Formal Water Markets: Why, When, and How to Introduce Tradable Water Rights

In most countries the state owns the water resources and the hydraulic infrastructure, and public officials decide who gets the water, how it is to be used, and how much will be charged for it. But costly inefficiencies in the supply and use of water support a shift from government provision to a market-based approach that is more effective and less wasteful Markets can allow rapid changes in allocation in response to changing demands for water and can stimulate investment and employment as investors are assured of access to secure supplies of water. Because of water's unique characteristics, such markets do not work everywhere; nor do they resolve all water-related issues. By designing appropriate water laws and regulations and by strengthening private and public institutions to administer them, formal water markets can effectively address rising demands for groundwater and for water found in rivers, lakes, and canals. Lessons from Chile's experience demonstrate that formal water markets can improve the economic efficiency of water use and stimulate investment

Tradable water rights : a property rights approach to resolving water shortages and promoting investment

In most countries, the state owns the water and hydraulic infrastructure, and public officials decide who gets water rights, how the water is to be used, and how much will be charged for its use. The authors of this paper compare administered systems of water allocation with a system of tradable water rights, and argue that water allocation by administrative edict has resulted in costly, large-scale inefficiencies in the supply and use of water, even withan adequate institutional framework. Secure property rights, on the other hand, have been shown to have a powerful positive effect on investment and efficiency, although only a few countries have tried to take advantage of the allocative efficiencies of a market to assign water resources among users. The authors argue that in order to ensure implementation of an effective water market system, attention should be paid to: (i) ensuring stakeholder participation in designing and implementing the new legislation; (ii) deciding on new rules for the initial allocation of rights and for how new rights should be allocated; (iii) establishing a public registry and block titling; (iv) setting up or strengthening water user associations; (v) protecting against the development of potential monopolies; (vi) ensuring that trades do not infringe on the water rights of existing users; and (vii) establishing appropriate environmental laws.Water Resources Law,Water and Industry,Water Supply and Systems,Environmental Economics&Policies,Water Conservation,Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Water Conservation,Water and Industry,Water Use

The Effect of a Change in Wheat Prices on Incomes

The effect of an exogenous change in wheat prices on the welfare of farmers, middlemen, consumers and the government is analysed in" a partial" equilibrium framework under a wide range of elasticity assumptions. The resulting computer simulations yield the tradeoffs for various policies. Although pareto optimality calls for equating the consumer, producer and international prices, this policy cannot be followed with abandon because of its adverse effects on consumers

Tradable Water Rights: A Property Rights Approach to Improving Water Use and Promoting Investment

In most countries, the state owns the water and hydraulic infrastructure, and public officials decide who gets water rights, how the water is to be used, and how much will be charged for its use. The authors of this paper compare administered systems of water allocation with a system of tradable water rights, and argue that water allocation by administrative edict has resulted in costly, large-scale inefficiencies in the supply and use of water, even withan adequate institutional framework. Secure property rights, on the other hand, have been shown to have a powerful positive effect on investment and efficiency, although only a few countries have tried to take advantage of the allocative efficiencies of a market to assign water resources among users. The authors argue that in order to ensure implementation of an effective water market system, attention should be paid to: (i) ensuring stakeholder participation in designing and implementing the new legislation; (ii) deciding on new rules for the initial allocation of rights and for how new rights should be allocated; (iii) establishing a public registry and block titling; (iv) setting up or strengthening water user associations; (v) protecting against the development of potential monopolies; (vi) ensuring that trades do not infringe on the water rights of existing users; and (vii) establishing appropriate environmental laws