is challenge; as noted above, China's reservoir storage is low in comparison with other countries and India is probably in a similar position. Many of the megacities of tomorrow are located in areas notable for their scarcity of water resources. It is axiomatic that the problem will be most severe in the least developed regions, where there is a lack of physical and institutional infrastructure capable of mitigating the impacts. The most likely response would be to seek to invest in harnessing additional water resources through reservoirs and transfer schemes, such as the Three Gorges and South-to-North projects in China. Such trends have been apparent in Africa. It is often perceived to be easier to address the problems of scarcity through supply-side measures rather than by alternative means of demand management. Thus in transition and developing economies water scarcity will likely prompt interest in new works to harness further water resources. The costs of such projects will continue to escalate, raising questions about their economic viability when compared with other alternatives. Water scarcity may provide the necessary impetus to develop and strengthen institutional means of governing and guiding water resource development at international or river basin level, the development of property rights, and markets in water rights and allocations. This could mitigate the expected pressures for new resources. The losers in all this would be rural water services and agriculture, especially irrigated agriculture, unless there is a strengthening of local rights, possibly through the expansion of Water User Associations (WUA) as advocated by international agencies. INFRASTRUCTURE TO 2030: TELECOM, LAND TRANSPORT, WATER AND ELECTRICITY - ISBN 92-64-02398-4 © OECD 2006 5. THE IMPACTS OF CHANGE ON THE LONG-TERM FUTURE DEMAND FOR WATER SECTOR INFRASTRUCTURE The availability of water resources could become a factor influencing the location of centres of industrial and manufacturing activity as these industries are reloca