Moving forward with the LHWP: a participatory approach?

Few days ago, I posted about the Lesotho Highland Water Project, highlighting benefits and drawbacks. I concluded saying that the benefits (towards bilateral cooperation, opportunities of development for Lesotho and of water security for South Africa) were important and instead of cancelling the project, the nexts phases should focus focus on sustainability and social justice. 

How can phase 2. be carried out while avoiding social failures observed during phase 1.?

  The LHWP was conceived long time ago, from a centralised top-down approach. The States have been the custodians of water resources and accountable for their population’s well-being. Although this approach can be effective in reducing administrative procedures, it has its pitfalls. 

Friedrich A Hayek (1899-1992), Nobel prize in economics, heavily criticised central planning systems. He stated that a central approach could not lead to an optimal allocation or resources due to “dispersed knowledge” not available to central planners to conduct “economic calculation”. According to him, they lack the price system from competitive markets which provides incentives to inform about market choices. According to this reasoning, a costly commodity is scarce, but a cheap one is plentiful. Prices can so influence individual decisions.

Friedrich A Hayek (1899-1992)

Without adopting some market fundamentalism and to say that planning is always ineffective, or that prices convey perfect information. Water is a good example of how pricing don't always correspond to availability and much less to actual worth. A entirely decentralised market-based system runs the risk of creating a ‘Tragedy of the Commons’ and uneven allocation of water. 

However, one factor to address is the paucity of information accessible to central planners. A top-down approach comes with lack of information on the demand side, missing crucial data for the fulfilment of social goals. 

In the LHWP case, a better planning and needs assessment could be considered to improve social justice both in Lesotho and South Africa. A participatory planning process would help to better understand the project’s consequences on the communities affected. Communities removed from their lands in Lesotho should be consulted via a participatory approach to understand their needs and allow effective compensation programmes. Interventions must be tailored to achieve specific ends, and only by taking into consideration the demand side it is possible to respond to preferences and needs.                              Centralization isn’t necessarily wrong, some decisions can still be made at the state level (e.g., the location of sites, pricing measures etc.). But in terms of social justice, and when compensation programmes are directed toward the population, it is best to engage them in the process.