Water Markets for the 21st Century: What Have We Learned?

354 Pages·2014·5.045 MB·English

by  K. William Easter, Qiuqiong Huang (eds.)

Global Issues in Water Policy 11
K. William Easter
Qiuqiong Huang Editors
Water Markets
for the 21st
Century
What Have We Learned?
Water Markets for the 21st Century
GLOBAL ISSUES IN WATER POLICY
VOLUME11
Editor-in-chief
ArielDinar
SeriesEditors
JoséAlbiacMurillo
StefanoFarolfi
AbelMejia
RathinasamyMariaSaleth
Forfurthervolumes:
http://www.springer.com/series/8877
K. William Easter (cid:129) Qiuqiong Huang
Editors
Water Markets for the 21st
Century
What Have We Learned?
123
Editors
K.WilliamEaster QiuqiongHuang
DepartmentofAppliedEconomics DepartmentofAgriculturalEconomics
UniversityofMinnesota andAgribusiness
St.Paul,MN,USA UniversityofArkansas
Fayetteville,AR,USA
ISSN2211-0631 ISSN2211-0658(electronic)
ISBN978-94-017-9080-2 ISBN978-94-017-9081-9(eBook)
DOI10.1007/978-94-017-9081-9
SpringerDordrechtHeidelbergNewYorkLondon
LibraryofCongressControlNumber:2014945761
©SpringerScience+BusinessMediaDordrecht2014
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Preface
A growingdemand for water combined with the impact of climate change on the
timing and quantity of water availability have dramatically changed how policy
makersviewwaterresources.Pressureisbuildingonwatermanagerstodoabetter
jobofconservingandallocatingwaterresources.Addingtothisisthedemandfor
more water to meet environmental needs, which makes it even more imperative
that we substantially improveour water use. One mechanismfor doing this is the
increaseduseofwatermarkets.
One of the objectives of this book is to provide the reader with a clear picture
of what we have learned about water markets. Since we completed our first
water markets book in the 1990s (Easter, Rosegrant, and Dinar, 1998, Markets
forWater:PotentialandPerformance)alothashappenedaroundtheworldwhich
hasimprovedourunderstandingofthepossibleproblemsandopportunitiesforthe
futureuseofwatermarkets.Thebookisacombinationofresultsfromnewresearch
andsurveysofwatermarketsinkeypartsoftheworld.Watermarketsincountries
acrossfivecontinentsareexamined.Australiahasdiscoveredtheproblemofsleeper
waterrightsandhasbeguntousethewatermarkettobuywaterforenvironmental
flows.Wehavealsobecomeawareoflocalwatermarketsthathavebeenoperating
inOmanforcenturies.Theseandmanyotherexperiencesneedtobespelledoutin
oneplacetohelpguideourfutureuseanddevelopmentofwatermarkets.
The secondobjectiveofthe bookisto assesswherewe arewith water markets
andwhatsuggestionswecanmakefortheiruseinthetwenty-firstcenturytohelpus
adapttotheimpactofclimatechangeandpopulationgrowthontheavailabilityof
waterresources.Itisclearthatwithclimatechangewaterwillneedtobereallocated
and used more effectively. We need to use less water and stop polluting it. The
big question for us is how water markets can better help us address these tasks.
Changesinwaterinstitutionswillbeakeypartoftheprocessaswilltheallocation
ofwaterrightsorwateruserights.Someofthebiggestnewinsightscomefromthe
experienceAustraliahashadwithwatermarketsoverthelasttwodecadesinwhich
theymademajorchangesintheirwaterinstitutions.OthercountriessuchasChile,
Spain,andtheUSAhavemademodestchanges,butmoreareneeded.Yetcountries
such as South Africa may eliminate the use of water markets because politicians
v
vi Preface
haveraisedconcernsregardingtheequityofthecurrentownershipofwaterrights.
Manyseemtoforgetthatwatermarketsarejustatooltohelpmanageandallocate
water.Theactualownershipandallocationofwaterrightsoruserightsisaseparate
issue. Water marketsdo notdeterminethe initialallocation of rights.Marketscan
comeintoplayoncethewaterrightsoruserightshavebeenestablished.Sincewater
rights are generally quite valuable their distribution can be highly political. The
findingsinthisbooksuggestthataholisticapproachshouldbetakentoconsiderthe
physical environmentalas well as institutions and politics in developing effective
watermarkets.
StPaul,MN,USA K.WilliamEaster
Fayetteville,AR,USA QiuqiongHuang
Acknowledgements
The editors would like to thank all the authors who contributed chapters for this
book.Itistheirknowledgeofwatermarketsthatmakethisbookamusttoreadfor
anyoneinterestedinwaterallocationandmanagementissues.Theeditorsalsowant
to thank Diane McAfee who has been a great help in organizing and processing
the book for delivery to the publishers and Susan Pohlod for her advice and help
especiallywiththefigures.Finally,wewanttothankGeorgeNorton,JayCoggins,
ArielDinar,RuthMeinzen-Dick,K.Palanisami,andJimNickumwhoallreviewed
chapters and made suggestions for changes and additions that strengthened each
chaptertheyreviewed.
vii

Contents
1 WaterMarkets:HowDoWeExpandTheirUse?....................... 1
K.WilliamEasterandQiuqiongHuang
2 TransactionCostsandPolicyDesignforWaterMarkets.............. 11
LauraMcCannandDustinGarrick
3 WaterMarketsasanAdaptiveResponsetoClimateChange......... 35
MarkW.Rosegrant,ClaudiaRingler,andTingjuZhu
4 SupplyReliabilityUnderClimateChange:Forbearance
AgreementsandMeasurementofWaterConserved ................... 57
BonnieColby,LanaJones,andMichaelO’Donnell
5 AreLeaseWaterMarketsStillEmerginginCalifornia? .............. 83
RichardE.Howitt
6 WaterMarketsinChile:AreTheyMeetingNeeds?.................... 103
RobertHearneandGuillermoDonoso
7 WaterMarketsinSpain:MeetingTwenty-FirstCentury
ChallengeswithTwentiethCenturyRegulations ....................... 127
DoloresRey,AlbertoGarrido,andJavierCalatrava
8 CenturyOldWaterMarketsinOman................................... 149
SlimZekri,DennisPowers,andAbdullahAl-Ghafri
9 TheEvolutionofWaterLegislationinAustralia........................ 163
JohnTisdell
10 WaterTradinginAustralia:Tracingits’Development
andImpactOverthePastThreeDecades ............................... 179
SarahWheeler,HenningBjornlund,andAdamLoch
11 TradingintoTrouble?LessonsfromAustralia’sMistakes
inWaterPolicyReformSequencing...................................... 203
MikeYoung
ix