The TWO Analysis - Introducing a Methodology for the Transboundary Waters Opportunity Analysis - GEFGEFGEFGEF
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The TWO Analysis – Introducing a
Methodology for the Transboundary
Waters Opportunity Analysis
GEF
GEF
Report 23
Copyright © 2008, Stockholm International
Water Institute, SIWI
ISBN: 978-91-975872-3-5
ISSN: 1404-2134
How to Cite: Phillips, D.J.H., Allan, J.A., Claassen, M.,
Granit, J., Jägerskog, A., Kistin, E., Patrick, M., and Tur-
ton A. 2008. The TWO Analysis: Introducing a Meth-
odology for the Transboundary Waters Opportunity
Analysis. Report Nr. 23. SIWI, Stockholm.
Design and production by Britt-Louise Andersson, SIWI.
Printing by Litografia, Huddinge, Sweden. The printing
process has been certified according
to the Nordic Swan label for environ-
mental quality. For electronic versions
of this and other SIWI publications,
visit www.siwi.org.
Cover photo: Jakob Granit, SIWI
The TWO Analysis – Introducing a Methodology for the Transboundary Waters Opportunity Analysis
Note to the Reader
This report was prepared by David J.H. Phillips, J. An- leagues for insights, and also in some instances for the
thony Allan, Marius Claassen, Jakob Granit, Anders provision of published or unpublished data, information
Jägerskog, Elizabeth Kistin, Marian Patrick and Anthony and figures to contribute to this report. These include
Turton and was published by the Stockholm International Dr. Pete Ashton of the CSIR in Pretoria, South Africa; Dr.
Water Institute (SIWI). Shaddad Attili of the Negotiations Support Unit in Pales-
The authors are pleased to acknowledge the support tine; Dr. Jenny Clover of the CSIR in Pretoria; Mr. Anton
of the Swedish Ministry for Foreign Affairs in Stockholm, Earle of SIWI; Prof Malin Falkenmark of SIWI; Professor
Sweden, which provided elements of the funding for Holger Hoff of the Stockholm Environment Institute in
this work, with special thanks to Dr. Mats Hårsmar and Sweden; Dr. Marcel Marchand of Mozambique; Profes-
Mr. Torgny Holmgren. The authors are also grateful sor Stephen McCaffrey of the University of the Pacific in
for support from Swedish International Development California, the USA; Professor John Murray of CM Partners
Cooperation Agency, Water Research Commission in in Washington D.C. in the USA; Professor Christer Nilsson
South Africa, the Swedish Research Links Programme of the University of Umeå in Sweden; Dr. Stefanie Rost of
the Global Environment Facility and GEF-UNDP African the Potsdam Institute for Climate Impact Research (PIK)
Water Governance MSP and its implementing partner in Germany; Dr. Håkan Tropp of SIWI; Mr. Melvin Wood-
InWEnt-Capacity Building International Germany. house of Dunbartonshire, Scotland; and Dr. Mark Zeitoun
We are grateful to a number of our international col- of the London School of Economics in England.
Table of Contents
1. Executive Summary 5
1. Introducing the Transboundary Waters Opportunity (TWO) Analysis 8
1.1 Background to the TWO Analysis 8
1.2 The objective of the TWO Analysis 9
1.3 The strategic use of the TWO Analysis 9
1.4 Development trade-offs 10
2. The Conceptual Framework for the TWO Analysis 11
2.1 The basic framework 11
2.2 The factors relating to development opportunities 13
2.3 The factors relating to the hydrological cycle 18
3. The TWO Analysis in Context: Issues to consider 20
3.1 The broad political context 20
3.2 Socio-political issues of relevance 20
3.3 Water allocation and management 21
3.4 The reform of water policies, allocation and management 22
3.5 Green Water and Blue Water in the transboundary context 23
3.6 Water resources, the Zero-Sum dilemma, and Positive-Sum Outcomes 24
3.7 Climate change 26
3.8 The role of regional economic frameworks 27
4. Conclusions and Next Steps 28
4.1 The use of the TWO Analysis 28
4.2 Limitations of the TWO Analysis 29
4.3 Using the TWO Analysis for endogenous basins 29
4.4 Access to (pre)investment capital 29
4.5 Scenario planning using the TWO Analysis 29
5. Acronyms 31
6. References 31
7. Annex 35
Photo: Jakob Granit, SIWI
1. Executive Summary
With growing economies, population, and superim- Key Concept
posed climate change, there is a global trend towards This report presents a conceptual framework that
a much more constrained freshwater resource base to can be used by stakeholders concerned by the
support societal development and maintain key serv- development and management of shared fresh-
ices. Especially in a regional context, decision-makers water resources. The objective is to promote the
need improved tools, to be informed on trade-offs sustainable and equitable use of transboundary
between development and management choices, to water resources, and to clarify trade-offs relating
identify options, and to mitigate against the impacts to development. The report outlines a concept for
of rainfall variability and climate change. analysing potential benefits in a transboundary
This report represents the output from one com- river basin to optimise economic growth, political
ponent of a broader initiative addressing the develop- stability and regional integration. The conceptual
ment and management of shared river basins.1 The framework is intended to be used by basin State
initiative seeks to enhance the management of fresh Governments, Regional Economic Communities,
water resources in transboundary basins (i.e. fresh water and financing entities.
catchments including surface waters and/or aquifers,
crossing international borders). The component of the odology, quantitative aspects using indicators will be
initiative presented in this report involves the generation developed, and case studies will be generated.
of a conceptual framework for identifying development The conceptual framework presented here has been
opportunities. Options to realise those opportunities, developed to be a flexible tool to support decision-
through attaining the necessary social and political making at the level of basin States, within Regional
agreement amongst the involved riparians, are also Economic Communities, and for potential investors
indentified. In subsequent development of the meth- engaged in the identification and implementation of
1
The Transcend-TB3 project.
