Water Governance and Climate Change Uncertainty

How are institutions for water management affected by climate change? And how should rules be adjusted to incorporate the future changes from climate change.
Water Governance and Climate Change Uncertainty

There are many challenges in water management and climate change.  Climate change brings additional uncertainty to the managing of water resources. Economic research has shown that uncertainty can make coordination and cooperation unsustainable in social dilemmas. Uncertainty increases the probability of bad equilibria when there are tipping points to ecological systems. Tipping points can be present in water systems from pollution, seawater intrusion, or extinction of a renewable groundwater basin. In a social dilemma, the incentive to be myopic becomes stronger with uncertainty because uncertainty makes it more likely that resource extraction exceeds a critical threshold.

Not only is uncertainty a challenge, but even knowing the specific distribution of outcomes is often tricky- this is known as ambiguity.  Uncertainty and ambiguity from climate changes add a unique and challenging aspect to effective water governance.

The rules of water governance, which vary quite a bit across the world’s major groundwater basins, are designed around the incentives for stakeholders to cooperate and take up meaningful action.  Elinor Ostrom’s scholarship laid the groundwork for understanding the settings for successful governance institutions, which do not rely on a centralized authority.  She pioneered eight principles of managing the commons, two of which are affected by uncertainty from climate change. 

One of the core principles is the need to match the use of the commons to local conditions.  With climate change, demand and supply of water may drastically change by region. Substantial changes in local conditions mean our rules must, to the best of their ability, foresee or be adaptable to these changes.  Regions may experience vast differences in recharge and precipitation from historical averages.  Areas highly reliant on irrigation water will need to adapt to these changes, and not just by supply-side policies.  Examples of supply-side policies are adopting water-saving technology, conveyance of water through aqueducts, or desalination plants. Instead, demand-side policies will be needed to adapt to growing scarcity or changes in regional markets through water permit systems, pricing mechanisms, or water rights retirement.  It is important to note that some regions may become wetter and be able to support more dryland farming as well.  Current governance institutions should incorporate these large-scale changes to existing rules- yet they often do not. 

Another fundamental principle of managing the commons is multi-level governance.  Water management should occur across local, state, and national levels of governance.  These levels of governance need to be adaptable to large-scale changes, and infrastructure projects should incorporate the environmental changes coming from climate change.  The uncertain future will impact large scale projects, dams, dam removals, irrigation projects, or pipelines that move water from one basin to another.  To the best of their ability, multi-level governance will need to be nimble and form rules that can be flexible to future changes in conditions. 

The uncertainty about how likely future conditions will match forecasts creates ambiguity about the future. This ambiguity adds incentives for current stakeholders to be more myopic, even after considering the future costs of mismanaging water supplies, this is the cruel nature of the commons without rules or norms of behavior.  Concern over future water scarcity, extreme climatic events, and the ability to make a living will also affect decision making over these resources.  Increased salience to these issues uses up mental resources, referred to as mental scarcity.  Mental scarcity increases myopic behavior and decision-making errors.

Basic social safety nets may be a practical approach to combat both ambiguities about future conditions and mental scarcity.  Large infrastructure projects need to have multi-level governance input into planning and take into consideration the need for changes in allocations based on substantial region changes in supply and demand.  Rules that dictate specific technologies or BMP may be the least flexible of policies in the short term.  More flexible rules, like price rationing or permits, will allow for water allocations to react faster to changing local conditions.


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