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WATER SCARCITY AND HOW SHOULD IT BE
MANAGED?
Resource Economics
Khadija Khan
Mehak Rafique
Lahore School of Economics
Tuesday, 18thJune 2013.
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Table of Content
Introduction .................................................................................................................................................. 2
Water scarcity and the Industries ................................................................................................................. 3
Government Policies and Institutions ........................................................................................................... 6
Cost-Benefit Analysis .................................................................................................................................... 8
Climatic Effects ............................................................................................................................................ 10
What we get out of it .................................................................................................................................. 12
How can it be linked to Pakistan ................................................................................................................. 14
Way Forward ............................................................................................................................................... 16
References .................................................................................................................................................. 18
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Introduction
Water is an essential element to life, the human dignity and most importantly the ecosystems.
Water is considered to be a unique resource unlike the finite resources such as coal or oil. The
amount of fresh water present on earth accounts for 3% only, and 1% of that is used by human
beings. Water is used for numerous purposes, and the use has increased over the course of years,
such as irrigational purpose, hydropower, dams, industrial and urban development, infrastructure
projects and so forth. This much success has been only possible after paying a cost for it- the
water resources are drying up. The future of the water resources is alarming, and the reasons for
the scarcity are many: the increasing population and its need for food and water is further
tightening the situation, the increased standard of livings is causing a higher water per capita
requirements, the rising economic growth in the developed countries need water for development
(domestic, agricultural and industrial), the demand for water infrastructure development to meet
the demand for water and energy needs (hydropower, dams etc), the climatic changes(variability
the precipitation rates, snowfalls, and floods), and many other reasons make up the water scarcity
issue. The United Nations expects that by the year 2025, 3 billion people in 52 countries will be
affected by water scarcity and they will not have enough water to drink, for sanitation or for
household use, and it is also projected that in 2025, the worlds water resources will need to be
enhanced and manipulated by 22 percent to meet the needs of the society (Thomas, Bender. N,2004, the Impact of Water Scarcity and Pollution on the Textile Industry: A Case Study from
Turkey). Hence we begin by address the problem of water scarcity and how should it be
managed over the years.
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Water scarcity and the Industries
Day by day the pressure is building up on the industries as to how to use and manage the worlds
most precious resource-water. Water usage is divided between many sectors; agricultural,
industrial and domestic, where industrial usage of water accounts for 22% for the world. There
stands a challenge in the way of these business/industries to deal with the situation of exposure to
water related risks. Water scarcity and managing the resource is a big hurdle for water and
energy-related industries, the agro-based businesses, product manufacturing departments,
chemical industries, financial and insurance industries and retail and distribution departments.
The industries, specially the chemical industries and pharmaceuticals are trying their best to use
less of water as required and pollute less in return as lack of clean water is a rising problem.
Hence the industries now have started using less water and by the years 2005-06 the chemical
industries in many states had reduced the water usage up to 8%. In the US, some of the chemical
factories have reduced the hazardous emissions of chemicals into water which are dangerous for
the aquatic life as well as the environment.
Industries under the pressure of using less water have come up with useful strategies to use less
water and store it for their use. They have started taking steps to store water, such as installing
water cooling kits to avoid evaporation of water, sterilization to maintain water quality, water-
harvesting methods where the excess of monsoon water is stored up and used in dry seasons.
These steps have started showing their impacts over the years. Some companies try to reduce
water consumption, some try to store water, and some try to recycle water and some re-use it.
The question is that what sort of technologies and ideas the companies need to invest in for the
maintenance and increased water supply.
Desalination is of the techniques-creating water instead of depending on the existing supply.
However recent studies in California where, to alleviate water shortages, there are plans to buildaround 20 desalination plants, the biggest of which would have a daily capacity of 400,000m
3
shows that recycling and reuse may be a more sustainable option (Milmo. S, 2008, Thirsty
Work). However everything comes with a price, and so does this technique, where it is costly to
install this and is very energy-consuming. However to judge the success criteria it must be so
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that the impact on water and energy is efficient. The reduced consumption of water by the
industries should in return decrease the energy consumption and lower the costs.