5
Photo: Getty Images
the development opportunities. It can be used in a specific analysis, which brings the possibility to add
developing country context, and in any transboundary other factors and categories for creative analysis and to
basin. The conceptual framework is also configured realise change in particular transboundary basins. In the
in a way that is useful for training purposes. For de- summary table ES1 we have illustrated some potential
veloping regions, it can be of value in determining opportunities that could be realised by analysing a river
the preferred and/or optimal uses of fresh waters, basin using the TWO Analysis. Examples of opportu-
especially in relation to the primary driver of the desire nities include the re-use of waste water or the siting of
to eliminate poverty and hunger. multipurpose dams in optimal geographic locations in
The conceptual framework is termed the ‘Trans- a river basin. The factors of primary relevance to the
boundary Waters Opportunity Analysis’, or ‘TWO TWO Analysis are enumerated below.
Analysis’. Particular emphasis is placed on the poten-
tial for developing baskets of benefits at the regional Development opportunity factors:
level by identifying Positive-Sum Outcomes (PSOs) 1 Hydropower production and power trading: The
or ‘win-win solutions’ which would benefit all basin link between water management and hydropower
States. This is achieved through the use of a simple for electricity production and power trade, to sup-
but robust analytical methodology. The conceptual port economic development.
framework can be used by stakeholders in a wide range
of different circumstances to aid their own decision- 2 Primary production: Options related to improve-
making, by developing insights into different options ments in primary production using Green and Blue
that might not be apparent at first glance. Water resources, e.g. in agriculture for food and
The conceptual framework of the TWO Analysis bio-energy production; and in forestry, where this is
consists of a matrix with four key development oppor- of particular importance in developing countries.
tunities, and two main categories of sources of water
to realise those opportunities (see the matrix at Table 3 Urban and industrial development: The potential
ES.1 for a summary). The framework allows for context- for an inter-sectoral reallocation of fresh water from
6
uses with low economic returns to applications a New Water: The potential for ‘New Water’ to be
with higher returns, involving urban growth and developed within the basin (i.e. for an increased
industrial development. volume of fresh water to be made available).
4 Environment and ecosystem services: Ensuring b The efficient use and management of water: Op-
key environment and ecosystem services for fu- tions for improving the existing efficiency in the
ture generations. Two specific forms of economic use of fresh waters by the basin States in trans-
ecosystem services addressed here relate to fisheries boundary basins. This can include institutional
and tourism. strengthening, joint management regimes and
physical infrastructure.
Context-specific opportunity factors also exist in certain
scenarios that are determined by the specific political, In basins that are not under water stress (not ‘closed’)
economic and hydrological contexts in particular trans- and have unutilised water, the water resources can be
boundary basins. As a result, the above list of develop- brought into service to drive economic development.
ment opportunities is not considered to be exhaustive. Once again, context-specific categories exist in rela-
tion to the fresh water resources that are determined
Categories of sources of water: by specific political, economic and basin parameters.
The two most important cross-cutting options relating These include opportunities for inter-basin transfers,
to the water resources are as follows: regional cooperation, and desalination.
Categories: a) New Water b) Efficient use of water c) Other sources in ba-
Factors: Sources
sins that are not closed
Development
Location of reservoirs in Siting of multipurpose dams Additional electricity gen-
1. Hydropower and
high altitudes to minimise for e.g. hydropower and ir- eration through hydropower
power trading evaporative losses rigation in optimal locations schemes and power pooling
Re-use of treated waste- Green Water use to in- Investment in bio-energy
water for irrigation crease agricultural outputs crops
2. Primary
production Interbasin water transfer Increase efficency in irriga- Introducing aquaculture
schemes tion
3. Urban growth Strengthen institutional Maximising economic Recharge of groundwater
management for water al- returns per unit of water in
and industrial de-
location to more high value industry
velopment use
Use of “green credit Optimising economic Allocate water to restore
4. Environment and schemes” through e.g. wa- returns from developing ecosystems
ter purification in wetlands fisheries and tourism sector
ecosystem services
5. Others (every Desalinate water for high Drought-proofing through Flood protection
basin is unique and value use improved land manage-
ment
other opportunites
may exist)
Table ES.1. The conceptual framework for the TWO Analysis. The table includes examples of opportunities that
could be realised using the TWO analytical framework in a specific river basin. A full version of the conceptual
framework can be found on page 12. An empty version of the conceptual framework matrix is provided in the
annex on page 35.
7
Photo: Manfred Matz, SIWI
1. Introducing the Transboundary
Waters Opportunity (TWO) Analysis
1.1 Background to the TWO Analysis boundary. This implies that the resources in question
The conceptual framework for the Transboundary should at least theoretically be shared by the parties
Waters Opportunity (TWO) Analysis has been devel- involved (the riparians) according to the principles
oped within a broader research initiative on the shar- of customary international water law.
ing of benefits in transboundary basins undertaken An important aspect of the TWO Analysis relates
by Phillips Robinson and Associates of Namibia; to data, which are often contested and invariably in-
the Council for Scientific and Industrial Research of complete. A philosophical point of departure in this
South Africa; and the Stockholm International Water analysis is that this data paucity does not necessarily
Institute of Sweden.2 The initiative focuses on the need to be a fundamental impediment to progress on
management of fresh waters in transboundary basins transboundary water cooperation. The best available
with an emphasis on promoting optimal economic data, which are often in the public domain, are used
development, and the attainment of social and po- here. In order to overcome the limitations of those
litical agreement on development opportunities and data, the methodology used features a unique method
trade-offs, based on sound technical information. to quantify uncertainty and factor it into the genera-
Transboundary basins are defined as the geographi- tion of various scenarios. This unique aspect of the
cal boundaries of natural hydraulic flow of water in TWO Analysis makes it highly suited for situations
rivers and/or aquifers across a political jurisdictional where a hegemonic riparian may seek to entrench
2
The initiative is called the Transcend-TB3 project. The initiative is part-financed by the Swedish Ministry for Foreign Affairs; Swedish Inter-
national Development Cooperation Agency; Water Research Commission of South Africa; the Global Environment Facility; and the Swedish
Research Links programme.
