Integration in the Management of International Waters: Economic Perspectives on a Global Policy Discourse

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In recent years an emergent global policy discourse has promoted the concept of Integrated Water Resources Management (IWRM) as a strategy for the sustainable management of international waters. However, integration remains a considerable challenge in large international river basins. This article addresses the relevance of the global discourse on IWRM, asking how much integration can be expected and how much integration is desirable in international water management. The article presents a novel compilation of eighty-six international river basin organizations and examines their degree of integration in terms of three dimensions: membership, substantive scope, and form. More particularly, the article examines the integration problem from an economic perspective, asking whether integration serves the self-interest of the respective riparian states. The empirical evidence highlights the difficulties of integration, as the majority of international river basin organizations remain narrow in membership and scope. Economic considerations suggest that voluntary cooperation in river basins is institutionally demanding and that the degree of integration depends on the problem at hand. Hence, the challenge for international waters management is to search for the economically desirable degree of integration in each case. Keywords: international river basins, Integrated Water Resources Management, Coase theorem, integration.

The Problem

Some 263 river basins on earth cross international boundaries. (1) Whenever a water resource is international, competing claims over shared waters can generate conflict among riparian countries. In response, a global policy discourse has emerged that promotes Integrated Water Resources Management (IWRM) as a concept for sustainable resource use. IWRM calls for the integrated management of different water uses within the hydrological confines of a river basin. Proponents of IWRM often advocate the establishment of special river basin organizations.

However, a number of social scientists have rejected IWRM as unrealistic with respect to international waters. For example, Frank Marty, basing his predictions on experiences with six bilateral agreements, expects that the majority of international water agreements will be bilateral and narrow in scope and that this is indeed how it should be. (2) John Waterbury warns that the quest for integrated development in international river basins will be elusive and excessively costly, although he concedes that bilateral agreements are not necessarily a solution for multiparty basins. (3) Empirical research suggests that existing arrangements are limited in membership and substantive scope, but large-N analyses are rare and generally limited to the analysis of membership. In terms of membership, Jesse Hamner and Aaron Wolf find that 86 percent of 145 international water treaties concluded since 1945 are bilateral; however, they do not distinguish between bilateral and multilateral basins. (4) According to Ken Conca, Fengshi Wu, and Ciqi Mei, thirty-three of forty-nine international river agreements established in multilateral basins between 1980 and 2000 are bilateral. (5) In terms of substantive scope, Ludwik Teclaff suggests that the majority of international water institutions are single-purpose, but the basis of his analysis is unclear. (6) In terms of form, it is an open question as to what extent riparian states not only conclude agreements but also set up specific river basin organizations. (7)

Hence, only vague knowledge is available concerning integration of existing international river basin institutions in terms of substantive scope and form. How much integration can be expected in the management of international waters? How much integration is desirable in terms of membership, substantive scope, and form? In other words, how viable is the IWRM concept for the management of international rivers?

To address these questions, I discuss in this article IWRM in the light of empirical evidence and economic considerations. I begin by setting out the global policy discourse of IWRM and then present the findings of a review of 506 international water treaties and eighty-six associated organizations. This survey provides a more comprehensive empirical review of the degree of integration in existing international water management institutions in terms of different dimensions of integration, including membership, substantive scope, and form. I next examine economic perspectives on the conditions for voluntary integration within the international system, asking whether integration can be expected to be in the self-interest of riparian states. In the concluding section, I discuss the findings and highlight research and policy implications.

The empirical review discussion confirms that the majority of international river basin institutions are limited in membership and scope, but it also suggests that this majority is smaller than is generally assumed in the literature. The economic analysis suggests that full cooperation in fact cannot necessarily be expected to occur. I conclude that full integration across international river basins is not necessarily desirable but that the challenge is to find the economically desirable degree of integration in any given case.

Global Policy Discourse on Integrated Water Resources Management

Starting with the 1992 International Conference on Water and the Environment, in Dublin, (8) IWRM has been promoted at international environmental and freshwater conferences in Rio de Janeiro (1992), (9) The Hague (2000), (10) Bonn (2001), (11) Johannesburg (2002), (12) Kyoto (2003), (13) and Mexico (2006). (14) IWRM is the central idea of a global policy discourse supported not only by international organizations such as the United Nations and the World Bank, (15) but also by new global actors such as the World Water Council (WWC) (16) and the Global Water Partnership (GWP). (17) The IWRM discourse is what other contributors to this special issue call a "mobius-web style" of global governance. (18)

IWRM has evolved as a response to traditional approaches to water resources management, which relied primarily on narrow engineering and sectoral solutions. (19) The discourse calls for more integrated approaches, both in respect of the resource and among the actors involved. In general, there are different understandings of what is meant by IWRM. (20) A very broad definition is provided by the GWP, which defines IWRM as "a process which promotes the co-ordinated development and management of water, land and related resources, in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems." (21)

Often IWRM incorporates the concept of river basin management (RBM), namely, that water resources should be managed in the context of a river basin. RBM is an institutional response to problems of "spatial fit" (22) between hydrological and political boundaries, as indicated on the left side of Figure 1. RBM suggests that water should not be managed at the level of geopolitical entities but at the river basin scale. In the case of international waters, RBM implies that all riparian countries should work together to manage water resources at the basin scale.

[FIGURE 1 OMITTED]

Although the concept of RBM has a longer history, (23) it has gained fresh momentum over the last few decades. For instance, since 2000 RBM is a legal requirement of the European Union's Water Framework Directive (WFD). The concept has been supported by natural scientists, lawyers, and often also by economists. (24) For example, Peter Rogers states:

  The general economic prescription to deal with externalities is to
  "internalize" them. The river basin itself is an ideal unit of
  analysis to achieve this goal: it can reasonably be assumed most
  externalities are captured by analysing the river basin as a single
  unit. This is why the concepts of integrated river basin planning and
  the creation of river basin commissions to implement and plan are so
  popular in the economic and planning literature. (25)

A second interpretation of IWRM places greater emphasis on the integration of different water-using sectors, such as water supply and sanitation, industry, agriculture, nature protection, energy, and transport. (26) Water is a multifunctional resource. Competing claims of different water users and water-using sectors create problems of horizontal "institutional interplay," as indicated on the right-hand side of Figure 1. In this case the challenge is to coordinate between different water-using sectors.

To solve problems of fit and problems of interplay, there is often an explicit or implicit assumption that it is desirable to establish new agencies, so-called river basin organizations (RBOs), to institutionalize a river basin management approach. In principle, RBM could also be achieved through other means of coordination, such as freestanding negotiations. This notwithstanding, influential bodies such as the World Commission for Water for the 21st Century clearly advocate RBOs: "If the IWRM principle is adopted, then basin-level systemic management is clearly needed. ... Accordingly, governments should set up management agencies at the basin and aquifer levels." (27)

Hence, IWRM encompasses three dimensions of integration: that of jurisdictions; that of sectors; and that of institutional arrangements. In the case of international rivers, the discourse on IWRM correspondingly points toward three different dimensions of institutional design--namely, membership, substantive scope, and form. Membership is constituted by those riparian states sharing a river basin that sign an agreement. Substantive scope refers to the range of water uses covered by an agreement. Form refers principally to the question of whether riparian states rely on agreements alone or whether they also establish corresponding organizational structures and international secretariats (sometimes also in collaboration with nonstate actors). In this article, the term institution is used as an overarching term referring to the "rules of the game." (28) These rules are often manifested in agreements or contracts and include the constitutional documents of formal organizations.

IWRM has been recommended for international as well as domestic river basins. (29) However, especially in large …