Water Markets, Property Rights and Managing Environmental Water Reserves

Author(s):  
Lin Crase
2020 ◽  
Vol 36 (1) ◽  
pp. 132-153 ◽  
Author(s):  
Sarah Ann Wheeler ◽  
Dustin E Garrick

Abstract Water markets are promoted as a demand-management strategy for addressing water scarcity. Although there is an increasing literature on the institutional preconditions required for successful formal water markets, there has been less focus on understanding what drives participation after establishment of the basic enabling conditions. Participation can be measured in terms of either trading activity (conducting either a permanent or temporary water trade) and/or trade volumes across time and market products. Australia’s water markets in the Southern and Northern Basins of the Murray-Darling Basin provide a notable example of a ‘tale of two water markets’, offering insights about the economic policy levers that can drive participation across different hydrological, irrigation, and socioeconomic contexts. Key lessons include: distribution of initial property rights in resource allocation; the need to prepare for and seize opportunities to strengthen property rights; and robust monitoring and compliance requirements—all of which will reduce transaction costs and increase participation.


2015 ◽  
Vol 01 (04) ◽  
pp. 1550018 ◽  
Author(s):  
Erik Ansink ◽  
Carmen Marchiori

Water scarcity has become a major constraint on economic development in many regions of the world and sectoral water reallocation is now widely recognized as an essential step toward the sustainable management of water resources. This paper offers an approach to the reallocation of water among sectors based on sequential sharing rules. An essential feature of this approach is that it takes jointly into account a multiplicity of aspects which are critical to many water reallocation problems, but have often been neglected by the theoretical literature. Such aspects include pre-existing customary (or other) rights, scarcity constraints, the chronological order of sectors’ arrivals and environmental water demand. In doing so, our framework can help achieve a solution which is not only more efficient, but also perceived as legitimate and fair. Sequential sharing rules can be used to support or complement other approaches to water allocation, including those based on water markets. Our framework is illustrated using an application to inter-sectoral water reallocation in Cyprus.


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