8
the status quo by relying on the argument that data The TWO Analysis has been developed in response
scarcity prevents future negotiations. to a background that:
In certain transboundary basins, it is known that
the status quo in terms of water allocations or the • Assumes that transboundary water resources are
generation of benefits arising from the shared waters rarely utilised either sustainably or equitably at
may be improved, to the benefit of all the riparians present. There is evidence that many transboundary
involved. This is known as a ‘win-win solution’ or a basins are mismanaged, and equitable allocations
Positive-Sum Outcome (PSO). PSOs contrasts with a of either the fresh waters themselves or the benefits
frequent outcome in transboundary basins where more arising from them, are rare.
equitable solutions to sharing waters are seen as only • Recognises the intimate link between water re-
being achieved through the simple reallocation of the source utilisation and national and/or regional
resources. This is known as a Zero-Sum scenario, where economic growth. Water is a critical input for
anything gained by one riparian is lost in equal share economic growth, and this is especially the case
by one or more other riparians. The Zero-Sum dynamic in developing countries. While it is self-evident
is a major obstacle to progress in many transboundary that fresh water is important in arid regions, such
basins, because it is inherently unstable with a high con- as the Middle East and North Africa, the resource
flict potential locked-in (Turton, 2008a). Identifying remains a vital driver of economic growth else-
and introducing an analysis of broader benefits from the where, even in regions where rainfall and run-off
utilisation of water and potential PSOs can potentially are abundant. The allocation of fresh water to
help overcome the Zero-Sum dynamic. This greatly particular sectors (agriculture; industry; services)
increases the likelihood that riparians agree to specific is an important element in the linkage between
methods to improve upon the status quo and enlarge transboundary water resources and national/re-
the basket of benefits to all parties. This also enables gional economies.
the riparians to identify opportunities for cooperative • Acknowledges the importance of water manage-
development and to move towards optimal economic ment to political stability and regional integration.
growth from the sustainable use of the available fresh In the transboundary context, this link is evident
water resources more easily. in many basins. For example, authors have com-
The Transboundary Waters Opportunity Analysis monly referred to the potential for water-related
presented here is a conceptual framework to analyse conflicts to spill over into the broader political
transboundary basins for their development opportu- arena; and the potential for the converse dynamic
nities and for specific forms of PSOs. In subsequent has also been raised, with cooperation over shared
work, the quantitative aspects of the methodology will water resources potentially giving rise to greater
be further developed, focusing on the development of regional stability (and even sometimes acting as a
robust indicators. trigger for peace; see Phillips et al., 2007, in press;
Turton, 2008a).
1.2 The objective of the TWO Analysis
The conceptual framework presented in the TWO 1.3 The strategic use of the TWO Analysis
Analysis can be used by stakeholders concerned with The TWO Analysis can be of use in a range of cir-
the development and management of shared freshwater cumstances:
resources to 1) promote the sustainable and equitable
use of transboundary water resources, 2) clarify trade- 1 By exploring development opportunities determined
offs in relation to development. It outlines a concept for to be PSOs the TWO Analysis can demonstrate pos-
analysing potential benefits in a river basin to optimise sible alternatives for countries sharing transbound-
economic growth, political stability and regional integra- ary water resources. It can be used in both formal
tion. The conceptual framework is intended to be used negotiations and in training situations.
by such parties as basin State Governments, Regional 2 The TWO Analysis can act as a ‘compass’ that identi-
Economic Communities, and financing entities. fies the need for subsequent detailed investigations
9
by riparian countries falling into two broad tracks: increased biodiversity and improved conservation, en-
a) political negotiations to be undertaken by the hanced water quality, and even greater possibilities for
countries concerned; and peace and regional stability. However, not all of these
b) cooperative strategic pre-investment analyses to public goods will necessarily be regional in nature.
identify development options and trade-offs. Care must be taken when managing transboundary
3 The TWO Analysis can act as a scenario tool to water resources, in order to avoid the generation of
illustrate longer-term changes and future options ‘public bads’ (Jägerskog et al., 2007). Development
in a non-threatening manner. within a transboundary basin can distribute local and
4 The TWO Analysis can identify opportunities for external costs and benefits unevenly between States,
public and private financiers to support initiatives regions and communities (such as pollution which
taken by riparian countries. This could lead to moves downstream). This can result in sub-optimal
feasibility studies, and to investment and transac- outcomes for certain stakeholders, the effects of which
tion advice to support development that could be must be considered when determining preferred devel-
either transboundary or intra-State, depending on opment options. Even where PSOs are possible at the
the circumstance involved. strategic level, all parties may not necessarily benefit
simultaneously. The TWO Analysis can function as
1.4 Development trade-offs a strategic tool to determine the scale and scope of
By jointly managing a river, riparians can generate trade-offs related to management and development
‘public goods’ such as flood and drought protection, opportunities and choices.
Photo: Jakob Granit, SIWI
102. The Conceptual Framework for the
TWO Analysis
This section describes the conceptual framework for the erations. Two specific forms of ecosystem services
TWO Analysis. In its most basic form, this consists of a include fisheries and tourism/ecotourism.
matrix with four key factors of development opportuni-
ties, and two main categories of fresh water sources to Additional context-specific opportunity factors that
realise those opportunities (see the matrix in Table 1). The are determined by the specific political, economical
framework also allows for context-specific analysis, in- and hydrological context may also exist.
cluding the possibility to add other factors and categories
for creative analysis. Each factor and category is described Categories of water sources:
in detail in subsequent sections of the report. Two main cross-cutting categories of options to allocate
finite amounts of water resources to specific develop-
2.1 The basic framework ment opportunities are identified here. Both categories
relate to the hydrological cycle; specifically to ‘New
Development opportunities: Water’ and to the efficiency of water use.
