1. Governance of Informal Water Economies A Framework for Study of Water Governance in the Indo-Gangetic Basin Tushaar Shah and R.P.S.Malik IWMI

2. Understanding water governance Water governance is viewed as the sum total of processes, mechanisms, systems and structures that a State evolves and puts into place in order to shape and direct its water economy to conform to its near and long term goals.

3. Institutional Environment and Institutional Arrangement The concern on institutional analysis has generally focussed on water law, water policy and water administration- often referred to as the three pillars of institutional analysis If institutional change is about how societies adapt to new demands, its study needs to go beyond what government bureaucracies, international agencies and legal/regulatory systems do; people, businesses, civil society institutions, religions and social movements – all these must be covered in the ambit of institutional analysis. We therefore distinguish between Institutional Environment (IE) and Institutional Arrangements (IA )

4. Formal and Informal Institutions There is another way in which this classification of institutions in to IE and IA has been looked at : ‘formal’ and ‘informal’ institutions The main difference between the two types of institutions lies in the basis of attainment of powers and the nature of authority wielded. The formal institutions derive power by the virtue of the state and formal rule of law, the informal ones acquire power through customary influences and beliefs

5. Self-supply predominates service providers dominate Water institutions are local, water institutions are few, formal, fragmented, informal legal bodies Vast numbers of tiny, primary very few, but large primary diverters Water diverters from nature of water from rivers, lakes Intermediation in water services Very high degree of Low or absent intermediation in water provision Water is scarce but free.. Water is aplenty but it costs money.. Water is everybody’s Water is the business of an Business organized industry. Informal Formal This transformation is driven by the ‘iron laws’ of economic development of nations.

6. How informal can a poor country water economy be is suggested by a large sample survey of households in India.. As a country, urbanizes, its water economy formalizes.. As rural areas become richer, they depend more on organized water service providers for domestic water..

7. A similar survey of irrigation in India showed that over 80% of India’s villages have irrigation..but less than 10 percent depend on public irrigation systems; the rest operate in an informal irrigation economy, outside the reach of the public system..

8. Economic Growth and Water Governance PoorRich Nature of the water economy Highly informal; state’s direct outreach limited Highly formal; state’s direct reach deep and broad Objectives of water governance Livelihoods; economic growth Sustainable NRM; Environment; Green Growth Nature of water governance Indirect; reactive; people-centred Direct; proactive; resource centered

10. The nature of water institutions existing in a given region/ nation at any given point in time depend critically upon the level of formalization of its water economy; by formalization, we mean the proportion of the economy that comes under the ambit of direct regulatory influence of the IE

11. Stages of formalization Stage I: Completely informal Stage II: Highly informal Stage III: Formalizing Stage IV: Highly formal water industry % of users in the formal sector <5%5-35%35-75%75-95% ExamplesSub-Saharan AfricaSouth AsiaMexico, Thailand, Eastern China Europe, North America, Japan Dominant mode of water service provision Self-supply & mutual help institutions Self-supply dominates; partial public provision Private-public provisioning; service improvement Modern water industry; self- supply disappears Concerns of the Governments Infrastructure creation in Welfare Mode Infrastructure and Water services, Infrastructure and service; Cost recovery; Integrated mgt. of water infrastructure, service and resource; Farm population as % of total % of water use self-supplied Human, technical & financial investment/m3 of water diverted Economic cost of water service provision % of water use in agriculture

12. Direct Instruments of Water Governance Indirect instruments: e.g., power subsidies Indirect instruments: e.g., Gujarat’s recharge program Indirect instruments: Fixing Procurement policy Indirect instruments e.g., subsidizing arsenic filters

13. Water Institutions in IGB Indo-Gangetic Basin (IGB) water sector exhibits a large variety of informal institutions which co-exist with formal institutions. Much information is however not known about the extent, nature and intensity of involvement of formal and informal institutions within different regions in IGB as also within a given region over different tiers of resource management. There is also a lack of clear understanding on the complex inter- relationships between the formal and informal institutions, their relative strengths, weaknesses and efficacy under varying resource availability and other underlying conditions, their impacts in promoting sustainable use of resources and contribution to pro poor growth and economic development

14. The lack of an analytical framework to investigate and answer some of these questions has hindered comprehensive analysis of issues related to water governance in the region. The paper has attempted to develop a framework for analysis of water governance in the IGB.

15. Agricultural water use segment RuralHousehold segment Urban water suppl y segm ent Industrial water segment 0.0% of total water diversions used by 1Level of formalization of water economy 1.1% of water use self-supplied by users themselves 1.2% of water use supplied by informal service providers 1.3% of water use supplied by formal service providers-private or public 1.4% of water users who self-supply their water needs 1.5% of water users supplied by informal service providers 1.6% of water users supplied by formal service providers-private or public 2.0Effectiveness of direct intervention by water administration 2.1Breadth of the presence of water administration 2.2Depth of the presence of water administration 3.0Promotional effectiveness of public systems 3.1 Quality of formal water service provider institutions promoted outside the public system (PPP; Co-op’s) 3.2% of users reached by these 3.3% of water use influenced by these An inventory of indicators of levels of formalization of water institutions

16. Agricultural water use segment Rural Household segment Urban water supply segment Industrial water segment 4.0Regulatory effectiveness of public systems 4.1Quality and sufficiency of legal and regulatory provisions 4.2Quality and rigor of enforcement 5.0Effectiveness of the use of direct economic instruments (prices, taxes, subsidies) for water governance 5.1Water resource fee is established by law 5.2Water resource fee is vigorously collected 5.3Water service fee is established by law 5.4Water service fee is vigorously collected 5.5Rationing is used as a demand-management tool 5.6Effectiveness of rationing as demand-management tool 6.0Effectiveness of indirect policy instruments for managing the water economy 6.1Indirect tools to manage water demand 6.2Indirect tools to augment water availability 6.3Indirect tools to manage externalities

18. Thank you