Institutional Conflicts of Interest in Regional Water Management and Water Supply in a Taipei Metropolitan Area Case Study

Many of water conflicts or inefficiency arise by self-interest seeking behaviors of institutional stakeholders in water sector. While the major goal of these institutional stakeholders is to maximize their own revenues, they definitely prefer to consume water resources with less cost rather than more expensive ones. From the perspective of regional water management, water resources with less cost are not always the first priority to use, because of hydrological condition and regional heterogeneity. The water supply in Taipei metropolitan area, including, Taipei City, New Taipei City, and part of Taoyuan area, is a good example of this case. Two major reservoirs, Feitsui and Shihmen, supply water to this area. In this area, Taipei City Water Company cooperates with Feitsui Reservoir to be responsible for water supply of Taipei city. Taiwan Water Company is for New Taipei City and Taoyuan with water from Shihmen Reservoir. Comparing these two reservoirs, the ratio of water supply to reservoir capacity for Shihmen is around 4 to 5 while it is less than 1 for Feitsui. It implies the inefficient water allocation for this region. A new water transfer project, BanHsin Division Plan, has been constructed, which deliver water from Feitsui to Taiwan Water Company’s facility to reduce the loading of Shihmen. Although the capacity of BanHsin Diversion Plan is 530,000 t/day so far and will expend to 1,010,000 t/day within a few years, it has never been operated with full capacity. The reason is that water from Shihmen is cheaper for Taiwan Water Company. To solve this problem, one possible is to adjust the financial framework of water pricing. This study will try to review the institutional issues of water allocation in Taipei area. We will try to propose incentive strategies for the potential problem, which is expected to be more socio-politically acceptable comparing to traditional top-down, central control approaches. Besides, a water allocation model developed by WEAP, will be also used to evaluate the consequence of the strategies proposed by this study for the case of water supply in Taipei metropolitan area.