AGENDA 21 AND THE DUBLIN PRINCIPLES put the concept of water as an economic good on the global agenda, and they have received wide acceptance by the world’s water professionals. However, there is substantial confusion about the exact meaning of some of the articulated principles. In particular, it is not clear to many non-economists what is implied by the statement that water is an “economic good” or an “economic and social good.” This paper addresses this lack of understanding by formulating the concept of water as an economic good and explaining, in practical terms, the economic tools that can be used to effect the environmentally, socially, and economically efficient use of water.