New Orientations in Socio-economic Approaches to Water

Submitted by Arthur Dahl on 27. May 2011 - 23:40
Dahl, Arthur Lyon

(Klingenthal, France, 26-30 November 1997)


Arthur Lyon Dahl
Geneva, Switzerland*

Economic instruments can be very useful in the management of water resources, but there are still many ways that the present economic system fails not only to provide for all the requirements of the sound management of water, but more generally to meet the broader needs of society and its sustainable development. In this context, where we are asking fundamental questions about the relation of ethics and spirituality to the environment, and to water in particular, it is worth looking beyond adaptations of the present economic system to other alternatives. We should recognize the failures of modern Western economics and of the institutions to which it has given rise, and try to imagine what kind of system it would be desirable to put in its place, particularly taking into account a more ethical, spiritual and ecological perspective.

If we look at how the economic system treats water, it is either viewed as a common property resource to be freely shared, or (more frequently in these days of privatization) as a good to be priced and traded in the market. Yet neither approach ensures sound water management, since many functions, services and values of water are not used or traded in the market. These include the value of aquatic environments as a habitat for biodiversity and a site of basic ecological functions, the amenity and recreation values of water, its use as a medium for transportation, its function in displacing and transporting materials and pollutants, its role in waste treatment and dilution, and even its place as a waste repository (although this latter is unsustainable). As a result we are accumulating many kinds of water debts which future generations will have to repay if the values and functions contributed by water to human welfare and the environment are to be restored. Watershed destruction, the depletion of water reserves, the degradation of water quality and accumulation of pollution in both surface and ground waters, and the use of the oceans as the ultimate sink for many wastes and residues of our civilization, all represent depreciation of the natural capital of water resources with which this planet was originally endowed.

On what basis can we consider alternative economic systems and approaches? We should not feel too attached to the present economic and institutional mechanisms of society. A quick glance at history shows that these have often changed in the past and will certainly change in the future. These systems and structures were created to be of service to humanity, not humanity to be crucified for any particular theory or mechanism. The Communist system of the former Soviet Union collapsed with amazing rapidity, and there is nothing that says that the free enterprise market system, which shares many of the same materialistic orientations of its former opposite, is any more stable. If it suffers a major shock or collapses, what will we put in its place?

From the perspective of water, a more optimal economic system would facilitate the long-term sustainability of water use and renewable water resources. It would also incorporate the ethical dimensions of water use, including equitable distribution and access, and apply the golden rule not to do unto the water of others what you would not want done to your own water.

More fundamentally, the failures of the economic system are not so much in the market mechanism itself, as in the basic values which, almost unconsciously, underlie modern economics. Only the material counts in economics; the spiritual dimensions of humankind cannot be costed, bought or traded, and are thus mere externalities, as are many other social, cultural and environmental dimensions of society. The concept of the invisible hand of Adam Smith accepts and even fosters as desirable a selfish, egotistical view of humanity. Add to this a Darwinian survival of the fittest which implies that the unfit (the unemployed, the uncompetitive) do not deserve to survive. There is an emphasis on individualism (at least in the U.S. variant) almost to the exclusion of any collective social interest, together with an allergy to government, and a reductionist perspective that does not recognize any special characteristics or advantages in larger social groupings. Furthermore these values are not only the guide to the individual behaviour of economic actors, but have been institutionalized in the very fabric of modern businesses and the corporate structure of the multinationals. The immediate imperative to make as much money as possible ignores or discounts long-term interests, while it is perfectly acceptable to pass on any external costs to others (especially those too weak to defend themselves), to the collectivity, or to future generations. The inevitable result is to increase the extremes of wealth and poverty, while leaving a growing burden for the future. While stronger governments can curb some of these effects at the national level, there are no equivalent possible mechanisms of control globally. Even the most ethical and well-intentioned people are trapped within this system and can do little to modify its impacts.

In contrast, all the religions and spiritual traditions teach the existence of another reality, a spiritual or "Divine" reality that is fundamental to human nature and thus to society. We all recognize other purposes than self-interest. Man is not fundamentally aggressive and selfish; it is only the lack of adequate moral and spiritual education that leaves him in this unhappy state. How do we incorporate this recognition into an economic system?

Exciting new work in science is also showing the existence of collective properties of complex systems, and their capacity for self-organization beyond the behaviour of the individuals that compose them. Systems analysis, chaos theory, neural networks and other techniques are establishing the importance of group behaviour and the adaptive value of altruism, love, truthfulness and other spiritual principles that foster cohesion and unity, principles long considered old fashioned or irrelevant to economic efficiency.

It is within this framework that we must rethink the economic system, developing new concepts based on a wider set of values and ecological principles, in an integrated view of our relationships to each other and to the environment on which we depend for our survival and well-being. The key to this transformation is the recognition that values are the basic rules of human behaviour and interaction. If we change the rules, then the mechanisms of the economic system will operate differently. These new values need to be incorporated at both the individual and institutional levels, including corporations and governments. It has in fact been the traditional role of religion to vehicule and integrate such basic values into the very fabric of society.

As an example, imagine how the market mechanism would work if, instead of using every trick to gain market advantage, buyers and sellers consulted openly and honestly about the just price for a transaction. Similarly, business corporations could be legally chartered to provide the best possible services to society, with due respect to social constraints and collective interests, and their managers judged by their performance against these criteria. Profitability would then just be one measure of efficiency in performing these services.

More fundamentally, we could change the measure of wealth itself. Instead of measuring the value of everything in terms of money, and the efficiency of an economy by how much money flows through it, we can recognize that real wealth creation comes from the fulfilment of individual human potential and creativity in all its diversity. The measure of development would then no longer be GNP, but the extent to which a society was able to make full use of all the human resources within it to better its collective life.

Justice and equity should provide the fundamental principles for the distribution of wealth, encouraged as far as possible through voluntary sharing rather than coercion. Principles of moderation in technological development, of contentment with little, and of detachment from material things as necessary and useful but not really important, would counteract the excessive consumerism of modern society and facilitate a reduction in resource consumption and environmental impact in the industrialized countries. A world perspective recognizing and appreciating the diversity of the component social entities, coupled with a long-term view, would facilitate a move towards sustainability.

The challenge, therefore, is to incorporate these and other similar values into the economic principles, structures and mechanisms of society. Since these values are common to most religious and spiritual traditions, we can combine forces to build a ground-swell for change, laying foundations through education and sensitization for the necessary transformations in human civilization on this planet.

In terms of water, such a renewed and reoriented economic system would be able to take into account the multiple human and natural benefits of water, and facilitate the management of water resources for long-term sustainability. Such values would encourage a respect for the purity and cleanliness of water, and build a sense of responsibility to avoid pollution and waste. It would even extend to the beauty that water brings into our lives. We shall only be able to achieve sound and sustainable water management on the basis of such new values, and the institutional expression of those values in our socio-economic system.

* The views expressed are the author's own and do not necessarily reflect those of the United Nations Environment Programme.

Last updated 21 April 1999