Leading water-using industries also include the textile industries which use water on a large
basis. Textile industries in countries like turkey have also hit the water scarcity stage and our
taking steps to deal with it. These textile industries at first tried to move out to locations where
they could store their water requirements. They have tried to cope up with the shortage of water
by building up their own waste water treatment plants and made sure that no polluted water is
being discharged out of their factories. Turkey is facing the consequences of water scarcity and
pollution as far as their textile industries are concerned, and this is not only turkeys problem, in
fact this is a global concern. Turkish industries are importing such techniques that facilitate them
in producing their goods where no water is used at all (Bender. N, 2004, The Impact of Water
Scarcity and Pollution on the Textile Industry: A Case Study from Turkey).
As far as the textile industries are concerned, they need fresh and clean water for the purpose of
dying the fabric and to produce the fabric. On the other hand water thats available to these
industries is highly polluted and thus needs to be treated. Hence the textile industries have
switched on to less harmful chemical based dyes and technologies. An example is Ultrasonic
where Ultrasonic waves are being researched in order to replace processes that require water or
to decrease the amount of reagents in the effluent. The ultrasonic waves can produce effects on
textiles that are similar to current physical and chemical techniques with the advantage of not
using water. Instead of chemicals or machinery that requires water during processing, researchers
are allowing the fast impulses of the ultrasonic waves to do the work (Bender. N, 2004, The
Impact of Water Scarcity and Pollution on the Textile Industry: A Case Study from Turkey).
Another type of water conservation strategy is the foam application where this application
replaces water with air to apply the dye on the fabric. Sperretto Rimar washing system is another
way of re-using water in the textile industries. Chemical formulas that are used to make dyes are
also being altered with the help of enzymes that make them less dangerous. The case study done
by Nathan Bender in his paper mentions that Turkey imports machines which help them use less
water and chemical in order to produce their fabric. It also talks about the Neuenkirchen
clarification system is a way of recycling the water that contains chemical waste products as an
end product.
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Industries on the whole play a large role in polluting the water streams and create the problem of
water shortage in those areas. A number of organizations have been established to cater to these
problems where the industries dump tons of heavy metallic wastes, toxic chemicals and sludge.
These organizations take up the responsibilities that the industries do not pollute the water and
also focus on dams, sewer systems, desalinization, and water allocation.
Not all manufacturing and other industries carry out the water treatments, the reason being that
water purification and recycling and its re-use may not only include higher costs of installation
or adopting these techniques, but also require training, expertise skills, and education.
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Government Policies and Institutions
Government policies and the institutions that are handling the supply side of water are one of the
issues that most of the countries are facing related the water scarcity.Government or
bureaucratic decisions favor the building of more dams which in turn cause environmental
problems such as flooding the lands by the reservoirs of dams and also increase the charges on
water use. Despite this governmental solution, every solution in supply side is with a pitfall. The
major pitfalls that most of the developing countries are dealing with, facing water scarcity, to
begin with that the increasing technology has raised the cost of new machinery and system along
with the debts that one country has taken fail to raise the funds to proceed with the process to
control the water scarcity in present and future as well. The other main issue related to
government is subsidizing the water use, enabling the users to use as much as water they want to
whether in agriculture purpose or so how, defy to encourage the conservation of water resource
that is not taking into account the future generation that they would be worse off than the present
generation. Government is foremost in increasing the water scarcity through public irrigation
system, ground water and private irrigation, and lastly urban water systems. Public irrigation
systemhas been an intense issue around the globe for ones facing water scarcity and there has
also been not a clear understanding of how to control it. Issue that deals with public irrigation is
that the remaining water, after given to water users (farmers, households, factories), is whether
used or wasted. Price setting, without taking in to account the waste of water or the cost that
actually is to supply the water discourages the conservation of the water and further failure to
provide water for irrigation in present and future. It is evident that irrigation infrastructure is
foremost to make irrigated area effective. These problems are compounded by the negative
externalities imposed by upland deforestation (Alan Richards, 2002). Bureaucratic structure of
responsibility plays a crucial role in public irrigation but so far they are the cause in the failure of
this system. To begin with the reasons, they pay more attention towards the supply side and
overlook the issues that this might lead to, decisions of allocation are segmented, prefer
seniority, and centralized decision making. In conjunction with the public irrigation, the private
irrigationhas also been the other issue in water scarcity encouraged by the government.
