Harnessing Markets for Water Quality

This issue of IMPACT is devoted to exploring and understanding the opportunities and challenges of harnessing markets to improve water quality. It looks at how markets could be implemented to address the growing concern of nonpoint source pollution as well as point sources. Recently, the EPA proposed a water quality trading proposal, which is summarized, reviewed, and critiqued

An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA

The paper provides an integrated framework to assess water markets in terms of their institutional underpinnings and the three 'pillars' of integrated water resource management: economic efficiency, equity and environmental sustainability. This framework can be used: (1) to benchmark different water markets; (2) to track performance over time; and (3) to identify ways in which water markets might be adjusted by informed policy makers to achieve desired goals. The framework is used to identify strengths and limitations of water markets in: (1) Australia's Murray-Darling Basin; (2) Chile (in particular the Limarí Valley); (3) China (in particular, the North); (4) South Africa; and (5) the western United States. It identifies what water markets are currently able to contribute to integrated water resource management, what criteria underpin these markets, and which components of their performance may require further development

Markets - Water Markets: Australia’s Murray-Darling Basin and the US Southwest

Worldwide supplies of fresh water are increasingly scarce relative to demand. This problem is likely to be exacerbated with climate change. In this paper, we examine water markets in both Australia’s Murray Darling Basin and the western US and their prospects for addressing water scarcity. The two regions share a number of important similarities including: climate variability that requires investment in reservoirs to make water available in low-rainfall periods; the need for internal and cross-border (state) water management; an historical major allocation of water to irrigators; increasing competition among different uses (agricultural, environmental and recreational in situ uses, urban demand); and the potential for water trading to more smoothly and quickly allocate water across these competing uses. A comparison of the two regions provides important insights about how economic factors can encourage more efficient water allocation, market structure and government regulation.

An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA

The paper provides an integrated framework to assess water markets in terms of their institutional underpinnings and the three ‘pillars’ of integrated water resource management: economic efficiency, equity and environmental sustainability. This framework can be used: (1) to benchmark different water markets; (2) to track performance over time; and (3) to identify ways in which water markets might be adjusted by informed policy makers to achieve desired goals. The framework is used to identify strengths and limitations of water markets in: (1) Australia’s Murray-Darling Basin; (2) Chile (in particular the Limarí Valley); (3) China (in particular, the North); (4) South Africa; and (5) the western United States. It identifies what water markets are currently able to contribute to integrated water resource management, what criteria underpin these markets, and which components of their performance may require further development.

Giving color to Oregon's gray water market : an analysis of price determinants for water right

Many parts of the West are experiencing substantial growth pressures that have increased the demand for water. These new demands come at a time when most of the water in the West has been fully appropriated by traditional uses such as agriculture, mining, and industry. Some attempts are being made to accommodate this new demand by reallocating water rights through market forces. Most western water markets are in their infancy at present, and have had limited trading activity; this has resulted in large variations in prices. Oregon's water market is no exception to this situation; little market information is available. The market is most appropriately characterized as a gray market. This thesis gives color to Oregon's gray water market. The first step was to assess current market activity. A review of the Oregon Water Resources Department water right transfer records identified 140 potential water right sales during the five year period from 1989 to 1994. A mail survey was used to collect market information on these potential sales. Reported sale prices exhibited a large degree of variation, ranging from $5 per acre-foot to as much as$1388 per acre-foot. The data suggests that there are two types of markets for water rights in Oregon. The first is a commercial market that includes participants such as commercial farmers, industries, and municipalities. The second is an amenity market whose participants have primary occupations unrelated to the use of the water right and who generally use water for smallscale, low-valued agricultural production. The second step in giving color to Oregon's gray water market was to identify potential price determinants for water rights. An econometric model based on hedonic price theory was constructed to analyze the relationship between potential price determinants and market prices. Results indicated that the duty of the water right, its relative seniority, the parcel size of the sale, and the geographic location of the sale are determinants of water right prices

