Water is becoming increasingly scarce all over the world. All indicators of water availability show that per capita supplies will continue to decline in the years ahead. A conservative recent estimate projects that 1.8 billion people will live in regions or countries with “absolute water scarcity” by 2025: that is, they will not have enough water to maintain their current level of per capita food production and also meet burgeoning urban demands, even at high levels of irrigation efficiency (Seckler, Molden, and Barker 1999). An additional 350 million will live in regions with “severe water scarcity,” “where the potential water resources are sufficient to meet reasonable water needs by 2025, but (only if the country) embarks on massive water development projects, at enormous cost and possibly severe environmental damage, to achieve this objective” (ibid., 1). There will also be additional, sometimes severe, localized water scarcities, even within countries that, in aggregate, have abundant water (for example, Sri Lanka: see Amarasinghe, Mutuwatta, and Sakthivadal 1999). Water scarcity will not go away.
It is encouraging that past predictions of future water use have been consistently too high. Linear projections of the past into the future have consistently underestimated the potential for changes in technology, social organization, and incentives that have made it possible to reduce per capita water use without negatively affecting welfare. This tendency offers opportunities for policy makers, since it can direct their action to those changes that can facilitate such benign responses to increasing water scarcity.
Nevertheless, rising water scarcity poses serious challenges. This paper develops a simple framework for analyzing the political implications of diverse strategies for managing water scarcity from attempts to augment supplies to managing demand by changing water users’ incentives. All responses provide opportunities for cooperation and creativity; all contain pitfalls and potential for conflict.