Hydrology and Economics in Water Management Policy under Increasing uncertainty

Well-designed public policy stimulates social progress. However, when governments translate political vision into programmes to deliver desirable social change, the complexity of issues can overwhelm the policy-making process, creating disappointment for all parties and suboptimal outcomes. In this paper we examine why well-known approaches to evidence-based policy-making often fail to provide policy-makers with credible, consistent and clear outcomes in line with broad social interest. We use the Murray-Darling Basin to highlight key stages to formulating effective natural resource policy, and identify key sources of difficulties that need to be managed to maximize scientific contributions. We argue that the need for public policy primarily arises from a lack of perfect knowledge, which causes individuals and agencies to behave in ways that counter social interest. We hypothesize that effective public policy formulation involves: determining what evidence is available, relevant and useful; as well as identifying critical gaps to making public policy necessary and meaningful. We then examine how effective public policy decisions can still be made and how information asymmetry can be managed via strong evidence, expert analysis to verify that evidence, and an understanding of knowledge gaps such that critical interventions can be agreed upon and objectives achieved in view of how they will be managed and resourced. We draw attention to the opportunities available and challenges that exist for hydrologists, economists and other social scientists to work together in assisting the policy process, and in particular to minimize the burden of information constraints in making effective water resource policy.