IWRM in urban systems –Lessons and pitfalls

Lin Crase and Bethany Cooper

Introduction• Economists ‘own’ some words (or we think they do)

e.g. efficiency

• Goldilocks focus – not too narrow, not too wide

• To analyse an ‘integrated’ choice need to consider:

• What is being integrated?

• Who is doing the integration?

• Measurement?

• For what purpose?

What?• IWRM – water obviously!

What?• IWRM – water obviously!

What?

• Here integrating water quantity and quality

What?• Lessons

• Measurement matters

• Property rights matter

• If it’s measurable and tradable, do we need a superordinate entity to integrate?

• If it can’t be traded then the scope of the decision entity matters – it still needs to be measured to approach efficiency

• So what happens when IWRM becomes I?RM

Who?matters if rights not defined and tradable!

Who?

Who?

Who?

• Lessons

• Measurement matters

• Property rights matter

• If it can’t be traded then the scope of the decision entity matters – it still needs to be measured to approach efficiency

Measurement tools?

• Measurement matters

• Ideally common measurement

• $ (not everything but it helps)

• An example

Measuring the benefits of Melbourne’s waterways

• Melbourne Water is the waterways manager for the project area and collects an annual charge to invest in environmental and social values along waterways.

• This study allows Melbourne Water to:

• Inform integrated planning and management outcomes for waterways

• Justifying expenditure, particularly where benefits are not easily measurable (e.g. amenity)

Melbourne Water

Source: Index of Stream Conditions 2013

Ecological value varies but measurable in biophysical terms

Amenity varies

• How to meaningfully measure amenity and ecological values across multiple waterways?

• Measures that are:• meaningful to managers and planners trying to balance benefits and costs

of actions

The challenge

• Conceptual Framework

• Delphi Study - Experts

• Focus Groups - Customers

• Choice Experiment

Project Phases

Framework

• Delphi Technique

• Two expert panels: Ecology and Amenity

• Amenity (unique definition for this study)

• E.g. Cleanliness of the waterways, Access, Infrastructure, Naturalness

• Ecological

• E.g. Water Quality, Hydrological Regime, Native plants and animals

Populating framework

Choice experiment

• WTP to redistribute existing distribution, particularly reduce highly modified quadrant (south-west quadrant)

• Gives MRS for changes in ecological and amenity values at a city-wide scale

• Quantity translated back to Management Units (by implication related to km of waterway in specific condition)

Operationalising framework

Current Situation

Redistribution of categories

Improvements in Waterways

Sample Choice Set

WHICH OPTION

WOULD YOU

CHOOSE?

WATERWAYS

COSTTotal Extra cost for 1

year – paid quarterly

(every 3 months)

Near Natural

High Ecological Value

Low Amenity Value

Ecologically Healthy

High Ecological Value

High Amenity Value

Sustainable Amenity

Low Ecological Value

High Amenity Value

Highly Modified

High Ecological Value

High Amenity Value

Option 1: Current

Situation

�

27% 9% 32% 32% $0

Option 2: Improved

Waterways

�

40%

(13% more)

17%

(8% more)

35%

(3% more)

8%

(24% less)

$20 in total

(equal to $5

each quarter for

one year only)

• Average respondent WTP for Ecological Value

• Average respondent WTP for Amenity Value if it also includes Ecological Value

• Average respondent is not WTP for Amenity Value alone

Key Findings

Lessons• Water customers are seemingly willing to have ecological values integrated

into their payments for access to potable water and wastewater treatment and disposal

• But less inclined to accept that actions on amenity should be similarly integrated by a water utility

• Ecology measurable in this example and scale of entity (Melbourne Water) seems appropriate

• Amenity measurable, but only for the experiment, and scale problematic

Measurement

Purpose?

• For economists should be welfare maximisation

• But

• Uncertainty used to make it complicated

• Does the planner deal better with uncertainty than others?

Conclusion

• Measurement critical

• If measurement � $, then why not use market?

• If non-tradable, then scope of entity matters

• Ideally, scope would align winners and losers in single choice

• If measurement not possible, claims of superior nature of integration needed to be viewed cautiously