Mapping incentives for sustainable water use: global potential, local pathways

Competition for freshwater resources is intensifying water scarcity and its impacts on people, economies, and the environment, posing a growing challenge for sustainable development. Meeting these challenges will require incentives to encourage sustainable water use. Prior calls to shift from supply-driven solutions to a soft path of demand management (pricing, markets, behavioral changes) have encountered stubborn obstacles. We undertake a multi-scale assessment of water reallocation and investment in water conservation technologies to understand their potential and limits for addressing different drivers of water scarcity. Our model identifies what drives water scarcity at the subbasin scale, and examines two prominent responses to these drivers. Our analysis distinguishes different types of water scarcity based on the demands for water and their timing, creating nine (9) categories of water competition, which can overlap. Water demand within agriculture contributes to scarcity in 94% of the basins experiencing scarcity, concentrated in central USA, Spain, and India. Urbanization has led to competition between cities and agriculture in 1,596 of 3,057 subbasins (52%). We examine how different institutional mechanisms (incentive-based water reallocation) and technologies (investment in water conservation technologies) can address these different types of water scarcity. This study builds on several local and high-resolution models demonstrating the potential to increase the economic efficiency (and marginal productivity) of water use. The gap between potential and implementation is high, however. Efforts to bridge this gap in priority geographies can link modelling advances with the design of pathways that combine incentives with robust water accounting, caps on water extraction, and enforcement capacity at multiple scales.