The economic importance of water cannot be overstated, as it plays a vital role in various economic social and enviromental sectors such as domestic, agriculture, manufacturing, mining and biodiversity conversation. Water supports  these various activities essential for our daily lives. However, water is often undervalued and underpriced, leading to economic externalities and underinvestment in water management.

The Global Commission on the Economics of Water highlights the need to revalue water and rethink its role within economic systems. In Tanzania, the economic contribution of water has been traditionally underestimated, with the actual contribution of water to the national GDP being unknown.

Therefore the Ministry of Water Tanzania in collaboration with Global Water Partnership Tanzania initiated a pilot study to quantify the economic value of water in Tanzania with a case study for the Wami/Ruvu basin. Specifically the study aimed to pilot water valuation methodological process, identify challenges for establishment of the economical valuation of water in the country and establish the preliminary results for the economic value of water in the three sectors of the Tanzanian economy, namely agriculture, manufacturing, and mining.

The study findings show that in the three sector within the Wami/Ruvu basin the lower bound of water's contribution to Tanzania's economy is approximately 4.8 trillion TZS (2.1 billion USD), which is the equivalent of 3.31% of Tanzanian GDP in 2020.

Based on the Tanzanian context, a combination of methods including stated and revealed preferences, next best alternative method and damage cost avoidance techniques can be the best alternatives for water valuation. Production functions and market-based approaches as well as the other shadow pricing methods can be used to raise awareness on the hidden value that water brings to each of these sectors.

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