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Water System Part I: Water Governance & Systems Of Exchange

Updated: Jan 14, 2021

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

Due to numerous domestic, industrial, and environmental demands for water, efficient water governance can be a complex challenge. Water is a renewable resource, but policymakers must ensure that water is not used at a faster rate than it can be replenished. As competition for water increases with population growth and pollutants increasingly threaten freshwater supplies, the need for effective water policy becomes ever more apparent. Below, I review some of the various demands for water and explain how the Systems of Exchange framework can inform policy debates about water use.

Competing Demands for Water

Household consumption is one of the most important demands for water. Not only do people need fresh drinking water for survival, but they also use water for bathing, food preparation, and sanitation. In 2010, The U.N. General Assembly approved a resolution recognizing water as a human right under international law. This resolution puts pressure on national governments to ensure a safe, sufficient, affordable, and accessible water supply for all their citizens. Nearly half of the people in developing countries suffer from health problems related to inadequate water or sanitation, so fulfilling this UN resolution will be no small feat. Therefore, many international aid programs focus on building capacity and infrastructure for domestic water projects in developing countries.

Household consumption constitutes a significant demand for freshwater in a world with around 7 billion people. However, compared to other sectors of the economy, household consumption is responsible for a relatively small proportion of global water use — less than 10%. Agriculture is the world’s largest user of fresh water, accounting for almost 70% of all water withdrawals. The remaining 20% of water withdrawals are used by the industrial sector for energy production, manufacturing, cooling, and chemical processes.

Fig. 1: Main Uses of Freshwater by Country

The challenge for policymakers is to balance these competing human demands for water with the biological requirements of ecosystems. The Systems of Exchange framework can be useful both for understanding these competing demands and for analyzing potential policy solutions.

Water from a Systems of Exchange Perspective

Competition for water illustrates a tension between instrumental and substantive values. The use of water in agriculture and other industries highlights its instrumental value as a component of commercial production. In this context, industrial actors treat water as a commodity and subject it to Price-based logics, seeking cheap and efficient water supplies for their economic activities. However, the U.N. declaration of water as a human right and the demand to conserve water and protect natural ecosystems point to the substantive value of water and suggest Moral and Communal strategies for water management.

In the following posts, I’ll highlight several water policy arrangements and explore how different communities have negotiated the tensions between different exchange logics. Given that multiple exchange logics can motivate demands for water, it is unsurprising that the most democratic, efficient, and flexible governance systems are hybrids of multiple Systems of Exchange.

Photo by Tom Raftery


  1. “The Human Right to Water and Sanitation.” United Nations. (

  2. “Freshwater Use by Sector at the Beginning of the 2000s.” United Nations Environment Programme. (

  3. 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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