Sustainability and Water Supply Governance - A Literature Review on Regional Water Governance, Multi-Criteria Decision Analysis, Cost-Benefit Analysis and Sustainability Assessments

Report, 2017

This literature review is part of a PhD project funded by the Swedish Research Council Formas with support from RISE Research Institutes of Sweden, the Gothenburg Region and the City of Gothenburg, performed within the centre for drinking water research (DRICKS). The research project aims to develop a decision support model for sustainability assessments of regional water supply interventions and cooperations. The decision support model is planned to be performed through a combination of multi-criteria decision analysis (MCDA) and cost-benefit analysis (CBA). In the process of developing the model, national and international studies on regional water governance, as well as on applications of MCDA, CBA, sustainability assessments, sustainability criteria and economic valuation techniques within water supply management were reviewed. The MCDA approach is often used for complex decision problems with large amount of information and when several, possibly contradicting, views needs to be considered in a coherent way. It can, for example, be used to rank alternative interventions, find the unacceptable alternatives, and identify alternatives that need more detailed assessments. MCDA provides a means for integrating quantitative, semi-quantitative and qualitative information concerning alternative interventions. It allows for comparison between objectives and can be used for integrating social, economic and environmental analyses into comprehensive sustainability assessments. CBA can be used to measure the economic profitability of alternative interventions. The method relies on the anthropocentric foundation of welfare economics in which benefits are defined as increases in human wellbeing and costs are defined as reductions in human wellbeing. Welfare economics is based on the assumptions that each individual is the best judge of his or her wellbeing at a given situation. Individuals’ wellbeing depends on market goods and services as well as non-market goods and services, such as health and environmental quality. An intervention is considered economically profitable when its total benefits are larger than its total costs. Both MCDA and CBA have been used in several applications in the water sector and numerous evaluation criteria have been proposed to assess the sustainability of alternative interventions. This review: (1) gives an overview on literature on regional cooperation in the water sector; (2) provides a general description of the decision-support techniques MCDA and CBA; and (3) presents an overview of applications of sustainability assessments and the use of MCDA and CBA as decision- support in the water sector.