I started chatting with Prof. Waleed K Al Zubari (Water Resources Management, Arabian Gulf University) after he bought my book, and we had a lot of views in common as well as ideas to exchange.
Al Zubari sent me this paper [DOC] on different water "futures" for the Gulf Cooperation Countries (GCC) of Saudi Arabia, UAE, Bahrain, Qatar, Oman and Kuwait. The paper looks at four possible futures for the region and their implications on the water sector: "markets first" (aka, everything for sale/laissez faire), policy first (aka Kumbaya bureaucracy), security first (aka, deadly neighbors and crushed citizens) and sustainability first (aka, do this kumbaya).
The paper begins with useful context, i.e., agriculture consumes 85% of water and 91% of water comes from (mining) aquifers. Urban demand is thus only 14% of total demand. Desalination, likewise, supplies only 7% of total water.
Al Zubari makes a telling observation in the paper, i.e., agricultural policies do not consider limited water resources, and their impact on groundwater is not assessed (or known) -- which is why aquifers are rapidly depleting.
I didn't really agree with the characterizations in the scenarios (many examples of "people do the right thing"), but its list of important forces (corruption, security forces, power-structures, social learning, etc.) and description of the two big problems (groundwater overdrafting and increasing urban demand) is useful.
The solutions to these problems are well known. Groundwater withdrawals can be reduced by increasing the price of pumping and/or distributing rights to people who will demand more money for water. Urban water demand will fall from 300-750 liters/capita/day if prices go up. Those "solutions" will not take place, of course, without a political decision to implement them.
And that's perhaps where I missed something in Al Zubari's discussion: The identities of and transfers between winners and losers. It's well known that residents of the GCC are not allowed to criticize the powerful (for fear of punishment), but it's also clear that the biggest beneficiaries of cheap water are the rich who own farms and the princes who use a lot of water for their palaces.
Imported laborers from Bangladesh and Pakistan do not get a big benefit from the 99% subsidy when they only use 50 liters of water per day. Landless peasants do not benefit from cheap irrigation water. The benefits go to those who use the water -- the rich and powerful.
The irony is that today's benefits to the rich and powerful make disaster more likely tomorrow -- either in terms of a destroyed environment, unhappy peasants, higher food prices, and so on.
Bottom Line: The rich and powerful of the GCC should start treating water like oil -- as something to conserve and price according to its scarcity and value. That's the way to maximize their wealth while keeping their poorer neighbors happy.