theseare the consequences of the failure of farmers and otherland managers to internalize the negative impacts theygenerate. Nevertheless, cases also exist where up-stream communities adopt land and water practices in

ways that positively impact downstream communities.The potential for benets sharing mechanisms to provideincentives for upstream communities to internalize nega-tive impacts has not been adequately assessed.

In most cases, however, the extent to which benetssharing schemes achieve their objectives is contestedby both providers and receivers of benets. This is partlyattributed to a lack of consensus on what benets toinclude, how to quantify and value them, and how toassess how well the benets are shared. To addressthis problem at basin scale, Sadoff and Grey (2002 and2005) argued that benets should be interpreted more

broadly to include environmental, aquatic ecosystems,economic, social and political gains and proposed aframework(Table 1) for broadening the range of recog-nized benets. It is important to adequately value waterfor rural and peri-urban uses, to ensure that food securitycan be achieved, livelihoods enhanced, and health andenvironmental goals can be met.

The major challenge lies in identifying, quantifying andvaluing benets in a participatory manner, particularly forbenets that are not recognized by some stakeholders.Meeting the vital water needs of all also requires greater

attention to the policies and institutions, as well astechnology for water management. Research is there-fore needed to identify opportunities for combining waterproductivity-enhancing interventions with appropriatebenets sharing mechanisms that result in positive out-comes. This research builds on CPWF research on waterproductivity and identies opportunities for compensa-tion or reward for adopting water saving technologies.More water can be released for other users/uses and theenvironment, thereby contributing to both ecological andhuman resilience. This research would focus on develop-ing and promoting effective use of guidelines on how toaddress questions such as:

What are the negative and positive externalities gener-ated by different actors, and what are the possibilities for


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change? What are the associated benets and costs?

What is the most appropriate analytical frameworkfor different scales: community, sub-basin and trans-boundary basin? How are benets perceived at differentscales?

What benets and costs are experienced by resource-poor and marginalized groups?

Improving methods for generating

credible information and for facilitating

its use in consultation and negotiation

processesGeneralisations about upstream-downstream linkagesand cause-effect relationships of externalities can resultin an erroneous diagnosis and design of land and water

management interventions. Proper diagnosis and design

of water benets sharing schemes need to effectivelyaddress: (1) the complex interactions involved; (2) a lackof appropriate methods to generate information needed

to improve our understanding of these complex interac-tions3and their consequences. Although the quantity anddistribution of benets and costs arising from changes inupstream land and water management in both upstream

and downstream areas is inadequately understood, itprovides the rationale for upstream - downstream coop-eration. In addition, inadequate understandings prevailregarding how basin stakeholders respond to variousdrivers of change and externalities.

The success of water benets sharing mechanisms isinuenced by the perception that benets providers andreceivers have on: (1) the extent to which individualand collective benets can be increased equitably andsustainably, (2) the willingness of those receiving ad-ditional benets to reward contributors to their gains and

compensate the losers; and (3) the extent to which thosereceiving reward/compensation will consider it to be fairand provide the services they are paid for. Methods arerequired to generate and apply credible information thatdisentangle facts from ction and facilitate informed con-sultations, negotiations and decision making.

Because the road to water benets sharing is strewnwith many obstacles, effective participation, consultationand negotiation are needed. They are, however, hard to

achieve when the information and/or the methods usedare contested. Considering the complexity of water ben-

3 The impacts of upstream water and land use andmanagement on downstream water ows, quality, erosion,

sedimentation, water table levels and aquatic productivity

depend on a number of site-specic bio-physical features,

climate and management regimes.

ets sharing schemes and the controversies that gener-ally arise, robust and acceptable methods are needed to

generate and facilitate effective utilization of the requiredinformation.

Although a wide range of methodshave been developed,

they need to be adapted for use in the often contentiousconsultation and negotiation processes. Equally impor-tant is the need to build the capacity of key stakeholder(benets providers and receivers, negotiators, sectormanagers and researchers) in applying the methodseffectively.

Research on this key research area will focus on devel-

oping, adapting and promoting effective use of methodsfor:

Quantifying externalities and their associated costsand benets;

Empowering and enhancing participation of thepoor and marginalized groups;

Evaluating alternative (rewarding and compensa-tion) instruments and facilitating associated negotia-tions; and

Facilitating scaling up and scaling out of successfulwater benets sharing schemes and learning by do-ing using adaptive management approaches.

