173
maintaining the technical systems. Water problems have predominantly been perceived as problems of infrastructure supply and only to a lesser degree (if at all) as
problems of demand management. “Water management strategies are still strongly
“Soviet” in approach, regarded by state actors as purely “technical”, because other
dimensions – economic, social and political – are “fi xed” through the state regulation” (Abdullaev and Mollinga 2010 , p. 85).
• Second, as a consequence, the reasons for the decline in infrastructure were (and
still are) associated mainly with a lack of fi nancial resources in the water sector
(in addition to the lack of international cooperation). This has been aggravated
by the fact that the infl uence of the water management authorities has decreased
since the end of the Soviet era.
• Third, the organisations and public authorities responsible for water management have not had any experience in the use of water pricing mechanisms as a
means of steering users’ behaviour in a certain direction. They emerged and
developed within a system of state-driven supply management and control
(Eschment 2011 , p. 20) and are therefore not familiar with the functioning of
market- based environmental instruments such as prices. Not surprisingly, the
other two functions of water pricing – providing information and setting incentives – have been widely ignored in decision-making.
• Fourth and fi nally, the design of adequate water prices becomes more diffi cult
the more the state actors’ interests are oriented towards protecting the agricultural sector. As will be shown in detail below, the planting of cotton as a major
state crop is still given top priority in Uzbekistan. There is little to no political
will to make the agricultural sector pay for the water services it receives.
From an economic perspective, however, the information and incentive functions
are crucial elements of water pricing policy. The idea behind economic thinking is
that users of water resources should bear the full costs of their resource use. This
leads to two problems that have to be solved (Hansjürgens 1997 ; Gawel 2001 ):
1. What are the full costs of water and its services?
2. Who should bear the full costs of water services?
12.2.1 What Are the Full Costs of Water and Its Services?
What costs should form the basis for pricing water resources? Or, more precisely,
what cost elements should be included? Figure 12.1 illustrates possible answers
(Rogers et al. 2002 ; Young 2005 ). From an economic perspective, the cost of water
includes all the resources that are required to deliver a unit of water to the end user.
These costs comprise not only the operation and maintenance (O & M) costs of
daily running water-related supply systems (e.g. purchased raw water, electricity for
pumping, labour, repair materials, input costs for managing and operating storage,
distribution and treatment plants) but also the costs that have to be spent to build up
and consolidate the necessary infrastructures (depreciation charges, interest
12 Theory, the Market and the State: Agricultural Reforms in Uzbekistan…
maintaining the technical systems. Water problems have predominantly been perceived as problems of infrastructure supply and only to a lesser degree (if at all) as
problems of demand management. “Water management strategies are still strongly
“Soviet” in approach, regarded by state actors as purely “technical”, because other
dimensions – economic, social and political – are “fi xed” through the state regulation” (Abdullaev and Mollinga 2010 , p. 85).
• Second, as a consequence, the reasons for the decline in infrastructure were (and
still are) associated mainly with a lack of fi nancial resources in the water sector
(in addition to the lack of international cooperation). This has been aggravated
by the fact that the infl uence of the water management authorities has decreased
since the end of the Soviet era.
• Third, the organisations and public authorities responsible for water management have not had any experience in the use of water pricing mechanisms as a
means of steering users’ behaviour in a certain direction. They emerged and
developed within a system of state-driven supply management and control
(Eschment 2011 , p. 20) and are therefore not familiar with the functioning of
market- based environmental instruments such as prices. Not surprisingly, the
other two functions of water pricing – providing information and setting incentives – have been widely ignored in decision-making.
• Fourth and fi nally, the design of adequate water prices becomes more diffi cult
the more the state actors’ interests are oriented towards protecting the agricultural sector. As will be shown in detail below, the planting of cotton as a major
state crop is still given top priority in Uzbekistan. There is little to no political
will to make the agricultural sector pay for the water services it receives.
From an economic perspective, however, the information and incentive functions
are crucial elements of water pricing policy. The idea behind economic thinking is
that users of water resources should bear the full costs of their resource use. This
leads to two problems that have to be solved (Hansjürgens 1997 ; Gawel 2001 ):
1. What are the full costs of water and its services?
2. Who should bear the full costs of water services?
12.2.1 What Are the Full Costs of Water and Its Services?
What costs should form the basis for pricing water resources? Or, more precisely,
what cost elements should be included? Figure 12.1 illustrates possible answers
(Rogers et al. 2002 ; Young 2005 ). From an economic perspective, the cost of water
includes all the resources that are required to deliver a unit of water to the end user.
These costs comprise not only the operation and maintenance (O & M) costs of
daily running water-related supply systems (e.g. purchased raw water, electricity for
pumping, labour, repair materials, input costs for managing and operating storage,
distribution and treatment plants) but also the costs that have to be spent to build up
and consolidate the necessary infrastructures (depreciation charges, interest
12 Theory, the Market and the State: Agricultural Reforms in Uzbekistan…