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

Addressing marine and coastal governance conflicts at the interface of multiple sectors and jurisdictions

Marine and coastal activities are closely interrelated, and conflicts among different sectors can undermine management and conservation objectives. Governance systems for fisheries, power generation, irrigation, aquaculture, marine biodiversity conservation, and other coastal and maritime activities are typically organized to manage conflicts within sectors, rather than across them. Based on the discussions around eight case studies presented at a workshop held in Brest in June 2019, this paper explores institutional approaches to move beyond managing conflicts within a sector. We primarily focus on cases where the groups and sectors involved are heterogeneous in terms of: the jurisdiction they fall under; their objectives; and the way they value ecosystem services. The paper first presents a synthesis of frameworks for understanding and managing cross-sectoral governance conflicts, drawing from social and natural sciences. We highlight commonalities but also conceptual differences across disciplines to address these issues. We then propose a novel analytical framework which we used to evaluate the eight case studies. Based on the main lessons learned from case studies, we then discuss the feasibility and key determinants of stakeholder collaboration as well as compensation and incentive schemes. The discussion concludes with future research needs to support policy development and inform integrated institutional regimes that consider the diversity of stakeholder interests and the potential benefits of cross-sectoral coordination

Property Rights to Land and Agricultural Organization: An Argentina–United States Comparison

The contributions of Harold Demsetz offer key insights on how property rights and transaction costs shape economic organization. These guide our comparison of agricultural organization in the early 20th century in two comparable regions, the Argentine Pampas and the US Midwest. In the United States, land was distributed in small parcels and actively traded. In the Pampas, land was distributed in large plots, and trade was limited because land was a social and political asset, as well as a commercial one. We analyze why the absence of trade led to persistently larger farms, specialization in ranching, and peculiar tenancy contracts in Argentina relative to the United States. Our empirical analysis, based on county-level data for both regions, shows that geoclimatic factors cannot explain the observed differences in agricultural organization. We discuss implications for long-term economic development in Argentina

How Transaction Costs Obstruct Collective Action: The Case of Califoria's Groundwater

Collective action to remedy the losses of open access to common-pool resources often is late and incomplete, extending rent dissipation. Examples include persistent over-exploitation of oil fields and ocean fisheries, despite general agreement that production constraints are needed. Contracting costs encountered in assigning property rights are an explanation, but analysis of their role is limited by a lack of systematic data. We examine governance institutions in California’s 445 groundwater basins using a new dataset to identify factors that influence the adoption of extraction controls. In 309 basins, institutions allow unconstrained pumping, while an additional 105 basins have weak management plans. Twenty of these basins are severely overdrafted. Meanwhile, users in 31 basins have defined groundwater property rights, the most complete solution. We document the critical role of the transaction costs associated with contracting in explaining this variation in responses. This research adds to the literatures on open access, transaction costs, bargaining, and property rights