20 Aug 2008

Water Marketing

Jonathan H. Adler, a law professor, writes of "Water Marketing as an Adaptive Response to the Threat of Climate Change," and this excerpt captures his argument:
The United Nations Intergovernmental Panel On Climate Change has noted that there are numerous policy options that “would generate net social benefits regardless of whether there was a climate change.” Examples of such “no regrets” policies would include the elimination of irrigation and development subsidies that artificially increase water demand, as well as the incorporation of environmental values into existing water institutions.

This article suggests that the gradual implementation of water markets is also such a “no regrets” policy. Many aspects of water markets, including their flexibility, decentralized nature, and ability to create and harness economic incentives, make them particularly well suited to address the uncertain water forecast. A gradual shift toward water marketing and market pricing will improve the management of water supplies, ensure more efficient allocation of available water supplies and encourage cost effective conservation measures.
Bottom Line: Read this paper.


  1. I have. I'm unimpressed. The major flaws include (a) a failure to discuss the effects on the formation of a water market by the fact that the purchasers will almost universally be government agencies; (b) a failure to analyze adequately the purported subsidies of agricultural water; and (c) a conflation of retail conservation pricing structures with a "market".

  2. Francis, your items a and c are linked, of course, and they aren't much different from power distribution. Like power, consumers will benefit if we see more deregulation, competition, metering and pricing options for water.

    Improving rural-urban markets is a different nut.


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