Water Markets and Environmental Flows in Theory and in Practice
- Resumen
- The practice of allocation of water for environmental objectives is increasingly common. In practice, often only minimum instream flow levels are required. This is rarely economically or ecologically optimal. Water markets offer an opportunity to advance beyond minimum flows and to achieve efficient allocations, with minimal political opposition. Markets in the western United States and Australia are already securing water for the environment. Experience, however, shows that environmental uses have difficulty competing against other consumers. This is due to their public goods nature, high transaction costs, and often a lack of marketable outputs. Governments, the largest purchasers of water for environmental purposes, are often obligated to purchase water by law. As such, the market functions more as a mechanism for compensation and least cost achievement of a legal mandate, and less as a vehicle for economically efficient allocation. The environment is also often affected by water market transfers between other consumers. Methods to minimize such third-party impacts include limiting the geographical scope of water transactions, restricting trade to consumptive use only, and dedicating a portion of water from all transactions to environmental objectives. Such restrictions minimize environmental impacts, but also limit the ability of the market to achieve efficient allocations.
- Autor
- Katz, David
- Palabras Clave
- Planificación hidrológica, Actividad económica, Finanzas, Derecho del agua, Recursos hídricos
- Idioma
- Inglés
- Documentos
- Ponencia ( 11 pag, 206 Kb )
- Presentación