Source- Scientific American, Water Shortages

Shortages of freshwater are meanwhile growing more common in developed countries as well. Severe droughts in the U.S., for instance, have recently left many cities and towns in the northern part of Georgia and large swaths of the Southwest scrambling for water. Emblematic of the problem are the man-made lakes Mead and Powell, both of which are fed by the overstressed Colorado River. Every year the lakes record their ongoing decline with successive, chalky high-water marks left on their tall canyon walls like so many bathtub rings.

Golden Rule
Location, of course, does not wholly determine the availability of water in a given place: the ability to pay plays a major role. People in the American West have an old saying: “Water usually runs downhill, but it always runs uphill to money.” In other words, when supplies are deficient, the powers that be typically divert them to higher-revenue-generating activities at the expense of lower-revenue-generating ones. So those with the money get water, while others do not.

Such arrangements often leave poor people and nonhuman consumers of water—the flora and fauna of the adjacent ecosystems—with insufficient allocations. And even the best intentions can be distorted by the economic realities described by that Western aphorism.

A case in point occurred in one of the best-managed watersheds (or catchments) in the world, the Murray-Darling River Basin in southeast Australia. Decades ago the agriculturalists and the government there divided up the waters among the human users—grape growers, wheat farmers and sheep ranchers—in a sophisticated way based on equity and economics. The regional water-planning agreement allowed the participants to trade water and market water rights. It even reserved a significant part of the aqueous resource for the associated ecosystems and their natural inhabitants, key “users” that are often ignored even though their health in large measure underlies the well-being of their entire region. Water and marsh plants, both macro and micro, for example, often do much to remove human-derived waste from the water that passes through the ecosystems in which they live.

It turns out, however, that the quantities of water that the planners had set aside to sustain the local environment were inadequate—an underestimation that became apparent during periodic droughts—in particular, the one that has wrought havoc in the area for the last half a dozen years. The territory surrounding the Murray-Darling Basin area dried out and then burned away in tremendous wildfires in recent years.

The economic actors had all taken their share reasonably enough; they just did not consider the needs of the natural environment, which suffered greatly when its inadequate supply was reduced to critical levels by drought. The members of the Murray-Darling Basin Commission are now frantically trying to extricate themselves from the disastrous results of their misallocation of the total water resource.

Given the difficulties of sensibly apportioning the water supply within a single nation, imagine the complexities of doing so for international river basins such as that of the Jordan River, which borders on Lebanon, Syria, Israel, the Palestinian areas and Jordan, all of which have claims to the shared, but limited, supply in an extremely parched region. The struggle for freshwater has contributed to civil and military disputes in the area. Only continuing negotiations and compromise have kept this tense situation under control.

Determining Demand
Like supply, demand for water varies from place to place. Not only does demand rise with population size and growth rate, it also tends to go up with income level: richer groups generally consume more water, especially in urban and industrial areas. The affluent also insist on services such as wastewater treatment and intensive farm irrigation. In many cities, and in particular in the more densely populated territories of Asia and Africa, water demands are growing rapidly.