Econ Development: As if it weren't complicated enough

Water supply investments in developing countries may inadvertently worsen sanitation if clean water and sanitation are substitutes. This paper examines the negative correlation between the provision of piped water and household sanitary behavior in Cebu, the Philippines. In a model of household sanitation, a local externality leads to a sanitation complementarity that magnifies the compensatory response. Empirical results are consistent with the hypotheses that clean water and sanitation are substitutes and that neighbors’ sanitation levels are complements. In this situation, clean water may have large unintended consequences.

From a paper by Bennett in The JHR (2012). An early draft is here (2011).  

Water management in Guatemala

The existing legal framework for water resources management in Guatemala is obsolete, inconsistent and not enforced. To bridge the gap, many indigenous and non-indigenous communities throughout the country successfully regulate water use through oral or written bylaws. This paper classifies the rules and practices adopted by local communities in order to define their scope and anticipate options to recognize customary water rights in future statutory legislation, as well as under the current legal regime, consistently with the public interest.

That is from the paper "Legal pluralism and customary water resources management in Guatemala" by Ariella D'Andrea published in the journal Water International. Alas I did not find the paper available online. 

Virtual water and free trade

Dalin et al argues in a recent article in the PNAS (Feb 2012):

. . . The water used throughout the production process of a good is referred to as virtual water.  

Importantly, China imports soy mostly from Brazil, the United States, and Argentina (Fig. 4A), and all these three countries produce soy with less water than China would use to grow this crop domestically (e.g., in 2007, the soy VWC was higher in China than in the three exporting countries) (Materials and Methods) (Table 1). Thus, imports of soybean to China contributed to saving water resources globally, and they were actually responsible for a substantial part (96%) of the global water savings associated with soy trade in 2007 and a significant part (36%) of the total global water savings in 2007 (Fig. 4B). 

This finding illustrates that food trade actually reduces global water use by transferring commodities to relatively less-efficient regions, because irrigation requirement per unit of crop varies widely among world regions (14, 15, 22). 

An interesting argument for free trade. See the Wikipedia entry on virtual water.