er complicated by the presence of state-owned water enterprises, which have their own agendas. There have been a number of legal instruments passed to strengthen powers in this area, including clearer lines of responsibility and financing; bridged gaps between environmental protection, water supply and pollution; demand management; and property rights. An increasing number of policy initiatives aim at adopting economic instruments, in some cases making government funding contingent on introducing full-cost pricing. But given that prices for services in general are held below full cost, this imposes financing constraints on the provision of services (OECD, 2005). Tighter budgetary constraints may, however, lead to some hard choices. In 1997 private and non-governmental organisations were allowed entry to the water sector, and all public water projects were supposed to be run along commercial lines. There are requirements for local governments to draw up integrated water management plans; municipal undertakings have been reformed and government has separated service delivery from regulation. Emphasis has been on economic growth and devolution of authority. This has 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 resulted in institutionally weak environmental protection and corruption at all levels. Reforms have strengthened the financial position of the state, contributed to a rising standard of living and the growth of per capita water use, and increased water pollution and competition for the dwindling water available (Elizabeth Economy, 2005). If these trends continue there could be up to 30 million "environmental refugees" forced to migrate because of lack of water for arable land, searching for work in the cities. Between 1981 and 1993 the annual investment in urban public water facilities increased from USD 45.6 million to USD 743 million. There are efforts to encoura