Governments of most developing countries has subsidized the power and promoted machinery
use to get ground water by lowering the tariffs and abolished the bans on imported machinery.
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Encouraging the irrigation by tube well has serious consequences; one has to face in the future, is
increased cost of capital and power and most importantly the reduction in availability of water
tables. Population has increased in cities and the issue related to urban water system is water
supply and sanitation service to such a huge population. Supply of water to massive population
needs proper sanitation services, for this purpose cities have to get the water from underground
or more distant sources which increases the cost of supplying it along with the cost of lower
quality water treatment.
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Cost-Benefit Analysis
The value of environmental goods or services can be determined by its direct, indirect, non-use,
option and existence values along with the understanding of the cost and benefits of
conservation. Discounting has been an intensive issue and a reason of scarce resource which in
this particular case is water. Discounting is a reason of deviation from sustainable development
by compromising future generation. As with the growing economy, the demand for water has
increased and the cost has also increased for the provision of clean water. Industries have
polluted the nearby water by its waste which has further raised the cost of their treatment. The
other issue regarding the dirty water is adverse effect on aquifer due to fertilizers and pesticides
and by unnecessary pumping, leading to scarcity of water. Diminution of aquifer jeopardizes the
ecological system. The core issue is the inability to understand the cost and benefit analysis of
such problems to reach to a sustainable or acceptable policy that benefit the current and future
generation as well with the reduced cost of executing it. One has to take in to account the
economic value of use and non-use benefits that will be generated by this plan and weighing
these benefits against the costs of implementing this plan, using different discount rates (Ekin
Birol, 2009). Ekin barol and its co authors has highlighted the cost benefit analysis framework by
explaining it through the experiments that were conducted in 2008. The proposed idea to control
the scarcity and poor quality of water is to fill the aquifer with the treated waste water inLimassol and close by places. The benefiters are farmers, deriving option and use value, other
public close the Limassol city, deriving indirect and non-use values. In particular article, two
experiments were carried out, given different attributes, taking in to account the economic value
that benefiters have accrued through that experiment. The first experiment related to farmers has
attributes of quality and quantity of water and it is specified in the experiment that highly treated
waste water is the only mean to maintain the current quality of water otherwise the water quality
will be poorer than before, deteriorating the crops. The other attributes are employment and
monetary. Employment level will effected, if the plan to replenish the aquifer with treated waste
water not taken seriously and the low quality water will destroy the crops leading to decline in
the employed farmers by large proportion. Monetary attribute tells that the price of water paid by
the farmers could remain same or increase by some percentage depending on the m3 of water
extraction. Second Experiment is related to residents given almost the same attributes. The
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employment attribute is the same as in the farmer experiment except the fact it takes in to
account the economic benefit public gets from social, economic and ecological factors. The
water attribute is to capture the impacts of economics factors on residents as to know the
diversification of local crops. The ecological attribute is the one which has not been mentioned in
farmer choice experiment but has been mentioned in resident experiment to know the effect of
scarce water on the region. Survey conducted by sampling the farmers and residents, asked for
their view on implementation of their plan to refill the aquifer by treated waste water firstly by
reminding them of the whole situation of the existing aquifers and damages that has been
occurred due to dirty. Condition logit model was followed to get the results. The result of the
CLM reveals that all attributes included in the definition of the aquifer management plan are
highly significant determinants of aquifer management plan choice (Birol, Koundouri,
kountouris, 2009). The results are in the favor of alternatives to maintain the current condition
evident from positive coefficients on quality, quantity and employment. Whereas in the case of
prices favoring those plans with lower prices of water apparent from the negative coefficient.
