Water Allocation in Rivers under Pressure

Water Allocation in Rivers under Pressure

Water Trading, Transaction Costs and Transboundary Governance in the Western US and Australia

Dustin Evan Garrick

Water trading and river basin governance have been upheld as institutional blueprints for allocating water for people, agriculture and ecosystems in a changing climate. Progress has been uneven, however, despite multiple decades of institutional reforms in river basins under pressure from demand, development and droughts. This timely book examines the evolution and performance of water allocation reforms in the Colorado, Columbia and Murray–Darling Rivers. It draws on concepts and evidence about property rights, transaction costs and institutional change to generate lessons about the factors contributing to more adaptive and sustainable water allocation.

Chapter 1: Water allocation in rivers under pressure: a large-scale collective action dilemma

Dustin Evan Garrick

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental governance and regulation, water

Extract

Water rights transfers would increase the benefits gained from the use of water and would tend to delay or make unnecessary the construction of new sources of supply . . . [but] the fact that no two water rights are identical ... will prevent the development of a market in water rights comparable to the auction market of a stock or commodity exchange. (National Water Commission, 1973: 260, identifying the benefits and constraints on water trading) The current system is clunky: it’s often difficult to get approvals, and protections are not always effective. We will need to develop a more streamlined approach, while taking into account that the water market is much more nuanced than, say, a market for plywood. How and when water moves through the system matters, so rules are needed to facilitate trading and to ensure that it doesn’t harm other users or the environment. (Ellen Hanak, New York Times, 29 June 2014, on the state of water rights trading 40 years later in the context of California’s drought, 2011 to 2014, and ongoing as of 2015)