The four development opportunities for PSOs in trans-
boundary basins highlighted in this report show distinct a) New Water: The potential for New Water to be de-
types of possibilities for providing economic and other veloped within a basin (i.e. for an increased volume
returns from fresh water use. These are as follows: of fresh water to be made available). ‘New Water’ is a
term utilised by Phillips et al. (2006, 2007, in press)
1) Hydropower production and power trading: The in studies on the Jordan River basin, and represents
link between water management and hydropower additional volumes of fresh water that can be intro-
for electricity production and power trade to sup- duced to the hydrological cycle, through various
port economic development. Many developing means. The economic output from a transboundary
countries have large untapped hydropower po- basin can clearly be enhanced where New Water
tential and lack transmission interconnection and can be made available, and it is also possible under
power trading regimes which are common in more particular circumstances to attain more equitable
economically developed regions. allocations of water to the basin riparians, in such a
2) Primary production: Options related to improving scenario. It has been argued that in highly securitised
primary production using Green and Blue Water basins (see Turton, 2003), New Water may represent
resources; for example in agriculture for food and the only means for attaining more equitable alloca-
bio-energy production; and in forestry, where this is tions of volumes, especially where a strong hegemon
of particular importance. In most developing coun- is present (Phillips et al., 2006).
tries, the bulk of the available fresh water resource b) The more efficient use and management of water:
is allocated to the agricultural sector. Improvements An increase in the efficiency of water use in a trans-
in the output from this sector will generally combat boundary basin will give rise to enhanced benefits
poverty and hunger directly. – whether these arise from agricultural output or
3) Urban and industrial development: The potential for from other uses of water which provide greater
an inter-sectoral reallocation of fresh water from low- economic returns. The efficiency of water utilisation
value uses to uses with higher economic returns, in- in a transboundary basin is especially important
volving urban growth and industrial development. in circumstances where the basin is ‘closed’ or is
4) Environment and ecosystem services: Ensuring key approaching closure (i.e. where all, or nearly all, of
environment and ecosystem services for future gen- the Blue Water is in use). It is notable that many of
11Categories:
Sources
a) New Water b) More efficient use of c) Other sources in basins
Factors: water that are not closed
Development
New Water can be created by The siting of dams in trans- Power trade provides the op-
the siting of dams where evap- boundary basins influences portunity to optimise complex
orative losses are minimised. the geographical pattern of power-supply alternatives al-
The interplay to Green and water availability. This has a lowing for a mix of sources of
1. Hydropower Blue Water dynamics should profound impact on the net fuel, including hydropower, fos-
and power trading be addressed. benefits arising from a trans- sil fuels, nuclear, and renewable
boundary watercourse. energy such as sun and wind. It
reduces costs and provides for
transparency in all transactions
for the consumers.
Desalinated sources of water The key method of relevance Many opportunities exits for
are generally not suitable for to increasing the efficiency increasing the production of
agricultural use, due to cost of water use for primary pro- biomass by optimising land
and quality-related constraints. duction involves closer atten- and water use. This provides
2. Primary However, there is great scope tion to the Green Water-Blue opportunities to produce bio-
production for the re-use of treated waste- Water interface. The output energy to meet the growing
waters in many developing of the agricultural sector can demand for energy at the glo-
countries. Inter-basin transfers be greatly enhanced in many bal level and scaling up e.g.
are also likely to become much transboundary basins, if this is aquaculture to meet growing
more common in the future. taken into account. food demands.
The much higher economic Where inter-sectoral alloca- To ensure reliable supplies of
returns from water in the in- tions occur and move water water for growing urban and
dustrial and services sectors from agriculture to the sectors industrial needs, water should
3. Urban growth (compared to the agricultural with higher economic returns, be managed and stored so that
sector) provide a route to en- it is most important that the losses are minimised. Water
and industrial
hanced economic growth for resource is used efficiently, can be stored underground
development many developing countries. maximising the economic re- through recharge of aquifers
However, societal effects must turns per unit volume. for both water supply and to
be addressed. protect coastal aquifers from
salt water intrusion.
Enhanced attention to the All forms of more efficient wa- In basins that are not closed
upstream Green Water-Blue ter use will alter river flow dy- ecosystems such as wetlands
Water interface can improve namics, and this offers poten- that have been degraded can
4. Environment or guarantee aquatic ecosys- tial for optimising returns from be restored by allocating water
and ecosystem tem services in downstream ecosystem services. Fisheries to restore their capacity to gen-
services stretches of shared water- and tourism are especially im- erate ecosystem services. This
courses. Benefits from this can portant generators of income provides benefits such as wa-
be transferred upstream, as in in such scenarios. ter purification and increased
the ‘Green Credit’ proposals. biodiversity.
Many urban areas are found Recurrent droughts are a major Floods destroy physical infra-
along coastlines. Desalination obstacle for farmers relying on structure and social and eco-
5. Others (every of seawater provides, where rainfed agriculture to receive a nomic systems in many basins
basin is unique economically feasible, a new return on their investment. By globally. Flood protection and
water source for high value improving the natural storage early warning systems may be
and other op-
use. The use of desalinated capacity through improved important strategies to increase
portunites may water may reduce the pres- Green/Blue Water management the resilience of basins providing
exist) sure to abstract water for e.g. and groundwater storage a basin downstream benefits. Storage
urban areas in water stressed system can be less vulnerable infrastructure or restoring water-
basins. to the impacts of drought. sheds are tools to consider.
Table 1. The conceptual framework for the TWO Analysis.
12the basins in southern Africa are in this category • hydropower and power trading potential;
(Turton, 2003; Turton and Ashton, 2008; Ashton • primary production;
and Turton, 2008). Options also exist for improving • urban growth and industrial development; and
the existing efficiency in the use of fresh waters by • environment and ecosystem services.
the basin States in transboundary basins. These can
involve institutional strengthening, joint manage- 2.2.1 Hydropower and power trading potential
ment regimes and physical infrastructure.
