WATER MARKETS: Tools for Management and Diplomacy

Various jurisdictions around the world have implemented water markets as a means of mitigating or avoiding water conflict, adapting to changing water supplies and demands, and improving water valuation. Water markets are sets of policies to allow the sale or trading of ownership interests in raw water resources between interested parties. Efforts to implement water markets have achieved various levels of success, while confronting obstacles and generating their own set of problems. Policymakers may struggle to implement efficient and effective water markets for a variety of reasons, including the sociocultural and ecologic values of water that may not be captured by markets, human rights and anti-commodification concerns, inter-generational impacts, and the administrative and practical complexities of regulating exchanges of such a critical and variable resource. Despite these challenges and risks, policymakers may still find markets a useful tool under appropriate conditions, including recognizing clearly delineated legal rights in water, appropriate use prioritization to protect nature and vital human needs, and reasonably predictable irrigation seasons and reliable models and data.