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Water Policy Part II: Creating Effective Water Policy: Two Case Studies

Updated: Jan 14, 2021

This is Part 2 of a four-part series on water policy. Click here to see Part 1, Part 3, and Part 4.*

The most effective water policy systems balance human and environmental demands for water and also include mechanisms to deal with unexpected changes to water supply. Unfortunately, many water policy systems that arose when water was abundant are now proving ill-equipped to handle growing urban populations and increasingly unreliable water supplies.

Prior-Appropriation Water Policy

The prior-appropriation system of water policy in the American West is one of the best examples of an inflexible regulatory framework. Unlike the riparian water policy systems on the East Coast, where water rights are related to land ownership, the prior-appropriation system is based on temporal priority. The first actor to use a certain amount of water for “beneficial use” (i.e. household, agricultural, or industrial purposes) has the right to continue using that quantity of water for the same purpose. Later users can use the remaining water for their own purposes as long as they don’t infringe on the water rights of previous users. Under this water policy, rights can be bought and sold like other forms of property. Every water right has an appropriation date — the date at which the user first drew water for beneficial purposes, with earlier dates given priority for water withdrawals — and water rights retain their original appropriation date when they are sold.

During times of drought, the prior-appropriation system fails to direct water toward the most efficient uses. Users with the earliest appropriation dates are entitled to draw their full allotment of water, whereas junior users may receive a small proportion of their allotment or even none at all. With no incentive to conserve their water use, users in prior-appropriation systems may deplete natural water sources, threatening the wildlife in those ecosystems and the water supply of future human generations.

Water Policy in South Africa: An Equitable Approach

In contrast, a much more flexible and efficient water policy system can be found in South Africa, where freshwater is increasingly scarce. The South African constitution recognizes every citizen’s right to sufficient water and a protected environment, and their water regulations reflect these national priorities. The highest priority water users are domestic households. The government provides a basic allotment of 6,000 liters of water per household per month for free. Any household consuming more than 6,000 liters per month is subject to increasing-block tariffs, which increase the unit cost of water for higher rates of consumption and thus incentivize conservation.

The environment is also given protections by the South African water policy. The Minister of Water Affairs and Forestry is required to consider environmental protection in the allocation of water rights. This responsibility includes limiting water withdrawals to avoid depletion, monitoring releases into the water supply for pollution, and disconnecting services to users who make excessive withdrawals. 

Industrial water rights are subordinated to the rights of households and the environment. Industrial users are also charged higher tariffs than residential users, and the tariffs typically increase with higher rates of consumption (although the tariffs vary by municipality).

South Africa's water policy prioritizes domestic consumers.

The Systems of Exchange typology can be used to illustrate why the South African water policy system is superior to the American West’s prior-appropriation. The prior-appropriation system can best be understood as an inefficient Price System. Moral and Communal values of water are not recognized under this framework, and in times of drought, water is allocated not to the highest-paying or most efficient user but to the one who got there first. Conversely, South Africa’s water policy gives priority to Moral and Communal uses of water (for domestic use and environmental protection). Once these water rights are assured, industrial users compete for water resources in a Price-based market. In this way, South Africa protects the substantive value of water for less powerful stakeholders while allowing the Price System to efficiently manage water allocation for instrumentally oriented users.


  1. Thompson, Barton H., Jr. 2013. “Governance of Water in the Western United States: Learning to Live with Inefficient Institutions.”  Stanford Law School.

  2. Cain, Nicholas L. et al. 2004. The World’s Water: The Biennial Report on Freshwater Resources. Washington, D.C.: Island Press.

  3. “Water Rights Definitions.” U.S. Fish and Wildlife: Mountain-Prairie Region: Water Resources Division. (

  4. “Case Study: South Africa.” FAO Legislative Study 70 – Water Rights Administration. (

  5. Pienaar, G.J. and E. Van der Schyff. 2007. “The Reform of Water Rights in South Africa.” Law, Environment, and Development Journal. (

  6. Biggart, Nicole Woolsey and Rick Delbridge. 2004. “Systems of Exchange.” Academy of Management Review 29(1): pp. 28-49.

*Special thanks to Ned Spang from the UC Davis Center for Water-Energy Efficiency for assistance on this series.


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