Water Accounts and Water Accounting

Author/s

Michael J. Vardon, Thi Ha Lien Le Ricardo Martinez-Lagunes, Ogopotse Batlokwa Pule, Sjoerd Schenau, Steve May and R. Quentin Grafton

Abstract

This technical report provides a foundation for water accounts and water accounting. It explains why water accounting is important and, with multiple examples, shows how water accounting is a key information tool needed by all water decision makers.

A range of different information is needed for water management and governance, but this is often lacking or of poor quality. This is due to several factors including that: (1) the socio-economic and environmental data related to water are held by a range of agencies; (2) various professions have developed their own theories, practices and terminology, and (3) resources available for data collection, curation and integration are limited. These factors are compounded by the multiple values of water and a lack of consensus on the way, or even if, these values can be represented by money. Water accounting can help overcome these problems.

Water accounts are a framework for assembling multiple data sources into a coherent information system. There are many types of water accounts covering the hydrological cycle, water quality, the water supply and sewerage industries, water fees and charges, defensive and restoration expenditures, and financing as well as for water-related ecosystem services, like water purification, water regulation and flood control. Through the consistent application of concepts, definitions, classifications and structures, water accounts can be linked to other types of environmental information and in particular ecosystem accounts and the System of National Accounts (SNA). The SNA is used by every country in the world for economic management and policy. Water accounting can provide the integrated information that can support water governance and management, just like the national accounts support economic management and policy.

Water accounting has evolved over more than three decades, and this experience is brought together in the System of Environmental-Economic Accounting (SEEA). Nearly 100 countries use or are developing this system, and 73 countries and regions have produced water accounts, using a range of data sources and methods, and with production growing steadily over time. The production and use of water accounting is global and is undertaken in all types of countries (e.g. low- to high-income, small to large, and at various levels of water stress).

This review of water accounts provides examples of their production and actual or potential use in water governance and management. The review also assesses the strengths and weaknesses of water accounting, enabling best practices to be identified. Best practice includes: a collaborative development process recognising the diversity of stakeholders and stakeholder values to ensure the relevance of the accounts; comprehensive coverage of water resources (surface, ground and soil water), industry and sectors (e.g. agriculture, mining, energy, water supply and sewerage industries plus households); development of multiple account types (stocks and flows, physical and monetary measurement units); regular, frequent and timely production; clear statements of data quality (including limitation); and using a continuous improvement process.

Citation

Vardon, M.J. et al. (2023), Water Accounts and Water Accounting (Technical Report), Global Commission on the Economics of Water, Paris.

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