GWP Toolbox - C7 Economic Instruments. Using value and prices for efficiency and equity

Economic instruments can complement the use of institutional, regulatory, technical and other kinds of tools used in the water sector. In general, economic instruments involve the use of prices and other market-based measures to provide incentives to consumers and all water users to use water carefully, efficiently and safely. Economic instruments may offer some advantages over other tools, such as providing incentives to change behaviour, raising revenue to help finance necessary adjustments, establishing user priorities and achieving overall IWRM management objectives at least overall cost to society. For successful application economic instruments need appropriate standards (e.g. for discharges or surface water quality), effective administrative monitoring and enforcement capabilities, institutional co-ordination and economic stability.