Eight Planning Models for 21st Century Water Allocation

One of the criticisms often leveled at Australia's National Water Initiative (NWI) is that the pathway specified for water reform attempts to combine market-based, regulatory and participatory elements, which are not necessarily compatible policy mechanisms. The tensions inherent between these different elements are intended to be resolved through implementation, and in particular in the detailed delivery of NWI through water resource plans.

What is less frequently observed, however, is that each of these policy mechanisms also have corresponding planning approaches. Understanding the particular advantages and disadvantages for each of these planning approaches, as well as their information requirements and utility in specific circumstances, is central to the development of water resource plans that are 'fit-for-purpose'. A paper by Professor Jay R. Lund - who is Director of the University of California's Center for Watershed Sciences - attempts to to summarise and organise the various approaches to water resources planning. Eight approaches are outlined by Professor Lund:

Requirements-based planning
Benefit-cost-based planning
Multi-objective planning
Conflict resolution planning
Watershed planning
Adaptive management planning
Market-based planning
'Muddling through' planning

Each of the approaches outlined by Professor Lund is summarised below, however reading his entire article is highly recommended.

Requirements-Based planning is sometimes referred to as “project and provide" planning, and draws from a traditional approach to formulating engineering problems. Planners first define the functional specifications that the system must satisfy, and then design (plan) the system to meet these requirements at the lowest cost or with the greatest reliability for a given budget. An outstanding characteristic of requirements-based planning in the water resources context is that it typically assumes given and fixed demands, and limits planning efforts to "supply-side" options. This is a reasonable assumption when demands are outside the control of the planner or of such great importance that the costs of meeting demands are less than the costs of any water shortages or demand reductions. For whole-of-catchment planning, however, requirements-based approaches often result in controversial and overly expensive solutions and can neglect important external costs of water supplies and demand, such as environmental consequences.

Benefit-Cost planning uses economic (and potentially other forms of) analysis to attempt to consolidate the many supply, demand, and other impacts of each alternative into monetary benefits and costs. The limitations of benefit-cost analysis are well known, including monetising all effects of alternatives, selecting discount rates, incorporating social equity, and representing risk preferences. Nevertheless, its application can serve to prioritise between or rule out various alternative management options or allocation scenarios, and facilitate discussion in ambiguous cases. Benefit-cost analysis has strong technical aspects, including a broad and potentially rigorous integrating economic perspective with abilities to incorporate variability, reliability, and uncertainty, either as mean economic values or probability distributions of net economic value.

Multi-objective planning responds to the narrow economic focus of benefit-cost evaluations, by attempting to display to decision-makers the trade-offs inherent in selecting alternatives where all objectives cannot be measured in the same units. While the analysis approach of multi-objective planning is technically attractive, it typically lacks a formal institutional mechanism to establish the trade-offs needed to identify a most desirable alternative, so tends to be limited in practice to informing decision-makers or stakeholders on the relevant trade-offs involved in their decisions or to helping identify promising alternatives that satisfy a range of preferences. Where the water resource problem involves fundamental political conflicts among objectives, multi-objective analysis cannot resolve those conflicts, only make them clearer.

Conflict Resolution planning seek to create a process where groups with conflicting objectives can negotiate a common plan or strategy. These approaches typically emphasize the need of various parties or stakeholders to communicate, understand, and negotiate as necessary conditions for any solution to be accepted politically. Often considerable emphasis, effort, and time is required to establish broad confidence and communication in both technical and policy-making processes as part of developing and implementing solutions. Conflict resolution-based planning typically gages its success based on how well a "consensus" solution is achieved, and to-date they have been far from universally successful, perhaps because such problems are tremendously messy and difficult.

Adaptive Management planning seeks to support ongoing environmental management with consideration of uncertainties and incorporating an ability to change management of the system as more was learned of the system's behavior and response to management. One expression of this is the 'shared vision planning' used in the United States of America, which uses a group of stakeholders and technical experts to develop a computer model to represent a common understanding of the problem and develop, quantitatively compare, and negotiate potential solutions. This type of adaptive management makes a greater effort at placing the modeling within a more traditional rational planning process with extensive facilitated public participation, merging aspects of rational planning and multi-objective analysis with aspects of facilitated conflict resolution processes.

Watershed planning (or what we in Australia tend to call collaborative planning) is based on the principles that all stakeholders in the catchment or watershed should be involved in discussions of its management, all aspects of water quality and quantity in the watershed should be considered, and that the parties should have great flexibility in arriving at a consensus solution. The emphasis is on developing consensus-based water plans, involving all major stakeholders and agencies. This approach to planning seems to be more successful where there is a balance between expectations and resources/funding, effective leadership and management, interpersonal trust, committed participants, and a flexible and informal structure, but tends to require extended studies, funding, and attention from parties involved, and the long time frames required can limit the practical implementation of this type of approach.

Market-based approaches uses markets or market-like instruments, like trading, negotiated contracts, and exchanges as a surrogate measure for decentralised planning. Although these types of instruments have long been important components of water planning, providing flexibility at local scales to adapt to short-term hydrologic, economic, and water demand variability, they suffer from issues related to the assignment and accounting of rights and real water, third-party and externality effects, and other classical market imperfections.

"Muddling Through" which might seem like it isn't a planning approach at all, in fact may be the most desirable option if the political or economic situation is not supportive of long-term planning. In such cases, it is often more effective for planning efforts to seek small short-term improvements in a desirable long term direction. Advantages to this approach include improved responsiveness to perceived problems, ability to identify important consequences, and diffusion of decision and evaluation responsibilities. In this situation, incremental decisions can be more effective than more formal plans based on formal decision-making calculations (such as elaborate benefit-cost analysis).

Reference

Lund, J.R. 2008. "Approaches to Planning Water Resources" unpublished typescript, 19pp. Online at [http://cee.engr.ucdavis.edu/faculty/lund/ftp/waterplanning.pdf]. Accessed 15/02/10.