Integrated Water Resources Management (IWRM) is a process

which promotes the coordinated development and management of water, land and
related resources in order to maximize economic and social welfare in an equitable
manner without compromising the sustainability of vital ecosystems and the
environment

The private water sector plays an important role in financing water resource management
through investment in service delivery in water supply and sanitation, and irrigation (typically
when the source for irrigation water is groundwater). Commercial banks and other financial
institutions (such as the World Bank) play an important role in financing both public and private
sector service providers. The private sector also invests in environmental protection as a response
to regulation, legislation and specific incentives. As it is of considerable prominence – and
growing interest – at present, this tool focuses on the direct role of the private water sector in
water supply and sanitation.

The motives for growing involvement of the large and/or international private sector are:

 Financial. Government passes on the cost and work of raising funds;

 Political. Necessary but unpopular reforms (e.g. raising tariffs, collecting unpaid bills,
reducing the workforce) are carried out by private companies rather than politicians;
 Expertise. Private companies, if large or international, bring essential know-how in some
technical and economic fields;
 Risk-sharing. Private companies are typically better at handling risks.

Small-scale or community-level private sector involvement depends on government economic

policies enabling access to finance. Micro-finance and community banks allow poor people to
finance small-scale water infrastructure, for both domestic and agricultural use.

The main types of private involvement (also known as privatization and PPP) in water service
provision are through:

 Contracting out – the least controversial form of private sector involvement. A water
undertaking sub-contracts certain functions to private firms, e.g. meter reading;
 Leasing. The water system remains in public ownership, but is leased to private
operators. In French-speaking areas this is relatively common;
 Concessions. Assets remain in public ownership, but use of the system is conceded to
private operators for a certain period of time, for example 20-25 years; the private
operators are expected to invest in specified improvements and expansion;
  BOOTs (Build, Own, Operate, Transfer) and BOT (Build, Operate, Transfer) are
concessions, usually for new facilities. After a specified number of years, the facility is
handed to a public organization;
 Joint ventures in operating companies;
 Divestiture. An extreme form of privatization, in which full ownership of assets is
transferred to private shareholders. Stringent public regulation is required. The only
large-scale example is in England and Wales.

Government has a key role in providing a clear regulatory framework, and ensuring that the poor
are served and users are protected from excessive costs.

Water is a key driver of economic and social development while it also has a basic function in
maintaining the integrity of the natural environment. However water is only one of a number of
vital natural resources and it is imperative that water issues are not considered in isolation.

Managers, whether in the government or private sectors, have to make difficult decisions on
water allocation. More and more they have to apportion diminishing supplies between ever-
increasing demands. Drivers such as demographic and climatic changes further increase the
stress on water resources. The traditional fragmented approach is no longer viable and a more
holistic approach to water management is essential.

This is the rationale for the Integrated Water Resources Management (IWRM) approach that has
now been accepted internationally as the way forward for efficient, equitable and sustainable
development and management of the world's limited water resources and for coping with
conflicting demands.

There are great differences in water availability from region to region - from the extremes of
deserts to tropical forests. In addition there is variability of supply through time as a result both
of seasonal variation and inter-annual variation. All too often the magnitude of variability and
the timing and duration of periods of high and low supply are not predictable; this equates to
unreliability of the resource which poses great challenges to water managers in particular and to
societies as a whole. Most developed countries have, in large measure, artificially overcome
natural variability by supply-side infrastructure to assure reliable supply and reduce risks, albeit
at high cost and often with negative impacts on the environment and sometimes on human health
and livelihoods. Many less developed countries, and some developed countries, are now finding
that supply-side solutions alone are not adequate to address the ever increasing demands from
demographic, economic and climatic pressures; waste-water treatment, water recycling and
demand management measures are being introduced to counter the challenges of inadequate
supply.

In addition to problems of water quantity there are also problems of water quality. Pollution of
water sources is posing major problems for water users as well as for maintaining natural
ecosystems.
The Dublin Principles were carefully formulated through an international consultative
process that culminated in the International Conference on Water and the Environment,
in Dublin, 1992. These four principles aimed to encourage change in those concepts and
practices which are fundamental to improved water resources management.

The Dublin Principles also contributed to the Agenda 21 recommendations adopted at the
United Nations Conference on the Environment and Development in Rio de Janeiro,
1992. Since then these principles have received universal support as the guiding
principles that under-pin IWRM.

The four Dublin Principles are:

1. Freshwater is a finite and vulnerable resource, essential to sustain life, development

and the environment.
2. Water development and management should be based on a participatory approach,
involving users, planners and policy makers at all levels.
3. Women play a central part in the provision, management and safeguarding of water.
4. Water has an economic value in all its competing uses and should be recognized as an
economic good.