The scale of river regulation
Context-specific categories again exist here, these being The ability of humans to alter the global hydrologi-
determined by specific political, economic and basin- cal cycle is perhaps best exemplified by the degree to
related parameters such as opportunities for inter-basin which the major rivers worldwide have been subject to
transfers, regional cooperation, and desalination. Addi- regulation. Figure 1 shows a summary of the present
tional water may also be brought into use, where basins situation, using the data of Nilsson et al. (2005), up-
are not ‘closed’ in nature (i.e. where all the available dated more recently by Nilsson (2006).
water is not yet being utilised). The TWO Analysis can The impacts of dams on the environment as a whole
be used as a broad framework for analysing development – both negative and positive – have been reviewed in
opportunities in basins where water is not a constraint detail by the WCD (2000). This text does not seek to
and allows for an analysis in which barriers are removed repeat this procedure. However, certain aspects of the
to optimise benefit generation and sharing. Barriers are effects of dams are of direct relevance to the search for
many and include borders, boundaries between local shared benefits and PSOs.
and regional jurisdictions, religious, ethnic, social and All impoundments in watercourses affect the local and
economic. Good water management needs to overcome regional hydrological cycle. The impacts of many dams
these barriers to development to improve the livelihoods are far-reaching. They can change total and seasonal
of people in the basin and beyond. flow patterns, evaporation rates, and many other factors
of relevance to the availability of Blue Water and how it
2.2 The factors relating to development may be utilised in transboundary basins (Puckridge et al.,
opportunities 1993; Davies and Day, 1998; Snaddon et al., 1999).
This section discusses the four key factors relating to the In certain instances, dams enhance the overall
development opportunities of a transboundary basin: availability of Blue Water to one or more of the ripar-
Figure 1. A broad classification of river regulation globally. After Nilsson et al. (2005) and Nilsson (2006).
13ians of transboundary rivers (usually due to their sins are not always taken into account – or sometimes,
smoothing out of seasonal flow fluctuations). In other the net effect on Blue Water availability is simply not
cases, dams reduce the overall availability of Blue given the weight that this factor deserves.
Water, usually because of high evaporation rates from
the impounded reservoirs. Other effects of major Power trading
impoundments in river systems are less immediately Power trading between countries is gaining momen-
obvious, but may be of significance. An increase in tum in many regions. In much of Europe and the
greenhouse gas emissions commonly eventuates due Scandinavian countries, power trading is an impor-
to decaying vegetation within newly constructed res- tant market-based regulated activity that allows the
ervoirs, and there is an intriguing link here to climate sale of excess power to utilities in different countries.
change effects. Alterations to sediment transport due This provides the opportunity to optimise complex
to dam construction can also be of importance, al- power-supply alternatives allowing for a mix of sources
though the downstream effects of this may be either of fuel, including hydropower, natural gas, coal, die-
positive or negative, depending on the precise situa- sel, nuclear, solar, wind, etc.). Power trading locks
tion within the basin. In certain instances, consider- countries together in a day-to-day trading relation-
able changes to the flow dynamics result from dam ship that benefits all parties. In Southern Africa, the
construction (especially on the main stem of rivers), Southern Africa Power Pool provides an important
raising concerns in a number of major rivers (e.g. framework for spreading risk and developing the re-
the Mekong River and the flood pulse; see Fox and gion in a cooperative fashion. Several power pools
Sneddon, 2005; Phillips et al., 2006). The regulation are under development in (for example) East Africa
of river flow also affects fisheries, both within the river and the Mediterranean area, including certain of the
itself and in estuaries. In some countries, eutrophi- Middle Eastern countries. Synergies can also arise
cation is an emerging problem, specifically where when New Energy becomes an option (harmonising
Cyanobacteria produce microcystins that are toxic with the concept of New Water discussed in Section
(Oberholster et al., 2004, 2005, 2008; Oberholster 2.3.1 below).
and Ashton, 2008).
2.2.2 Primary production
Issues to consider when evaluating benefits and PSOs Key indicators for inclusion in a TWO Analysis re-
involving hydropower lating to the potential for a PSO in the agricultural
Key issues to consider when evaluating benefits and sector are:
PSOs involving hydropower in a transboundary river • asymmetry in temperature and/or rainfall amongst
basin are: riparians;
• the existence of significant hydropower potential • asymmetry in the potential agricultural yields
in the geographically distinct parts of the basin; amongst riparians, sometimes relating to soil qual-
• asymmetry in the volumes of water available to the ity in addition to other factors;
co-riparians; • a significant consumptive use of Blue Water in
• a gap between electricity supply and demand for in- upstream stretches of the basin; and
dividual riparians, basin-wide or regionally; and • potential for expanding the irrigated area in down-
• a reasonably desecuritised character of the basin, stream reaches of the basin.
implying that the riparians are prepared to at least
consider cooperation. These factors are possible to quantify with data from
meteorological records; agricultural statistics from
The objective relating to hydropower facilities both national and international sources (the latter,
Decisions on dam sites are complex, and should take mainly through the Food and Agricultural Organi-
account of many aspects. The present analysis suggests zation); and databases on consumptive uses of water
simply that the net effect of dams on the availability of (AQUASTAT and several additional sources, varying
Blue Water to all the co-riparians in transboundary ba- according to the specific basin involved).
14However, other factors are also important in certain countries can solve any problems involving water scar-
circumstances pertaining to a PSO in the agricultural city by importing virtual water in foodstuffs and other
sector, and these include: commodities (Allan, 1998, 2001, 2002, 2003).
