MEASURING WATER USE IN A GREEN ECONOMY - UNEP

Measuring water use in a green economy
According to classical economic thinking,
in idealised market conditions the pricing
mechanism should ensure the allocation
of resources to their most productive uses
and thereby maximise social well-being.
Reality differs markedly from optimal market
conditions, however, and prices often provide
highly distorted signals of resource scarcity and
the full costs and benefits of our actions, leading
to inefficient investments and resource use.
Economists assessing market failures and
responses often seek to derive prices for
human preferences. Such values represent
a very important analytical tool. They render
diverse ecosystem services commensurable
with each other and with other economic and
social costs and benefits, and make it possible
to integrate these values into decision-making
and policy incentives.
This last point leads us to an additional area
where decision-makers require knowledge
to guide the transition to a green economy:
information on the policies, tools and
technologies that can be deployed within
the economy (at national, regional and other
scales) to extract more value from resources,
while minimising waste and emissions.
Market-based tools are clearly important as
a means to correct price signals and thereby
incentivise an adaptive water management
and better allocation of resources. But there
is also a role for regulatory information-based
approaches. Clearly, the underlying knowledge
base on resource use and natural systems will
be essential for designing effective tools and
setting and monitoring appropriate targets for
keeping the limits of sustainability, as outlined
in the following chapter.
As examples from Jordan, Singapore and
Netherland show, knowledge of available
and used resources is key to developing the
governmental and institutional setting for
sustainable water management. The availability
or constraints of water resources, particularly
in water-scarce areas, pose a significant risk
to political and social stability (i.e. Jordan,
Singapore but also in the African and Chinese
case studies). Climate change is further
increasing these risks. In this sense, knowledge
management and risk management go hand
in hand, using appropriate tools, reliable
information and indicators on the status of the
resources and the impacts on ecosystems and
their social and economic consequences.
2.4 Decoupling concepts
At the core of the concepts of sustainable
development and the green economy is
recognition of the need to break the link
between economic development and resource
use - to ‘decouple’. The notion of decoupling is
intuitively simple to grasp but scrutiny reveals
various nuances.
The first Resource Panel report on decoupling
(UNEP, 2011a) used the term to denote a
reduction in the amount of resources used
or environmental impacts caused per unit
of economic output. Figure 2.4 represents a
simplified diagram differentiating possible
developments of GDP, different trends of
resource use and human well-being.
The IRP decoupling report (UNEP, 2011a)
introduced terminology for several forms of
decoupling:
• Resource decoupling in general means
reducing resource use per unit of
economic activity. This can be expressed
by comparing economic output over
time with the resource input (water use).
The resource use itself can increase or
decrease in relation to a reference value
(100 per cent). This principle of resource
decoupling is specified in more concrete
cases:
• Relative decoupling occurs when resource
use still increases but at a lower rate than
economic growth.
• Impact decoupling occurs when the scale
and character of resource use causes
no negative environmental impact so
that natural systems can function and
provide ecosystem services sustainably,
respecting the limits and resilience of the
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