The ability to allocate water where it creates most value is a condition for sustainable growth, social equity and environmental performance. The OECD has reviewed water allocation regimes in a range of countries and provides policy guidance on how to improve these regimes so as to make them more equitable and efficient and reflect the distinctive features of different types of freshwater resources.

Ideally, water should pay for water. This means measures for the sustainable financing of water services, infrastructure, management and protection of water-related ecosystems should consider four principles: the “Polluter Pays Principle”, the “Beneficiary Pays” Principle, as well as “Equity” and “Coherence” between policies affecting water resources. The OECD conducts analysis and develops guidance to support countries with the development of appropriate economic instruments that reflect their specific social and economic conditions. Pricing instruments should be used in combination with other tools (e.g., regulations), to manage water resources, including through water conservation, to phase out negative externalities (e.g. overuse, pollution) and improve the financial sustainability of water infrastructure and services while considering affordability constraints for vulnerable sections of society. 

Investments are needed to ensure water security, including for the delivery of water and sanitation services, the management of water resources and for tackling water-related risks. These investments are important for public health and social well-being, as well as for protecting ecosystems and strengthening the resilience of economies.

To encourage more large-scale investment, more needs to be done to identify investment needs, improve the investment environment, make the most efficient use of existing sources of finance and assets, and mobilise additional sources.

The OECD facilitates water policy dialogues in OECD and partner countries. The dialogues provide policy guidance on water resources management and the planning and delivery of water services. They align with the OECD Council Recommendation on Water. Policy dialogues are a dynamic and demand-driven process. National stakeholders and experts from across the world contribute to formulating actionable policy recommendations.

Tackling water challenges requires looking at who does what in government. In a nutshell, governance is about managing complexity. OECD evidence shows that solutions to water governance challenges need to be designed to fit diverse circumstances within and across countries.