**1. Introduction**

At a global level, water has been declared to be a social and an economic good by *fiat* by the definition of water in The United Nations Conference on Environment and Development Agenda 21 "*as an integral part of the ecosystem, a natural resource and a social and economic good*. *.*." [1] (Chapter 18) and by the fourth Dublin Statement Principle "*Water has an economic value and should be recognized as an economic good, taking into account affordability and equity criteria*" [2] since 1992. As seen in [3] it also satisfies *de facto* the Robbins conditions of the definition of economy as "*the science which studies human behavior as a relationship between ends and scarce means which have alternative uses*" [4] since scarcity is accepted by OECD in [5] pp. 18,129 and finiteness by the first Dublin Statement Principle "*Water is a finite, vulnerable and essential resource which should be managed in an integrated manner*" [2].

Booker and his colleagues further assert this by stating that water is used in the production of virtually all economic goods and services; and above all, plays a vital role in the provision of basic ecosystem services for human beings and organisms [6]. The importance of water in the economy can also be seen via the Water-Energy-Food (WEF) Nexus as seen in general in [7] and for South Africa in particular in [8–10]. In addition to this, other scientists have recognised the influence that water has on development [11]. For example, it has been claimed by the World Water Assessment Programme [12] that proper management of water resources brings the prospects of poverty reduction and economic growth to developing economies. Brown and Lall [13] further add that the production of food and most infrastructural development initiatives across the world have been affected by the amount of rainfall received and its variability. Rainfall variability plays an important role seen in general in [14], for South Africa in [15–17] and for KwaZulu-Natal Province in particular [18] while extreme rainfall is seen in general in [14] and for South Africa in [19–21]. This is particularly true in Sub-Saharan Africa where infrastructure development in the water sector still lags behind, and storage of the available water is a challenge such that farmers are not able to continue food production without depending entirely on rainfall [22]. As a consequence, it has been argued by Ward [23] that the need to satisfy the growing human demands for water while protecting the aquatic ecosystems on whose products and services economies and life itself depend has emerged to be a significant challenge for 21st Century water policy especially as the demand for freshwater sources continue to increase worldwide.

It is further noted that literature is awash with evidence on the relationship between resource use and incentives to manage the resource. Musole [24] has argued in his paper that resource users tend to increase resource use efficiency when they have stake in the resource. In addition, some scholars [25–27] posit that by properly defining the rights of use of the water resource, there are high chances that a water user will invest in the improvement of the resource and hence ensure its efficient use. However, despite the growing body of knowledge on property rights and natural resource use [28–30], little research has been conducted to examine how the property rights definition would help in managing the increasing water demands at the scale of a river basin. While numerous studies have been conducted to examine the role that property rights play in creating incentives for investment in land use rights and conservation of fish and forestry resources [31–37], there is scarce literature to indicate the existence of similar research in water demand management. In addition to that, while research efforts have advanced in water demand management, most of this research places its focus on residential or domestic water demands and economic instruments like pricing. Efforts to study the response of water users to property rights institutions in water resource utilisation have been insignificant.

The purpose of this paper is therefore to explore how a property rights system can enhance incentives towards managing water demands by luring users to conserve water on their properties. The argument is that property rights can serve as both incentives and disincentives towards the actions of water users and those actions may either reduce or increase water demands. We learn from Bruns and Meinzein-Dick [38] that property rights can secure access to water for existing users and offer equitable ways to meet additional water needs/demand, including urban expansion, economic growth and environmental protection. However, in order to advance the understated aim, an understanding of water availability and scarcity, demand management and property rights theory is required.

*Incentives for Managing Water Demands: Lessons from the Umgeni River Basin, KwaZulu-Natal… DOI: http://dx.doi.org/10.5772/intechopen.106238*

The paper is organised as follows; following hereafter is the background to debates on water availability and scarcity bringing out the rationale for improved water management efforts. After this section, the paper gives a brief overview of the current understanding in demand management efforts in the water sector. A discussion of the property rights theory and its applicability in water resources management has been presented next. This section is followed by a methods section which precedes the results and discussion section. The paper finally closes with some significant conclusions that have been generated from the results of the study.
