WATER RESOURCES

REGULATION – KEY ISSUES AND

PRINCIPLES

March 2010

WHAT IS REGULATION? “At its most general level, it refers to the

means by which any activity, person, organism or institution is guided to behave in a regular fashion, or according to rule. In principle, reference can be made to the regulation of any kind of social behaviour… In the context of socio-legal studies, the concept has two main advantages. First, it leaves a useful ambiguity over the extent to which such regular behaviour is generated internally or entails external intervention. Secondly, it embraces all kinds of rules, not only formal state law.”

Picciotto, Sol and Campbell, David (eds). New Directions in Regulatory Theory. Blackwell publishing. 2002. p1

KEY ELEMENTS OF REGULATORY FRAMEWORK

Formal regulatory framework

ConsultationPublic participationPolicy Legislatio

n

Instruments

Regulating human impact

on water resources

Financial resourcesHuman capacity

Organisations

Informal regulatory framework

Social norms

Consumer Groups

Community Groups

Media

Self-regulation

Lobby Groups

Customary law

Public interest

Market failure

Response to interest group demands

Result of agencies captured by regulated industries

Product of competition between regional political economies

WHY REGULATE?

International

National

Catchment

Local

Catchment

NESTED LEVELS OF REGULATION

SELECTING APPROPRIATE INSTRUMENTS / APPROACHES Regulation is a site of contestation Issue of scale - profoundly affects

outcomesdifferent groups have increased access to

regulatory decision making at different spatial scales

decisions regarding scale are critical in the contestation for regulatory power

Raises issue of how to balance regional or local flexibility with compliance with national objectives

Distributional impacts of regulationPro-poor regulation

Policy Principles for WR regulation

Transparent

Low transaction costs

Redistributive

Implementable

Adaptive

Necessary

Appropriate to available resources

Equitable

Participatory

Operational Principles for WR regulation

Non-discriminatory

Clear roles and mandates

Aligned with govt

objectives

PRINCIPLES FOR WATER RESOURCES REGULATION

AC

Parliament

Dept of Water Affairs

Catchment Management

Agency

Private Water Users

Public sector regulation of private sector as water users

Political regulation of public sector

Public sector regulation of public sector as regulatory authority

Government Water Users

Courts and Water Tribunal

Judicial regulation of public sector

Public sector regulation of public sector as water user

Economic Regulation

Technical regulation

Technical Regulation

Governance Regulation

Independent regulator?

WATER RESOURCES REGULATORY CHAIN

KEY ELEMENTS OF WATER RESOURCES REGULATION

Policy Development and Articulation

Economic Regulation

Technical Regulation

Institutional Regulation

Compliance Monitoring and EnforcementNatio

nal D

evel

opm

ent a

nd

Tran

sfor

mat

ion

Obje

ctiv

es

Natio

nal W

ater

Res

ourc

es O

bjec

tives

POLICY DEVELOPMENT AND ARTICULATION Key issue: Translation of water resources

regulatory policy into a clear, targeted, costed and implementable strategy and plan.

ECONOMIC REGULATION Key issues: No formal economic regulation

currently Capacity Understanding economic regulation

for water resources Full value chain regulation Conflict of interest Independent water economic regulator?

GOVERNANCE REGULATION Ensuring good governance of water

management institutions eg CMAs Key issues: Capacity; Lack of separation between

government’s role as sole shareholder and regulator;

Lack of clarity re governance responsibility of Board and regulatory responsibility of DWA.

Effective instruments and practice to ensure good corporate governance of water management institutions;

TECHNICAL REGULATION CMAs

Regulation of abstraction, discharge, storage including dam safety, water quality, ecological and basic human needs reserve, water allocation reform; etc

DWARegulation of CMAs to ensure adequate

technical performance

Rainfall Sea

Water Resource

Water ServicesWater Resources

Stream flow reduction activities

Raw water non-

consumptive use

Abstraction

Storage

International flows

Ecological Reserve

Waste Water TreatmentDischarge

Water Treatment

Discharge

Treated water non-

consumptive use

Raw water consumptive

use

Treated water Consumptive

use

Interbasin transfers

8

9

7

6

11

4

53

1

17

18

15

13

14

2

10

12

Re-use

16

19

Altering beds/ banks of water

course

20

TECHNICAL REGULATION Key issues: Lack of capacity; Unclear roles and responsibilities in

DWA; Lack of progress on establishment of

CMAs Lack of establishment of NWRIA - leaves

DWA as player/referee re operation and maintenance and safety of state dams;

Development, revision and application of more appropriate tools

COMPLIANCE MONITORING AND ENFORCEMENT Key issues: Lack of capacity from inspectors to legal

officers; Lack of effective and targeted CME

strategy aligned to available capacity Poor alignment with other regulatory

agencies such as DEA and PDEAs; Weak enforcement tools, particularly in

relation to local government Limit on sanctions (e.g. fines) is too low

to act as a real deterrent in many cases

Persuasion

Warning letter

Civil penalty

Criminal penalty

Licence suspension

Licence revocation

An example of a regulatory pyramid (source Picciotto and Campbell 2002 p 20)

Technical Regulatory instruments

Command and Control

Information

Economic Instruments

Participatory planning

Market Mechanisms

Minimum norms and standards

Specified technology

Pricing (abstraction and discharge)

Subsidies

Tradable permits

Developing basin objectives

(Toxic) discharge registerPublication of compliance

Provision of information to regulator

Water banking

Voluntary agreements

Negotiated agreements

Community based policing

REGULATORY IMPACT ASSESSMENT Presidency working on this as

requirement for all regulation What does it mean in relation to WR

regulation?

INSTITUTIONAL ARRANGEMENTS Status quo +

Real need is to implement existing provisions more effectively

Regulatory branch in DWAEstablishment of CMAs

Independent regulatorSuch as EPA or Environmental Agency?Evolution of institutional arrangements not

quantum leapShould be informed by specific SA context

including resource constraintsDifferent arrangements for technical vs

economic and governance regulation?

RELATIONSHIP TO OTHER STRATEGIES Regulatory strategy must align with

White Paper NWRSWater Services Regulatory StrategyDEA strategy for environmental regulation

KEY CHALLENGES Transformational regulation

Understanding distributional impacts of particular approaches

Capacity, capacity, capacityAlign strategy with available capacity and

expand as capacity developsBuild synergy with other regulatory

departments eg DEA/PDEAsFast track establishment of CMAsFormal programme to develop necessary

skills Institutional arrangements