Pacific Institute

Economies of Scale & Scope in River Basin Management

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Water management in most parts of the world has long followed a pattern of functional specialization (FS). Water agencies, companies, or departments of government supply water. Other agencies, companies, or departments supply wastewater services. Yet a third group is charged with flood control and storm runoff management. Of course some water utilities supply both water and wastewater services, and some government departments include all three branches of the water sector. These may appear to be exceptions, but the internal organization of these departments is usually along functional boundaries with planning documents and capital improvement budgets separated by function.

In contrast, many view River Basin Management (RBM) and its close cousins, Integrated Water Resources Management (IWRM) and Watershed Management (WM), as the emerging and better paradigm for water management. The World Bank (1993) has long urged the adoption of a comprehensive, cross-sectoral approach to water management. Serageldin (1995) labeled the French system of stakeholder-governed water institutions organized into six hydrologic basins, created in 1964, as a “model” to be emulated by others, and offered the 1984 reformation of the Murray River Commission in Australia into the Murray-Darling Basin Authority as another successful example of this approach. Since then, Mexico and China and other countries have revised their laws to promote and strengthen integrated approaches to water management. The US Agency for International Development advocates integrated approaches in the water sector (AID, 2002), and solicited proposals in 2004 to spend at least $3.75 million for IWRM.

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