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

Australia’s Murray-Darling Basin and south western United States share: (1) climate variability resulting in the need for large water storage investment; (2) the need for internal and cross-border (state) water management; (3) an historical over-allocation of water to irrigators; and (4) increasing competition between agricultural and urban demand and in situ environmental and recreational uses. The ability of water markets in these two regions to mitigate water scarcity is compared in this report. The evaluation suggests that on-going water market reform, along with processes to account for the public interest, can promote equity, environmental sustainability and economic efficiency

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

Water markets in Australia’s Murray-Darling Basin and the western US are compared in terms of their ability to mitigate water scarcity. The two regions share: (1) climate variability that requires large investment in water storages; (2) the need for internal and cross-border (state) water management; (3) an historical over allocation of water to irrigators; and (4) increasing competition among different uses (agricultural, environmental and recreational in situ uses, urban demand). The evaluation of the two markets suggests that on-going water market reform along with processes to account for the public interest can promote equity, environmental sustainability and economic efficiency.