_5_ (World Bank 1993) which takes the view that because of imperfections in water markets, they should be eschewed in favor of comprehensive administered solutions. "At the heart of the approach is the development of a comprehensive analytical framework for water resources management. Water resources should be managed in the context of a national water strategy that reflects the nation's social, economic, and environmental objectives and is based on an assessment of the country's water resources. The assessment would include a realistic forecast of the demand for water, based on the projected population growth and economic development and a consideration of the options for managing demand and supply, taking into account existing investments and those likely to occur in the private sector" (World Bank 1993, p. 41). Proponents of such solutions claim that national plans such as the one described above will solve problems of allocation and prioritization and will allow long term investmnents to be made which will ensure that the demand and supply of water will remain in equilibrium.

15. Essential to the effective implementation of this form of solution is that users be charged the opportunity cost of water which "provides a measure of the scarcity value of water to society, thus highlighting any cross-sectoral differences in value, taking into account society's multiple objectives and water's multiple uses and interdependencies," (World Bank 1993, p. 43). Not only would it be difficult to estimate such prices across uses, regions and over time, it may be politically difficult to raise water charges to levels that reflect the scarcity value of water. Presently, water charges barely cover the cost of operating and maintaining the water delivery system, let alone the cost of building the infrastructure. Moreover, for irrigation water at least, a sharp increase in water charges would imply an expropriation of property rights since land prices already reflect the access to cheap water.

16. In evaluating the efficacy of such approaches to the allocation of water resources and in comparing them to a tradable water rights system, care must be taken to ensure that the same things are being compared. The usual approach of strong advocates of administered solutions is to point out the existing market imperfections, which reduce the efficiency or effectiveness of water markets, and then to compare this situation with an administrative solution which involves a far-seeing, incorruptible, influence-free administrative body that is able to estimate alternative rates of return between water investments and investments in other parts of the economy and then be able to design and implement the correct policy. In reality, administrative bodies are often captured by interest groups, are not known for being far-sighted, are unable to estimate future demands with any accuracy, are unable to set and collect appropriate water charges, and almost always have more imperfections than the markets that they are supposed to replace.

17. A further drawback of the administrative approach is that it tends to favor large scale investments over water conservation; there are few rewards for administrators from painstaking improvements in water efficiencies via better pricing policies. Rather the glamour of large projects and the attendant publicity and power that they bring provide far stronger incentives. In contrast, attempts to set prices that reflect the true cost of water provision are unpopular. Without such prices, incentive for users to conserve water are weaker.