• the existence of sub-optimal existing yields in the It is clear in many transboundary basins – especially
agricultural sector, for one or more riparians; those in arid regions of the world – that a strong reliance
• the availability of effective transportation systems on the agricultural sector cannot continue indefinitely
for agricultural products, both within the basin without the prospect of a future catastrophic failure.
and to external markets; This is because the growing human populations of
• the existence of regional free trade areas which such basins generate an increasing demand for domes-
would allow agricultural produce from one country tic supplies of fresh water, effectively ‘squeezing’ the
in the region to be sold in other countries in the agricultural sector over time (see Phillips et al. [2007]
region; for a discussion of this in relation to the Jordan River
• the absence of trade sanctions and the existence of basin). Under such circumstances, a shift of Blue Wa-
developed (or at least potentially available) mar- ter away from the agricultural sector and towards the
kets within and outside the basin for agricultural higher economic returns available in the industrial and
produce, the external markets preferably offering services sector represents the only manner in which the
high economic returns for cash crops; and economies may survive. In many instances, this is the
• a political scenario which offers the potential for only option for significant economic growth.
benefit-sharing, in recognition that collaboration
amongst the riparians offers higher order solutions Current and anticipated urban trends
compared to any preference for notions of absolute In 2005, the urban population in the world was 3.17
sovereignty and food self-sufficiency. billion, of a total 6.45 billion. In 2007, the proportion
of the global population living in cities surpassed 50
Some of these factors can only be qualitatively assessed percent. With nearly one billion people currently living
in basins based on detailed expert knowledge. The in slums, the State of the World Cities Report for 2006-
intensive interrogation of transboundary basins for 2007 has questioned the entire notion of urban sustain-
their potential for a PSO in the agricultural sector is ability (UN-HABITAT, 2006). However, the current
therefore best attained within the framework of a Co- trends suggest that the number of urban dwellers will
operative Regional Analysis or similar form of study, keep rising, reaching almost 5 billion by the year 2030,
as suggested by Sadoff and Grey (2002, 2005). compared to a global population total of 8.1 billion.
Between 2005 and 2030, the world’s urban population
2.2.3 Urban growth and industrial development is expected to grow at an average annual rate of 1.78
The development opportunity relating to urban growth percent, almost twice the growth rate of the total world
and industrial development was selected in recognition population. After 2015, as more people occupy cities,
mainly of the much higher economic returns available the population of rural settlements around the globe
from water allocated to the industrial and services will begin to contract (UN-HABITAT, 2006).
sectors, compared to the agricultural sector. In the face of this ongoing and increasing trend
Most developed countries have already made the towards urbanisation and the accompanying indus-
transition from agriculturally-dominated economies trialisation, it is instructive to contemplate the politi-
(in which Blue Water generates very poor economic cal rhetoric within particular transboundary basins.
returns, in general) to service-based and industrial Several of the basin hegemons continue to promulgate
economies. The huge differences in per capita GDP statements concerning the intimate link of their people
between the developed nations and the transitional to the land, and the importance of the agricultural
or developing economies reflect in part the higher base of their economies (Zeitoun and Warner, 2006;
economic returns realised by the developed countries Zeitoun, 2008). Israel provides a prime example of
from the use of their available water resources. This this, although it is clear that the use of more than
also generates a self-sustaining scenario, as the richer 60 percent of the regional water resources by Israel
15to generate a mere two percent of its GDP does not wastewater, and also the potential re-use of certain
support this negotiating position. types of industrially-derived wastewaters).
In any event, certain of the developing countries Where developing countries opt to reallocate water
are part-way through a transition between an agri- inter-sectorally, it is most important that appropriate
culturally-based economy and a ‘developed economy’ decisions are made in relation to the specific preferred
in which water is allocated in increasing volumes to uses of the water in the industrial or the services sec-
industrial and services applications which have higher tors. All too often, the profligate use of water in the
economic value. agricultural sector in arid regions is replicated by an
Gleick (2006) has noted that the general global inappropriate choice of industrial developments, e.g.
trend towards industrialisation and service-based involving ‘thirsty’ users such as textiles. In arid regions
economies is threatened by concerns over both water especially, the drive to harness the higher economic
quality and quantity, especially in arid areas. The same returns from water within the agricultural sector should
is also true for the agricultural sector. Developing also be respected within the other two sectors. Israel
countries face these challenges related to water quality provides good examples throughout these scenarios,
and quantity on an urgent and daily basis, whatever having markedly improved its yields per unit water
decisions are made in relation to the inter-sectoral volume in the agricultural sector over the last two dec-
allocation of their fresh water resources. ades, and having also developed high-quality industrial
The scale of inward investment, the abundance facilities, many of which utilise very little fresh water
nationally (or nearby) of raw materials, and the avail- (e.g. its software and electronics industries).
able technical skills-base in industrial applications are
perhaps the most important factors that determine the 2.2.4 Environment and ecosystem services
degree to which developing countries can reallocate
fresh water inter-sectorally away from the agricultural Types of ecosystem services
sector. Major shifts of this type will not occur rapidly, Ecosystem services represent the benefits obtained
and the dynamic in most or all countries will reflect from ecosystems by humans. The term ‘services’ en-
gradual transitions. Recognising the gradual nature compasses both the tangible and intangible benefits
of these processes is important in a socio-economic involved (some authors preferring to separate ‘goods’
sense, as the transition between agriculturally-based and ‘services’ from each other). The main forms of
activities and the industrial and service sectors is chal- these are shown in Table 2 below.
lenging – both socially and politically. Importantly, We considered these various goods and services,
any shift towards the industrial and services sectors and concluded that two specific areas offer possibili-
should take account of the interplay between these ties as elements of PSOs for transboundary basins.
and the agricultural sector (e.g. the potential for the These involve fisheries and tourism (the latter term also
re-use in agricultural applications of treated domestic encompassing ecotourism). In relation to ecosystem
Provisioning Services Regulating Services Cultural Services
[Products obtained [Benefits obtained from the regu- [Non-material benefits
from ecosystems] lation of ecosystem processes] obtained from ecosystems]
Food Water regulation Recreation; tourism
Fuel wood Water purification Aesthetic; inspirational
Fibre Climate regulation Spiritual and religious
Biochemical products Disease regulation Cultural heritage
Genetic resources Pollination ‘Sense of place’
Education
Table 2. Forms of ecosystem goods and services, presented in broad categories. Modified after the World Re-
sources Institute (http://www.wri.org/).
