**3. Managing water demands**

While the conventional approach to deal with increasing water demands has been to increase supply through infrastructure development for dams and new water supply schemes (29), this has become pecuniary expensive alternative over time as water resources have been affected by multifaceted challenges which include climate change, demographic changes and pollution. It must be highlighted that while managing water demands has been exhorted as probably a more beneficial alternative to supply side management, some authors have found otherwise [56]. For the water users, it has been contended that effective water demand management would enable equity among them and aide in financial savings that would emanate from water use bills [59]. In addition, water supply and management institutions would be saved from making huge infrastructure investments like dam constructions, new water schemes and inter-basin transfers. On the other hand, studies conducted in Iran found that while the adoption of trickle irrigation methods led to improved water use efficiency, there was a significant reduction of the downstream return flows leading to less water available for ecological purposes and those users reliant on these flows [56]. It has been argued by Molle that while there are indeed significant savings by various commercial farmers by employing improving methods of water application and changes in the crop husbandry practices in order to save water, the reality has been that water users tend to utilise every drop of their allocated water by even expanding their current farm coverage [ibid]. This notwithstanding, water demand management strategies should be designed in such a way that they are not a means to themselves but rather with downstream measures to ensure there are water savings that can be reallocated to other users in cases of closed basins as well as environmental uses.

There are thus various types of instruments that have been used to curtail water demands across the globe. These include legal instruments (institutions), economic/ financial/market-based instruments, technical instruments and social-political

arrangements [59–61]. For the purposes of this study, this discussion will focus on property rights as a form of institutions that can be used to manage water demands.

### **3.1 Property rights theory**

There has been a lot of disagreements on how to define the concept of property rights among scholars in literature [24]. The differences are prominent among legal, economic and social scholars. For example, Furutbotn and Pejovich [62] as cited by Musole [24] defined property rights from a legal perspective as the claims, entitlements and related obligations among people regarding the use and disposition of a scarce resource. However, Barzel [63] later in 1989 cited by Musole [24] contested from an economic view that a person's property rights consists of the rights or the power to consume, obtain income from and alienate the property to another person. On the other hand, Wiebe and Meinzen-Dick [64] in their study on property rights as policy tools in resource use defined property rights as formal and informal institutions and arrangements that govern access to resources, as well as the resulting claims that individuals hold on those resources and on the benefits they generate. Irrespective of the fact that these scholars come from different backgrounds, however, these definitions share some common features. More generally, they all point to the fact that property rights determine what can be done with a resource, by whom, at what time and in what manner, and a permit or a licence system is used for administering or allocating the resource to the user. For the purposes of the current study, the definition proposed by Wiebe and Meinzen-Dick [64] was adopted due to its applicability in the context of water resources management [65]. It must be pointed out that as some authors argue, property rights affect economic outcome in various ways e.g., the resource use pattern, the goods and services produced quantity and mixture as well as the resulting income and wealth distribution but they do not determine it as it can affect in its turn the structure of property rights themselves [66].

### **3.2 The attributes of property rights**

According to Scott and Coustalin [65], rights to natural resources such as water have prescribed attributes such as duration, exclusivity, quality of title, flexibility and transferability that make the property rights structure effective or otherwise. In addition to these, other scholars point out that a successful property rights system needs to have enforcement mechanisms [24, 67, 68]. The way these attributes have been defined represents the quality of the property right system and to an extent may lead to the success or failure of the system in sustainable management of the natural resources. Some authors have argued that a property rights system would be ill-defined if these attributes are not considered in the design of the system leading to the increase in transaction costs and uncertainty among resource users [62, 63, 69–71]. The discussion in this study has, however, been limited to duration, flexibility, enforcement and transferability of the property rights; while the discussion of enforcement has been combined with exclusivity because they quite often share similar traits.

### *3.2.1 Duration*

Duration of a property right is defined by Crase and Dollery [72] as a representation of the period or length of the right possessed by an individual. The length of property rights is an important element in determining water use. As pointed out by

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

several scholars [27, 67, 73], property rights of long duration encourage water users to invest in water saving technologies as well as infrastructure improvements on the resource. This would enhance efficient use of the water resource thereby leading to sustainable utilisation as well as curbing the insurgent demands of water in water stressed river basins.

### *3.2.2 Exclusivity and enforcement*

Exclusivity is the description of the extent to which other resource users can be prevented from accessing the resource and enjoying the benefits of the resource [72]. Most scholars agree that this attribute is an important dimension that determines the success or failure of most property right regimes [27]. According to Musole [24], the right of the resource users to the resource would be deemed exclusive if there are adequate enforcement mechanisms in place. This suggests that the enforceability of the property right is an important prescription that needs to be considered if property rights regimes are to be successful. Understanding the enforceability of the property rights structure would help in understanding the behaviour of water users in the way they use the resource.

Several authors assert to the need for exclusive property rights by stating that they tend to internalise resource depletion [24, 74, 75]. Furthermore, well enforced property rights have been upheld by Kemper and Olson [76] in that they lead to emergence of water markets in water scarce areas. This means that water would be allocated to its highest values within the water scarce river basins. In addition, Rosegrant and Binswanger [77] bring about another significant contribution of exclusive property rights systems particularly in water demand management which was also later echoed by Bruns and Meinzen-Dick [38]. They claim that having an enforceable property right could motivate long-term investments in water saving technologies (an important element in demand management) among water users, cause users to consider the opportunity costs of water and to use it efficiently, and gain additional income from the sale of water and internalise externalities.

### *3.2.3 Flexibility*

Crase and Dollery [72] defines flexibility of property rights as the extent to which the right permits an alteration to the pattern of use without forfeiting the right. Flexibility of the right has some intriguing consequences on the sustainability of water resource utilisation. It has been argued that placing exclusive flexibility on property rights especially in water resources implies that a right-holder can alter the pattern of water usage without regard to the impacts on other users. In view of this, therefore, many scholars recommend that flexibility need to be attenuated to limit the extent to which right-holders can modify usage [64, 68, 78, 79].

## *3.2.4 Transferability*

The transferability of property rights has been defined by Veettil, Speelman [80] as the ability of the resource user to transfer the individual property right to another user either temporarily or permanently in line with the specified rules of the governing body. Authors such as Crase and Dollery [74] consider property rights especially in water resources that are not transferable as ill-defined property rights. This is in agreement with several other scholars who argue that transferability of property right enables

resource users to get incentives to invest in the resource and hence improve resource use efficiency [27, 38, 75]. Further than that, transferable property rights in water have been deemed important in the emergence of water markets whereby underutilised and low productive resources can be allocated to higher productive uses [80, 81].
