• Adopting a watershed or river-basin management perspective, especially in water-short regions (also appro-priate as an international response, since watersheds frequently cross national boundaries);
• Instituting a workable water infrastructure so that national, regional, and local water needs can be met within the context of a national water policy;
• Enacting and enforcing water legislation and regulations that conserve water and value the resource properly according to type of use; and
• Connecting water management to the needs of agriculture, industry, and municipalities, and meeting public health requirements for proper sanitation and disease prevention.

The US defines a watershed as the entire area drained by a river system or one of its major tributaries. The UK defines a watershed as the divide between river basins, a potentially much larger area. No matter how it is defined, "we need to see a river or lake, along with its entire watershed and all its physical, chemical, and biological elements, as part of a complex, integrated system," according to Janet Abramovitz of the Worldwatch Institute (1).

Everyone has a watershed address: We all live in basins that drain rainwater into streams and rivers that eventually send the water back to the sea or into inland lakes. The people living in most of these addresses have radically altered the natural drainage systems around them. Tampering with watersheds has proved ruinous for many developing countries, where hillsides denuded of vegetation empty tons of soil into water courses every year, causing floods during the wet seasons and suffocating aquatic life during the dry seasons.

Deforestation has ruined land and altered climates, causing less rain to fall in some areas. In others, rainwater runs off so fast that little can be collected for use. In sub-Saharan Africa, for example, the albedo effect—the drying of the landscape as a result of the wholesale clearance of tropical forests and poor farming practices—has resulted in below-average rainfall over the past 40 years compared with the century as a whole (2).

Watershed or river basin management pays multiple benefits. The economic value of ecosystem maintenance is high. The value of an intact floodplain, for instance—including its fisheries, wildlife, recreation, and natural flood control effects—has been calculated at close to US$2,000 per acre (1). Another estimate puts the value of one hectare of wetland at US$15,000 (92).

Ideally, a comprehensive watershed management plan mobilizes communities and individuals and gains broad public acceptance at the national level (79, 102). Watershed management is not easy to accomplish, however. It is a complex and contentious process that involves many stakeholders with competing views about water use. Not many countries have been able to initiate workable watershed management strategies (27). In fact, the Chesapeake Bay, the largest brackish water estuary in North America, has one of the few comprehensive watershed management plans in operation anywhere in the world (see side-bar, Successful Watershed Management: Restoring the Chesapeake Bay) (90).

A number of other countries also have instituted river basin management schemes or are in the process of doing so (67). The Murray-Darling River Basin Commission in Australia, for instance, is an intergovernmental organization whose main aim is to coordinate the management of water resources across state borders within the Murray-Darling River Basin, the country's largest river system (79). The commission's technical abilities are comprehensive, covering river management and ecology, environmental impacts, finance and administration, and communication. All development activities within the river basin fall under the jurisdiction of the commission, and all government agencies connected to water management and its uses must collaborate (79).

In India, as a result of the 1987 National Water Policy Act, the states of Rajasthan and Gujarat are setting up a committee to regulate and control water use in the Sabarmati River Basin, which encompasses parts of both states (128). The average amount of water available in the Sabarmati River Basin amounts to no more than 360 cubic meters per person per year, making it one of the most water-stressed regions in the country (128). Water is not only a very limited resource, but it is also increasingly polluted by irrigated agriculture.

To deal with these problems, the committee will regulate and manage water resources in the entire river basin, with a structure that gives a voice to representatives from each major water user group. The committee hopes to establish broad popular and institutional support and a structure capable of ensuring that polluters are fined and that major users pay a fair price for water. If the system works, it may be extended to other water-short areas of India with high population densities (128).

Freshwater supplies that originate in mountainous areas also can be better protected and managed at their source, observes Mountain Agenda, a nongovernmental organization interested in sustainable mountain development. According to the organization, in humid areas the proportion of water generated in mountains can comprise as much as 60% of the total freshwater available in the watershed areas, and as much as 95% in arid areas (146).

2. Building institutional capacity. Managing watersheds and river basins sustainably means building institutional capacity, including the creation of cross-sectoral data collection and monitoring systems (27, 47). Capacity building is a key theme of international organizations promoting change, including the World Bank, the United Nations Development Program (UNDP), and the Global Water Partnership (130). To build capacity, the following measures are needed:

• Assessing national capacity-building requirements. It is vital for governments to know the capacities of their water-sector agencies as a first step toward improvements.
• Creating competent administrative and legal structures. The technical and administrative competence of national, regional, and local agencies responsible for water management must be strengthened before progress can be made in water management.
• Making institutions more responsive and effective. Water-management agencies, both public and private, must also be able to respond to changing situations (political and social as well as environmental). Static organizations and outmoded procedures need to be overhauled, especially as countries enter the water-stressed or water-scarcity categories.
• Training senior water managers. Few hydrologists have been trained to consider water resources broadly. As well as an engineering approach to water management that considers supply needs and how to satisfy them, a demand-oriented approach is increasingly needed.
• Establishing closer ties to universities and research institutes. Since water issues embrace societal concerns and cultural values, water agencies should reach beyond the usual government channels and draw on a wide spectrum of opinion and expertise in order to assess freshwater issues and find solutions.

There are several good examples of how water can be valued more appropriately than is the usual case. Chile established a water market in the mid-1980s that not only has saved water but also has enabled farmers to meet their needs by trading water rights among neighboring farms. A World Bank study of the water market system concluded that it contributed greatly to better management and fairer pricing (164).

Similarly, in southern California, US, chronically one of the most water-short regions in a water-short state, the San Diego County Water Authority reached an agreement with farmers in the Imperial Valley area east of the city of San Diego. The agreement encourages farmers to conserve up to 200,000 acre-feet of water a year and sell it to the county, which would finance the conservation measures and pay farmers cash incentives to participate. San Diego County would benefit from the guarantee of cheaper water, and the farmers would, in effect, be paid to conserve the resource. This approach to water management could change the dynamics of water use throughout California (42, 148).

In São Paulo, Brazil's most populous state, where water resources already are stretched thin, increasing demands from municipalities, industries, and agriculture threaten to cripple the state's capacity to manage scarce supplies. In 1997 a draft Water Pricing Law was sent to the state legislature that could form the basis for an entirely new water management policy. Under the proposal, the price of water will be determined by the source of supply, type of use (whether municipal, industrial, or agricultural), and the availability of water. The fees collected under the policy would be re-invested in the water management infrastructure (76).

4. Managing water for sectoral needs. A workable water management system requires the institutional capacity to balance sectoral needs for the good of society as a whole and also to consider ecosystem needs (67). Water allocation, rather than absolute scarcity of water, often lies at the heart of national water problems. Without policies that link the supply of freshwater to competing sectoral uses, local and regional water shortages often result, and competition becomes increasingly bitter (198).

In developing countries meeting sectoral demands is challenging because most lack efficient water management systems and equitable pricing policies that are based on how water resources are used. For example, although China passed a national water law in 1988, there is little coordination of sectoral water use between the Ministry of Water Resources, the river basin commissions, and the various provincial and local authorities (79).