National water accounts treat water as any other product, valuing it by the price of its transaction. Valuation techniques include goods and services derived from water in the following scenarios:
- Water as an intermediate input to production in agriculture and manufacturing
- Water as a final consumer good
- Environmental services of water for waste assimilation (UNSD 2006)
Water accounting in Southern Africa began in 1995, but only in 2006 did the United Nations (UN) release detailed and comprehensive guidelines, known as the System of Integrated Environmental and Economic Accounting for Water (SEEAW) (Lange et al. 2007). In the Limpopo River basin water accounts were first developed for Botswana and South Africa, then later Mozambique (Lange and Hassan 2006).
These are largely based on flow accounts, which measure how water flows from the environment into the economy, within the economy and back into the environment (in what quality and quantity) and into other countries. Flow accounts are preferred over the alternative, stock accounts, because of their usefulness in policy and management (Lange et al. 2007). There are also monetary accounts that assign a value to the flow and stock accounts through pricing, costs, charges, tariffs, etc. Monetary accounts are discussed in the section on the Economic Value of water.
Policy makers use water accounting to determine physical and economic implications of water supply and allocation (Lange and Hassan 2006). Water accounts allow policy makers to use economic models to make informed decisions about infrastructure development and water allocation to the different economic divisions. Water accounts and the value of water in the basin states are discussed in the following pages.