16Photo: Jakob Granit, SIWI
services, the analysis provided here has therefore been ent cycling, physical changes, and destruction of habi-
restricted to these two aspects. tats, has a quantifiable economic impact. The economic
loss from reduced fisheries landings following alterations
Fisheries to the Zambezi River flows (due to the reduction in
Fisheries are an important source of both income and nutrients entering the Indian Ocean at the Sofala Bank
food in many developing and developed countries shar- fishery), has been estimated at between USD 10 and
ing transboundary watercourses. Some such basins offer USD 20 million annually (Turpie, 2006). In South
huge fishery-related yields and benefits, such as in the Africa, altered hydrological characteristics arising from
downstream stretches of the Mekong River (Phillips et a half-century of aggressive dam building combined
al., 2006), but it is a common finding that the fishing with failing sewage treatment works are leading to
success in transboundary basins remains sub-optimal, growth in microcystin-producing Cyanobacteria. This
especially in the developing world (e.g. see Cowx et al., has unknown implications on the population that has a
2004; FAO, 2004). It is also most important to note that high prevalence of HIV-AIDS (Oberholster and Ashton,
the flow of rivers is of critical importance in determin- 2008). Likewise, elevated levels of partially metabolised
ing downstream secondary productivity, as has been medical chemicals, specifically anti-retrovirals (enter-
shown very convincingly for a range of estuaries (e.g. see ing aquatic ecosystems that have reached a point of
FAO, 1995; Nixon et al., 2004). The recent study of the closure and thus have lost their dilution capacity) is
important prawn (Penaeus indicus) fishery in Maputo becoming an issue of growing significance to some
Bay – receiving flows from three transboundary rivers water-constrained countries (Turton, 2008b).
shared by South Africa, Swaziland and Mozambique – Generally, for most transboundary river systems,
has again emphasised the integrated nature of land use improved fishery yields are likely to exert only local
and water allocation practices within river basins, and or small-scale regional impacts on the reduction of
the estuarine/offshore fishery success (Monteiro and poverty and hunger. However, a few examples exist
Matthews, 2003; Monteiro and Marchand, 2008). where this is not the case (mainly for major rivers such
In some instances the alteration of freshwater flows, as the Mekong, the Amazon or the Zambezi) and the
with the attendant impact on sediment transport, nutri- effects are more widespread.
17Photo: Jakob Granit, SIWI
Tourism edly over the last two decades in particular. De-
Tourism represents one of the biggest and fastest grow- salinated water can presently be produced at unit
ing industries globally. It is also an important source of costs as low as USD 0.70/m3. This will alter the
hard currency income to many developing countries. dynamic in many transboundary basins, as such
This trend is expected to continue and strengthen in costs are within the range of bankable projects
the foreseeable future, and sustainability issues are (Phillips et al., 2006) and are comparable to those
coming to the fore (UNEP, 2005; Conrady and Buck, of the higher-cost surface waters or groundwaters
2007; Honey and Krantz, 2007). (e.g. those requiring considerable pumping and/
With its abundance and range of natural ecosystems or extensive pre-treatment). Recent decisions to
and its huge tourism potential, the African continent develop desalination in widespread geographies (e.g.
is of special interest. ‘Ecotourism’ represents a par- Algeria; California; Jordan; Namibia; Spain) reflect
ticularly fast-growing sector, and this depends on this altered dynamic, but many other countries are
the minimisation of negative human interference in yet to recognise the new opportunities afforded.
natural ecosystems and the regeneration of habitats to • The re-use of treated wastewaters. While this
enhance their diversity. In certain states in Africa and might be accounted for in the improved efficiency
elsewhere, tourism represents a significant contribu- of water use, wastewater re-use in fact increases the
tor to overall GDP. For example, Botswana receives total volume of water available to riparians sharing
approximately ten percent of its foreign income from a transboundary resource. In most instances, waste-
the tourism sector, with the downstream reaches of waters arising from domestic use are treated and re-
the Okavango River being of exceptional importance used for agricultural purposes. Where sewage treat-
in this regard (e.g. see Kalikawe, 2001). ment is already required to attain environmental
standards, the marginal cost of polishing effluents
2.3 The factors relating to the hydrological cycle for their re-use in agriculture is often affordable.
This section discusses the two categories identified in Quality-related issues require care in relation to the
the present study as being of key importance in rela- specific use involved, but problems of this type are
tion to the hydrological cycle: the capacity to generate well-documented and the technologies relating to
‘New Water’ within transboundary basins; and the their solution are widely available.
efficiency of water utilisation. • The improved management of the flows of trans-
boundary waters. This method of increasing the
2.3.1 New Water Blue Water volumes available for allocation requires
‘New Water’ represents additional Blue Water supplies understanding of watercourses. Watercourses repre-
that can be made available to the riparians within sent flows, not stocks. This means that the volumes
transboundary basins. New Water can be developed that can be withdrawn for use vary according to
in several fashions: management practices. A range of methods exists
• The desalination of brackish or marine supplies. to minimise losses from evaporation. This also links
Desalination technologies have improved mark- to Green Water, because certain management tech-
18niques relating to Green Water affect Blue Water 2.3.2 The efficiency of water utilisation
flows. Hoff (2008) has pointed out that the affores- The efficiency of utilisation of the existing water sup-
tation (or re-afforestation, in many cases) of upper plies represents the second of the two main factors
catchments – rather than enhancing downstream identified by the project team relating to the hydro-
flows, as was once considered the case – reduces the logical cycle. If these utilisation efficiencies can be
downstream availability of Blue Water because of the improved, transboundary fresh water resources should
much higher transpiration losses from trees (com- generate higher levels of economic growth. The present
pared to grassland, for example). A complex basin analysis considers this initially from the perspective
dynamic will emerge from such factors, especially of Blue Water only, and then addresses the interplay
where drivers involving carbon sequestration (due to between Blue Water and Green Water.
