This paper uses the system of economic and environmental accounting for water to demonstrate how the water sector interacts with the social-economic sectors of the economy. Furthermore, it reviews the existing institutional and policy framework in Uganda, and proposes an analytical framework which can be used to provide sound inter-sectoral planning in order to achieve sustainable water resource use. The proposed framework also articulates how outcomes of water policies and social-economic policies can be analyzed. In Uganda, the uneven distribution of water resources both in space and time, poses constraints to economic activity particularly in the water-scarce regions of the country. The problem is being exacerbated by the increasingly erratic rainfall and rising temperatures. The accounting results show that the current level of water use within the economy is less than the available quantity. In this regard, there is room for the development of mechanisms to increase its utilization. This would serve to mitigate the scarcity especially of water for production which primarily emanates from climate variability. This in turn affects the performance of the economy, as key sectors such as agriculture are rainfall-dependent.

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