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100UNIVERSITIES COUNCIL ON WATER RESOURCESJOURNAL OF CONTEMPORARY WATER RESEARCH & EDUCATIONISSUE 135, PAGES 100-106, DECEMBER 2006From Value to Finance: Making IWRM WorkBen Lamoree and Frank van SteenbergenArcadis EuroconsultThe discussion on Integrated WaterResource Management (IWRM) has beenvery rich on institutional change (basinorganizations, apex water bodies, legal reform)and on process management (multi-stakeholderprocesses, consultation and participation), but attentionto the financial dimension of IWRM has been lessdeveloped.The gist of IWRM is that in water managementthere are many different functions to be managedsimultaneously. Through investment and managementinterventions, values are created (or destroyed)in connection to these functions: productivity values,amenity values, property values, environmentalconservation values, and more. The challenge inIWRM is to, at a minimum, balance these differentfunctions and values, yet preferably to optimizethem. This paper further argues that these differentvalues need to be captured and, when possible,help finance the management of water resourcesystems in an integrated way. We present this asan improvement of the principle of “water as aneconomic good.” The economic good argumenthas, in our view, often led to reductionist strategies,focusing on recovering the financial cost of wateronly and not maximizing and recovering the valuesassociated with the many functions of water.This paper first clarifies some definitions andthen discusses how to capture values and turnthem into financial contributions to IWRM usingillustrations from several parts of the world. Thepaper then comments on the principle of water asan economic good, long considered as the financialunderpinning of IWRM. We look particularly atwater pricing for demand management, closelyassociated with the theory of water as an economicgood. It argues that a broader financial strategy,based on balancing, improving, and capitalizingon increased values related to water management,is more promising in funding IWRM and makingit work. Finally, some institutional aspects of thisapproach are explored.Functions and ValuesThe concept of functions describes the goodsand services the natural resource system providesor performs. There is almost always a wide rangeof functions associated with any given resourcesystem (Abdel Dayem et al. 2004). Table 1, forinstance, is a list of functions associated withirrigated areas. Other lists can be produced forother natural resource systems.Values is the concept through which societalpreferences, perceptions, and interests with regardto functions provided by natural resources areexpressed. These values are social, economic,financial and (temporal and spatial) ecologicalvalues. Values should not be seen separate fromstakeholders. They are not general and abstract,but they are always values to stakeholders. Thesemay be farmers, property owners, industries, localtowns, livestock owners, fishermen, and so forthand, in many cases, the public at large.The point of such lists is that there is usuallya large number of functions, many of which inpractice are overlooked in resource management,if only because the organizations that arepractically managing the resource have a limitedagenda and mandate. In the management process,important opportunities to create value for variousstakeholders are missed.Quite typically the many functions in irrigationUCOWRJOURNAL OF CONTEMPORARY WATER RESEARCH & EDUCATION