concerns over climate change) interplay with desires
to maintain downstream Blue Water flows. This in- Considerations relating to Blue Water
terplay has not yet been considered in any detail, but The sectoral allocation of Blue Water is all-important
will be important in certain transboundary basins. in any analysis of the potential economic returns from
• Inter-basin transfers of water. This involves the water utilisation. Sectoral allocations are generally
transfer of water in bulk (usually by canal or pipe- measured in relation to three broad end-uses of water:
line) between discrete basins. Inter-basin transfers for agriculture; industry; and services. The last of these
are a common feature in certain areas of the world covers a wide range of economic activities, and in cer-
such as South Africa (Turton, 2000, 2003), although tain instances will require ‘unpacking’ to investigate
their construction is somewhat controversial (Dav- potential added value from altered inter-sectoral al-
ies and Day, 1998), with some authors considering locations of water. In relation to the present analysis,
that ecosystem damage may eventuate (e.g. see it is important to consider water utilisation efficiencies
Snaddon et al., 1999). However, it appears likely within all sectors, as well as between sectors.
that such transfers will become more common,
as populations increase and specific areas become The importance of Green Water
more heavily water-stressed. The above analysis may be extended further through
the consideration of Green Water and Blue Water in
These methods of increasing the water volumes avail- concert. The importance of Green Water has only
able to the riparians of transboundary basins are not recently become appreciated, and very little reliable
mutually exclusive. As an example, both desalination quantitative information is available on the resource.
and wastewater re-use are quite common in the Jordan While it is known that Green Water comprises the
River basin. Inter-basin transfers of water have also bulk of the available fresh water resource in most
been considered (by Israel in particular, with a scheme basins (being approximately twice the volume of
for transfers from the Manavgat River in Turkey hav- Blue Water in the Nile River basin, for example; see
ing been shelved, but other possibilities remaining LWRG, 2007), the precise relationships between the
of interest).3 Indeed, the Red Sea-Dead Sea conduit two resources vary considerably among basins and ac-
currently undergoing a Feasibility Study involves an cording to meteorological, geological, morphological
inter-basin transfer, desalination and environmental and other factors.
services (Benvenisti, 2004; see also the World Bank
website at http://www.worldbank.org). Phillips et al. 2.3.3 Other water sources
(in press) suggest that inter-basin transfers are most Where basins are not ‘closed’, additional water remains
likely to occur in the future in this geography, in part available for allocation to particular development oppor-
to satisfy the rapidly growing domestic demand for tunities. The TWO Analysis can assist in determining the
fresh water. optimal allocation patterns for such additional flows.
3
Israel’s shelving of the importation of water from the Manavgat system in Turkey has been followed by more recent studies on the possibil-
ity of multiple undersea pipelines from Turkey to Israel, for the supply of oil, gas, electricity and fresh water (Chossudovsky, 2006).
193. The TWO Analysis in Context:
Issues to Consider
The TWO Analysis is multi-disciplinary and considers that developed by the TWO Analysis into these inner
many cross-cutting issues related to politics, economy, sanctums that deal in high politics.
investment and the environment. These are discussed The impact of the TWO Analysis will be immensely
below, commencing with the political dimension and increased if the principles and framework are adopted
moving on to more technical issues of relevance. by these inner (shadow State) entities that have an
intuitive and unhelpfully narrow grasp of sovereignty
3.1 The broad political context and national security – including water security. The
This report has been prepared by a team that has issue is not new. At the end of the nineteenth century,
very wide experience of international relations over US Attorney General Harmon, when asked for an
transboundary waters. This experience has led them to opinion on the shared waters of the US and Mexico,
recognise the nature of transboundary water conflict adopted the narrow intuitive view of water security. On
and the key roles of different Departments of State of his mind was sovereignty. It took the US water profes-
the riparian Governments involved in transboundary sionals ten years to negotiate an agreement between the
international relations. parties which included the notion of equitable utilisa-
When the shared water resources are abundant, tion. They ignored the Harmon opinion – although
the level of conflict is generally low, as the sovereignty that opinion perversely remained in currency for the
issues – over such waters – are ‘low politics’. As aware- following century, in some quarters at least.
ness of water scarcity increases, transboundary waters
become an issue of sovereignty and the stewardship of 3.2 Socio-political issues of relevance
the resource moves from departments managing the Underlying resource circumstances play an impor-
water to entities that conduct foreign relations – the tant role in determining the extent to which sustain-
Ministries of Foreign Affairs. Even more important able approaches to water use and management can
than the shift from water resource professionals to be achieved. These are frequently invisible to water
professionals in diplomacy and international relations, users and water policy-makers. They can, however,
is the shift of responsibility to inner groups that run the be identified by scientists – and especially by ‘outsider
really serious affairs – the ‘high politics’ – of State. scientists’. Working together, scientists and economists
By the end of the twentieth century, highly devel- can also identify opportunities to achieve collective
oped economies with a wide range of economic and benefits through the cooperative behaviour of ripar-
regulatory options were engaged constructively in ians, deploying principles of ecological security, and
transboundary relations. They could negotiate out- of economic security and efficiency. In addition, issues
comes and development frameworks – for example the of equity play a role in identifying opportunities that
Water Framework Directive of the European Union could enable those riparians enduring inequitable
and its daughter Directives – that lead to mutual ad- access to shared waters, to improve their allocations.
vantage through the recognition of shared benefits. By The asymmetric inter-riparian power relations that
contrast, political economies that lack these adaptive, bring about these inequities are intensely political (see
economic and administrative options almost always Zeitoun and Warner, 2006; Zeitoun, 2008).
lock the transboundary water issues into an inacces- Sustainability is a useful conceptual lens – at least
sible world populated by a few officials close to the when it is defined by the discursive political pressures of
national leadership – an inner cabinet or other political the three voices that contend to project their respective
group trusted by the President or the monarch. It is rationales of sustainability – namely the sustainability
very difficult indeed to introduce information such as of society, the sustainability of the economy, and the
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