Comparative Assessment of Water Markets: Insights from the Murray-Darling Basin of Australia and the Western USA

by R. Grafton; Clay Landry; Gary Libecap; Bob O'Brien; Eric Edwards

Jan 1, 2012
Water markets in Australia's Murray-Darling Basin (MDB) and the US west are compared in terms of their ability to allocate scarce water resources. The study finds that the gains from trade in the MDB are worth hundreds of millions of dollars per year. Total market turnover in water rights exceeds $2 billion per year while the volume of trade exceeds over 20% of surface water extractions. In Arizona, California, Colorado, Nevada, and Texas, trades of committed water annually range between 5% and 15% of total state freshwater diversions with over $4.3 billion (2008 $) spent or committed by urban buyers between 1987 and 2008. The two-market comparison suggests that policy attention should be directed towards ways to promote water trade while simultaneously mitigating the legitimate third- party concerns about how and where water is used, e specially conflicts between consumptive and in situ uses of water. The study finds that institutional innovation is feasible in both countries and that further understanding about the size, duration, and distribution of third-party effects from water tra de, and how these effects might be regulated, can improve water markets to better manage water scarcity.
Comparative Assessment of Water Markets: Insights from the Murray-Darling Basin of Australia and the Western USA


Powered by Foundation Center's Knowledge Center Service