The whole scenario highlights one important point that farmers and residents utmost need is the
better water quality and quantity and there is also large economic benefit from it. Willingness to
pay and compensating surplus are the two keys to ensure the replenishment of aquifer maintains
the water quality and quantity at the current level. The article in the end discusses about the cost
benefit analysis that is mostly analyzed by the net present value but it does not take in to account
the future generation which is quite problematic as future is difficult to predict so it considered
uncertain. The second foremost step in cost benefit analysis is to know the fixed and variable
cost to incur in aquifer replenishing plan. The last step that should be followed in this analysis is
to analyze that whether the plan implementation will be Pareto improvement as this is related to
cost-benefit improvement. This cost benefit analysis is helpful in a sense as it takes in to account
the cost and benefits that one group has to accrue in conjunction with sustainability.
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Climatic Effects
We know that changes in the water quality and quantity because of the changes in climate in
return can cause problem of food availability, utilization and specially water management.
Changes in the climate can cause a number of difficulties when it comes to manage the water
resources for the purpose of infrastructure and management practices.
The indicator used to formulate the water necessary to survive is the water resources per capita
by watershed. In a short period, we can think of the water resources to vary because of the
patterns of monsoon cycles. On the long run however, it can be judged from the severity and
intensity of the floods, droughts and other hydrological calamities.
The general trend is such that the water resources are affected by the climatic changes. The
regions which are facing the problem of water scarcity are facing adverse climatic changes. In
the regions like tropical, high latitude, and equatorial, they are facing an increase in the
temperature, and the evaporation rate has also gone up gradually over the years and it is
projected that it will increase up to 17-18% in the year 2025. These changes not only reflect the
variations in the levels of precipitations, but also the increase in the evaporation rate, where
larger parts of the world where water shortage is a problem, they face an overall reduction in the
level of runoff and annual precipitation. (Arnel. Nigel W., 1999, climate change and global water
resources).
It can be said after reviewing the climatic situations in various regions that the increase in the
evaporation is because of many reasons like increase in the temperature, the increased vapor
pressure, and higher wind speeds. In northern snowcapped areas, the overall increase in
temperature means that there will be less amount of precipitation in the form of snowfall. Hence
the water resources in these snowcapped regions are in the form of snow fall. Across large parts
of North America, northern China and Eastern Europe, snow cover by the end of winter has
been considerably reduced by the 2050s and this has implications for the timing of stream flow
through the year as indicated in the next section. In northern Asia, however, extra winter
precipitation leads to an increase in March snow cover (Arnel. Nigel W., 1999, climate change
and global water resources).
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According to the paper presented by Schaake and Kaczmarek (1979), they conducted a study on
the climate, the climatic change and water supply. They discussed the issue of the water scarcity
which might or might not had been the result because of the changes in the climate, whereas they
also assessed the possible changes that climate brings to the water resources (J. Nemec, J.
Schaake, 1982, sensitivity of water resource to climatic variations).
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What we get out of it
Most of the developing countries are facing the problem of water scarcity and has not taken
proper measures to control the scarcity. Government role in exacerbating this issue is that they
perceive that building of dams can increase the provision of the water to their citizens and
demands can be fulfilled to some extent with it. But this perception of the government and
related institutions is strongly needed to be changed as the increasing the supply and subsidy on
water has only encourages the users to consume water more and more. The article that has been
reviewed for the issue also made it very easy to understand by dividing the water supply division
in to three sections, that is public, private irrigation system and urban water system. these
sections highlight only one major issue that government only motivates consumer to use as much
water as they want and no strict measures are taken to control. As in public irrigation the price
that has been set for farmers ignore the cost of the water they wasted and in private irrigation
reduce tariffs and reducing bans on imported machinery to get water from ground water.
Eliminating bans on imports and encouraging the use of hydro power is only increasing the
consumption of water and energy. With growing population the cost of supplying the water has
increased which made the sanitation services poor.
Cost benefit framework has been the important tool in analyzing the cost and benefit accrued to
the different groups. The step that one has to follow of calculating NPV is problematic in sense
that it does not predict the future. Increasing discount rates will make the future generation worse
off so keeping lower discount rate is better strategy to not increase the cost for future generation.
Discounting leads to Pareto improvement that one has to be compensated to benefit the other
person, which is not efficient and efficiency cannot be achieved in real world. Cost benefit
analysis helps to evaluate that which policy is appropriate. If cost to implement the plan is
greater than the benefit it is giving, then should not be opted. A proper survey should be done to
know the Willingness to pay so that to be able to analyze the cost benefit. A perfect econometric
model should be used to get a better result without errors in it.
