Water conservation and management: common sense for a common resource?

The increasing water scarcity and pollution problems that are affecting large areas of the globe are provoking a heated debate both among scholars and in the public opinion on two main issues: first, on the very nature of water as a common resource and the related management problems that this generates and, second, on the most appropriate market instrument to apply the polluters' (user's) pays principle and thus price water pollution (consumption). This chapter analyzes these two intertwined issues and critically examines the experiences of various countries that have applied a specific kind of market-based instrument, tradable water permits programmes. For this purpose, the author first investigates the recent debate on water as a common resource and its practical implications in terms of water pricing, emphasizing the rationale and limitations underlying the use of market instruments for water. The chapter then focuses on tradable permits as this might become the main market instrument for water management and conservation to be adopted in many countries in the years to come. In this regard, the work critically evaluates the most significant applications of water tradable permit systems all over the world, focusing attention on the crucial role that the government can play for their successful implementation, in order to provide a few suggestions which can be drawn from these programs for their application in other countries in the future.