This document discusses economic instruments for integrated water resource management. It outlines key concepts like the public good nature of water, supply and demand, and full cost recovery. Economic instruments can help balance water supply and demand management by addressing issues like markets not being active in the water sector. Instruments mentioned include water tariffs, taxes, subsidies, fees, permits, and pollution charges. The goal is to help recover the full costs of water services provision given water's public good features.

1. Economic and Financial Instruments for IWRM Introduction to economic instruments for water management

6. Multi-sector use

7. Public-good nature of water resources

9. The supply function Quantity supplied Price

10. The role of variable and fixed costs

12. The demand side and net benefits Price Quantity demanded Net benefits for consumers when a price p* is charged p*

13. Competitive market

15. Full cost recovery approach: the situation Plus: V: Environmental costs VI: Opportunity costs Supply Costs: I: Operations and maintenance costs only II: Average financial (capital + O&M) cost, with capital valued in terms of historical costs III: Average financial (capital + O&M) cost, with capital costs computed in replacement terms IV: Long run marginal cost of additional supplies