It is evident that the developed countries like the US, Canada, China, Turkey and many
others have already taken steps to deal with water scarcity since a long time ago. The industries
in the developed nations, have tried to stabilize conditions for the production and manufacturing
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departments with the help of technology and their knowledge. A higher cost of conserving water
is one of the major drawbacks for the developing nations and the third world countires for not
taking any steps to conserve water. They are not provided with enough incentives to carry to take
any steps to save water. Moreover Climatic changes as a result of deteriorating environment have
played its role in further alleviating the problem of water shortage. The temperature has started to
increase in a number of regions mainly because of global warming and hence this causes
flooding and in some areas higher evaporation leading to droughts or lower precipitation rates, or
even a decrease in the snowfall in the northern areas. The main problems lies in the fact that
temperature of the world is increasing overall and the consequences have to be faced-less
precipitation, more of evaporation, and increased melt down of the glaciers and snowcaps.
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How can it be linked to Pakistan
Pakistan has been blessed with water resources through Himalayan and Karakoram. Pakistan is
an agricultural country and it is considered as the backbone of our country. The consumption of
water is highly needed in agriculture sector for cultivation and other purposes beside this our
industries work by hydropower and for this purpose dams are built. Water is the essential need
for the living and survival of an economy, precisely. Pakistan is quite behind the other
developing counties in the race of development and overcoming the issues regarding the water
scarcity. As been said that Pakistan has various water resources such as rivers, rain, lakes,
glaciers, surface water and ground water. Historical background of Pakistan related to water
resource has not been good as after the independence had only two three dams which has
increased in number till now but are not as efficient as they should be. The storage loss due to
dams has increased through the years. Government perceives that large quantity of dams will
overcome the problem in supply side which in turn has adversely effected the nearby
environment. The demand for water is increasing rapidly, while the opportunities for further
development of water resources are diminishing (Ayaz Ahmed, 2008). The increasing demand of
water is mainly due to increasing population growth which has made it more difficult for the
government to fulfill the need of every citizen. Cultivation of land has to be increased so as to
produce more food with the increasing demand of the increasing population. Expansion inirrigation has led to other serious problem that is salinic, soak up all the mineral salts from the
earth, which has polluted majority of the water tables and poor sanitation services with the rising
sewage overflowing towards the rural community, Balochistan and KPK are the provinces which
are highly affected by the salinic. Salt water intrusion has increased the proportion of dirty water.
Sewage and dirty drinking water problem is highly evident in Karachi as no construction or
maintenance has been done on broken water pipes and the underground dirt has polluted the
water in the pipes. The other issue regarding the polluted water is linked to industries. In
Pakistan industries are located at distant places from the very edge of the developed cities but
near to rural areas, dumping the waste directly or indirectly in to lakes thus polluting it with toxic
chemicals. Industries that are polluting the water heavily by toxicants are sugarcane, tanner,
cement and fertilizers. No precautionary measure has been taken seriously so far as it is obvious
from the fact that Pakistan has only three waste water treatment plants.Managing the Indus river
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basin the light of climate changes, water supply is falling behind agricultural and urban demand
particularly in Karachi where population growth exceeds the physical institutional capacity of the
public water system (Omar, 2004). Politics always had a negative impact, as in instead of solving
the situation; worsen the situation more than before. Corruption has constantly been the major
factor in worsening the situation of allocation of water resource or any other resource between
different cities along with rural and urban, which has been evident from the disputes between
Sindh and Punjab. In Punjab rural areas the water supply is through the piped water or hand
pump and large percentage of people in Sindh, Balochistan and KPK, as compared to Punjab,
depends on dug well, river or canal. It has been predicted by the economists that Pakistan will
face the water scarcity issue in the near future as the population is increasing and the availability
of water resource is diminishing. The climatic changes have also adverse effects on the water
availability as the green house gases which trap the solar radiations and increase the temperature
of the earth. Due to increase in temperature the climatic changes in the form of rain fall, ice
extent, and sea level rise has taken place. Climate change will add to the susceptibility of the
agricultural zones to natural catastrophes such as storms, floods and droughts in addition, to
exposing the country to socioeconomic losses. Global warming is also one of the reasons in
water scarcity, quite apparent from the level of scarcity in KPK, Balochistan, Sindh, where the
sources of water has depleted, Stream flow reduced and drying up of wells especially in Quetta.
