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Though energy (generally fuels) is systematically traded on commodity exchanges, water trading is much more difficult and contentious as it is based on tradable ‘rights’ rather than a commodity. However, water trading between major use sectors is possible in some circumstances and provides an economic mechanism for resolving allocation conflicts. Trade could be either seasonal or permanent. Although water markets have been created in a few countries (e.g. Australia, Chile, USA) trading depends on an appropriate legal framework and effective regulation designed to avoid transfer of negative externalities and monopolization of water rights and to reduce transaction costs. The large volume of water required for thermal power on a long-term basis is likely to need permanent transfers; for example, by buying out farmers’ rights. Such transactions tend to arouse social and political resistance, although there are cases of cities securing their water by such deals. The imposition of a non-consumptive water use tariff at an economic level, applicable to power generation and other sectors such as industry and mining competing for bulk water, could provide a level playing field for charging, and create incentives for the more efficient use of water all round. Imposing higher non-consumptive tariffs on thermal and hydropower generation would clearly signal and incentivize the need to adopt more water efficient processes. This would apply whatever water tariffs were charged to other sectors. 15.3 Role of the United Nations system and the international community Local, national and regional policies and actions can often benefit from a strong endorsement from the international community, in such areas as (a) cooperation and information exchange in state-of-the-art public policy formulation; (b) government, consumer and investor awareness and commitment; (c) application of integrated resource efficiency planning; (d) capacity development on existing strategies and tools; and (e) improvements in the availability of relevant and robust data. The United Nations Conference on Sustainable Development (Rio+20) in 2012 explicitly acknowledged that water is at the core of sustainable development as it is closely linked to a number of key global challenges. The United Nations General Assembly in 2012 also recognized the critical role that energy plays in the development process. However, it is particularly telling that there is no mention whatsoever of water in the energy section, or of energy in the water section of the outcome document. The Bonn 2011 Nexus Conference,34 organized in preparation for Rio+20, focused international and national attention on the water–energy–food nexus and the solutions such an integrated approach can provide. Economic pricing of energy and water services can more closely reflect the economic cost of their provision; provide sufficient revenues for continued operation and maintenance; and avoid waste and distortions due to under-pricing In practice, different people in different departments, if not different agencies, are responsible for funding decisions, project development and policy-making. This holds true at all levels of administration and explains why integrated energy and water policies are rare (Section 5.1). However, in the work of the United Nations system, other international regional organizations, development banks and bilateral development agencies, many programmes and projects exist aiming to address the interplay between energy and water. This points to a project-by- project approach to deliver context-specific support. The coordination mechanisms of the United Nations system, UN-Water and UN-Energy continue to play leadership roles in providing a platform for cooperation with civil society to formulate coherent responses on water and energy – issues that cut across the mandates of the international system. The recognized need for separate sustainable development goals dedicated to water, food and energy security, which must be independent of each other but closely related and coordinated, provide an excellent opportunity for UN-Water and UN-Energy to assume a strong leadership and facilitatory role. In the realm of financing, the international community has an obligation to support those people most in need 34 For more information, see http://www.water-energy-food.org/en/ conference.html (Accessed Apr 2013) WWDR 2014 CREATING AN ENABLING ENVIRONMENT FOR CHANGE 107PDF Image | Water and Energy
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