Design and implementation principles

of site-specic water benets sharing

mechanismsBenets sharing schemes perform well where a seriesof necessary conditions are present. These include: (a)cooperative action generating additional recognizablebenets; (b) acceptable methods exist for quantifying,

valuing and sharing benets; (c) the goals of differentstakeholders are in favour of cooperative schemes overexisting governance ; (d) stakeholders are adequatelyinformed and participate effectively in consultations andnegotiations; (e) benets are allocated fairly and the ben-ets distribution process is efcient and transparent; (f)mechanisms resolve any disagreement; and (g) mecha-nisms have sufcient exibility to adapt to changes in thequantities and values of benets generated and shared.

Enabling conditions encompass the cumulative effect ofgood policies, regulations, governance structures andprocesses, organization and political support, power-sharing arrangements, infrastructure, mutual trust andrisk reducing mechanisms. There is a general consen-


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sus that the performance of benets sharing schemes

improves as the enabling conditions improve.

The primary goal of water benets sharing schemes isto enhance the benets derived from water for all partiesand to equitably share those benets. This is achievedby rewarding those who contribute positive benets andexternalities while compensating those who (a) experi-ence negative externalities, or (b) incur additional coststo reduce negative externalities or to generate positiveexternalities. Benets sharing schemes have multipleobjectives depending on stakeholders, their needs,aspirations and expectations. Numerous benets sharing

mechanisms have been developed and applied in differ-ent contexts with differing performance levels.

Urgently needed are benets sharing mechanisms tomanage water allocation trade-offs associated withenvironmental ows and water requirements for irrigatedagriculture, sheries and aquaculture. For these mecha-nisms to be most effective, they should be appropriatelytargeted.

Research on this sub-topic would focus on devel-oping and promoting effective use of guidelines onhow to address questions such as:

What policy, legal and organizational changeswould be needed to support the adoption of benetssharing schemes

How would co-management of water, crops, sher-ies, grazing and forest resources support benetssharing schemes?

What level of trans-boundary cooperation would bemost conducive for different types of benets sharingmechanisms?

What would be the most appropriate forum and

power sharing schemes for resolving conicts arisingfrom benets sharing complaints?What benets sharing options would be requiredunder different bio-physical, socio-economic andinstitutional contexts?

What consultation and negotiation processeswould be suitable for the design and implementation

of benets sharing mechanisms?What monitoring and evaluation program would be

required to assess the performance of the mecha-nisms?

How are they performing and what adaptive man-

agement responses would be required to improve

their performance?

Are existing mechanisms suitable for catalyzingpro-poor and pro-environment increases in waterproductivity and, if not, what new mechanisms wouldbe required?What is the scale (watershed, sub-basin or basin,or community, regional and national) interaction ofbenets sharing mechanisms and how would benetssharing at one scale affect the performance at an-other scale?

How can trade-offs associated with short and long-term benets and with monetary and non-monetarybenets be addressed?

CPWF niche andvalue addedOpposition to water benets sharing includes doubts

regarding viability. Some view benets sharing as aprocess with numerous obstacles that result in injustice(Sharma, 2005), while others see it as an opportunityto create a better future for all (Berhan and Egziabher,2005; Sadoff and Grey, 2005). Mechanisms that increaseand share benets have the potential to reduce poverty,inequity and conict. Furthermore, benets sharing canenhance social and ecological resilience4at all scales(from household to global). Nevertheless, no generalconsensus exists as to how great the magnitude andextent of the benets can be. This is a key objective ofCPWF Topic 3.

Little concerted research has been conducted to dateon water benets sharing, a gap the CPWF Topic 3 willll. The gender equitable, pro-poor and pro-environmentimpacts of well-designed water benets sharing schemesin the CPWF basins are potentially very large, especiallyin the Nile, Mekong and Ganges. The CPWF is well-posi-tioned in these basins to bring together key stakeholdersto design and implement water benets sharing schemesand for unlocking the pro-poor potential of water in theCPWF basins and beyond.

4 CPWF research (PN46), for example, has shown that small

community-based reservoirs enhance resilience by using reservoir water

during the dry season to diversify livelihood systems (mainly sh and irrigated

horticulture production and associated labor activities and trade).


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