Pakistan has been unable to form a better strategic plan to overcome these issues or problems
related to water. Every year the situation worsens more than before and government is highly
ignorant to even strategize to control these issues.
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Way Forward
Water scarcity is increasing at an alarming rate and we need to conserve this precious liquid.
There are many ways that the water can be conserved to meet future needs, to save money, and
most importantly to preserve the environment.
There are many solutions provided by many environmentalists to deal with the shortage. Cloud
Seeding is one of the most recent scientific inventions. This technique stimulates ice crystals to
form precipitation-an attempt to induce rainfall. This type of a technique works against the harsh
climatic conditions that deprive the lands with water resources. However this is an uncertain
method to induce rainfall and there arent many evidences to support. Nevertheless it is relatively
inexpensive (Frederick K.D. 1995, Americas water supply: status and prospects for the future,
Vol.1)
Another method is Desalination, which is becoming a great concern for many engineers, and
governments. This method converts the sea water to fresh water for the commonly known uses of
water. However less attention is paid to the desalinization of water in the subterranean and
surface brackish water. Desalination has in fact resulted in cost reductions, greater efficiencies,
and nearly half of the worlds water is desalinated by the Middle East countries and 15% byNorth America (Colorado River basin Water Management: Evaluating and Adjusting to
Hydroclimatic variability, 2007)
Another interesting way to conserve water is to remove the water-consuming invasive plant
species namely, cheat grass, camelthorn, Ravenna grass, Russian olive, and tamarisk, or salt
cedar America (Colorado River basin Water Management: Evaluating and Adjusting to
Hydroclimatic variability, 2007). These species are able to survive in any sort of habitat and are
imposing danger to water parks and many other resources.
Agricultural water conservation can bring about remarkable results such as employing different
cropping patterns, and different salinity control programs and so forth.
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Urban Water conservation is also under attention. These programs include water conserving
technologies (e.g., lower-flow plumbing fixtures and more efficient irrigation systems), market
incentives, regulatory policies, new landscaping techniques and the use of drought-tolerant
(xerophytes) plants, and public education announcements encouraging urban water conservation
(Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic
variability, 2007).
By far Recycling is one of the latest methods that the people can implement to conserve water,
and it is not only efficient but also conserves the ecology.
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References
Ahmed, Ayaz., Iftikhar, Henna., Chaudhary, G.M. ( 2007). Water Resources and conservation
Strategy of Pakistan.The Pakistan Development Review, Vol. 46, No. 4.
Arnell. N.W. 1999, climate change and global water resources
Birol, Ekin., koundouri, Phoebe., Kountouris, Yiannis. (2009).Assessing the economic viability
of alternative water resources in water scarce region: the roles of economic valuation, cost-
benefit analysis and discounting.
Colorado River basin Water Management: Evaluating and Adjusting to Hydroclimatic
variability, 2007, The National Academies Press
Frederick K.D. 1995,Americas water supply: status and prospects for the future,
Vol.1.retrieved fromhttp://www.gcrio.org
J.Nemec, J. Schaake, 1982, Sensitivity of water resource systems to climatic variations,
Hydrological sciences-Journal
L .Bender. N. 2004, The impact of water scarcity and pollution on the textile industry: A case
study from Turkey,
Llyods, Global Water Scarcity; Risks and challenges for Business.
Milmo. S, September 2008, Thirsty Work, Chemistry World, p66-68
Richards, Alan. (2002). Copingwith water scarcity: the governance challenge
Tisdell. C. 2007, Economics, Ecology and the Environment; Economic change and
environmental issues: Policy reforms and Concerns in Australian Agriculture.
http://www.gcrio.org/http://www.gcrio.org/http://www.gcrio.org/http://www.gcrio.org/ -
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