As pressure on water resources increases, governments need to consider water as a resource in its own right and manage it accordingly. Policies are the framework within which water resources are managed, and thus a framework within which to develop an IWRM approach. To be integrated, water resources policy must mesh with overall national economic policy and related national sectoral policies. IWRM also means that water issues within every economic and social sector must be taken into account when using or impacting water.
Since the multiple users of water are competing, and the demand on the resources is increasing both in terms of available quantity and of quality, the participation of as many different stakeholders and authorities in the management of water resources as possible is crucial. Only in that way can water governance systems come up with policies that will be deemed both socially and economically beneficial. At the same time, policy makers should be aware of environmental concerns – the ways in which water policies may have an impact on other environmental media and vice versa – and bring these into proper consideration.
Policy formulation is a core role of governments. Through its policies, the government can delimit the direct and indirect activities of all stakeholder groups, including itself. The government can be a direct provider, or regulate and support other providers. Appropriate policies can encourage participatory, demand-driven and sustainable development. Policies that encourage IWRM include reference to the nation's wider social and economic objectives that make up the development goals of the society. Policies lead to the development of laws and rules and regulation (A2) designed to achieve the overall policy goals.
Appropriate policies can deal with the many inter-related and complex issues involved in IWRM, including:
- Assessing the environmental, economic and social values of water;
- Assigning responsibilities to the various public and private actors including basin organizations;
- Recognizing the role of women as users and managers of water resources;
- Taking into account sustainability and environmental issues in the planning, design, construction, operation and management of major water projects;
- Assessment of the social impact of water resource developments;
- Restoring and protecting the quality of surface and ground waters;
- Introducing flexible drought and flood management strategies;
- Mandating the provision of easily accessible, accurate and up-to-date data on water resources and needs;
- Linking water policies with other sectoral policies;
- Estimation of the costs of policies and identifying the means for financing them.