Water Scarcity and Water Markets: A Comparison of Institutions and Practices in the Murray-Darling Basin of Australia and the Western US

Water markets in Australia’s Murray-Darling Basin (MDB) and the US west are compared in terms of their ability to allocate scarce water resources among competing uses. Both locations have been in the forefront of the development of water markets with defined water rights and conveyance structures to assist in the reallocation of water across competing demands. They also share the challenge of managing water with climate variability and climate change. As these two markets occur in developed, wealthy countries, their experiences in water markets with different water rights (appropriative, riparian and statutory rights) provide ‘best-case’ scenarios of what institutional arrangements work best, indicate which are less effective, and demonstrate what might be possible for greater use of water markets elsewhere in the world. The paper finds that the gains from trade in the MDB is worth hundreds of millions of dollars in per year, total turnover in water rights exceeds $2 billion per year and the volume of trade accounts for over 20$4.3 billion (2008 $) spent or committed by urban buyers between 1987 and 2008. Despite the clear benefits of water markets in both locations, there are on-going restrictions to trade that limit the potential gains and also third-party effects from use that require resolution.

A Comparative Assessment of Water Markets: Insights from the Murray-Darling Basin of Australia and the Western US

Water markets in Australia’s Murray-Darling Basin (MDB) and the US west are compared in terms of their ability to allocate scarce water resources. The study finds that the gains from trade in the MDB are worth hundreds of millions of dollars per year. Total market turnover in water rights exceeds $2 billion per year while the volume of trade exceeds over 20$4.3 billion (2008 $) spent or committed by urban buyers between 1987 and 2008. The two-market comparison suggests that policy attention should be directed towards ways to promote water trade while simultaneously mitigating the legitimate thirdparty concerns about how and where water is used, especially conflicts between consumptive and in situ uses of water. The study finds that institutional innovation is feasible in both countries and that further understanding about the size, duration, and distribution of third-party effects from water trade, and how these effects might be regulated, can improve water markets to better manage water scarcity.water markets, US west, Murray-Darling Basin, gains from trade

Water Markets: Australia's Murray-Darling Basin and the US Southwest

Fresh water supplies increasingly are under stress in many parts of the world due to rising populations, higher per capita incomes and corresponding consumption, greater environmental concerns, and the effects of climate change. Water rights and markets are part of the institutional menus for responding to these problems. We examine water markets in both Australia’s MDB and the western US and their prospects for addressing water scarcity. The two regions share a number of important similarities including: climate variability that requires investment in reservoirs to make water available in low-rainfall periods; the need for internal and cross-border (state) water management; an historical major allocation of water to irrigators; increasing competition among different uses (agricultural, environmental and recreational in situ uses, urban demand); and the potential for water trading to more smoothly and quickly allocate water across these competing uses. A comparison of the two regions provides important insights about how economic factors can encourage more efficient water allocation, market structure and government regulation. We show that rights are more clearly defined and trading more common in Australia than appears to be the case in the western U.S. Longer periods of scarcity and hence, higher water values may explain this difference.

Comparative Assessment of Water markets: Insights from the Murray-Darling Basin of Australia and the Western USA

Water markets in Australia\u27s Murray–Darling Basin (MDB) and the western USA are compared in terms of their ability to allocate scarce water resources. The study finds that the gains from trade in the MDB are worth hundreds of millions of dollars per year (note that all monetary units of dollars in this article are treated as US$because Australian$ are converted at par). Total market turnover in water rights exceeds US$2 billion per year while the volume of trade exceeds over 20$4.3 billion (2008 US$; monetary units in dollars are expressed in their value in US$ in 2008) spent or committed by urban buyers between 1987 and 2008. The two-market comparison suggests that policy attention should be directed towards ways of promoting water trade while simultaneously mitigating the legitimate third party concerns about how and where water is used, especially in conflicts between consumptive and in situ uses of water. The study finds that institutional innovation is feasible in both countries and that further understanding about the size, duration an