Using economic instruments for water demand management

Posted January 2006

By Bernard Cantin, Dan Shrubsole, and Meriem Ait-Ouyahia

Presented in the Spring 2005 edition of the Canadian Water Resources Journal, this article presents the main policy research issues related to the application of selected economic instruments (EIs) for water demand management. It builds on the papers presented at the Policy Research Initiative’s Symposium on economic instruments for water demand management.

Despite the great promises made on their behalf, there is limited concrete evidence of the efficacy or cost effectiveness of EIs (or of any other instrument for that matter) used for water demand management. A number of policy research avenues are proposed to better assess their advantages and limitations. These include fostering multidisciplinary efforts, particularly in the social sciences, to understand how our institutional arrangements affect water use; increasing Canada’s ability to monitor water supply and use; and documenting the strengths and weaknesses of economic instruments in well-designed comparative case studies, as well as in new projects, by a commitment to the development of adaptive management frameworks that make conscious efforts to learn from policy implementation. Doing so, however, requires a clarification of the primary objectives for using EIs, which has more often than not been left relatively vague and multifaceted.

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