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 4: Emerging water markets in the Columbia Basin: transaction costs and adaptive efficiency in environmental water allocation

Dustin Evan Garrick

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


At least on paper it [the Columbia Basin] appears to come close to comprehensive integrated management under a watershed-wide authority, and, in fact, it can boast of many positive accomplishments. . .but the two most sought-after goals – salmon recovery and comprehensive integrated management – have remained terribly elusive. These goals remain elusive not simply because of politics but because of boundedly rational people struggling to achieve collective goals in the face of transaction costs. (Schlager and Blomquist, 2008: 89) [The] bank balance of acquisition money remain[s] quite healthy, as it [has] turned out to be harder than expected to spend the money. (Neuman, 2004: 439–40)

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