I’m pleased to promote a recent book release: Tapping Water Markets. As a fan and supporter of PERC, this one hits close to home. PERC was talking about environmental markets as a solution to our environmental problems, before it was cool. They’ve also been instrumental in planting and growing this seed within me and many others.
I had the opportunity to pass three burning questions past one of the book’s authors (and friend), Reed Watson. He was kind enough to respond. I told you we were friends. Enjoy.
1. Why Tapping Water Markets?
Our book is about the past, present, and future of water markets. It compares water markets with political water allocation, documents the growth of water markets, and explores the ways in which water markets can be improved and implemented further. This book provides up-to-date information of where and why water shortages are occurring and where and why water markets are evolving to resolve conflicting water uses. The title reflects the book’s primary thesis, that tapping water markets offers great potential for improving water use efficiency and water quality.
2. What is the most important lessons in the book?
Although water policy is a broad and complex topic, most water conflicts arise for the same simple reason: competing users cannot trade. Trading water requires clearly defined, secure, and transferable property rights; and whenever a water crisis develops, it’s usually because the water right system is lacking in one of these critical dimensions.
Tapping Water Markets applies this property rights lens to a number of discrete water management topics including surface water allocation, groundwater management, environmental flows, and water quality trading. For each topic, we analyze the barriers to trade and suggest policy reforms for reducing the transaction costs. We hope readers appreciate the book’s breadth but also notice the pervasive property rights theme.
3. What does the future hold for water markets?
The future of water markets depends in large part on the scarcity of water. After all, markets are only useful in allocating scarce resources to their highest valued uses. Rarely do you observe markets for abundant resources. The problem in the United States is that we subsidize the majority of our water consumption. These price distortions mask the actual scarcity of our water resources, reduce the political will for institutional reforms, and perpetuate inefficient use. Not until water users feel the sting of depleted supplies will water marketing come to the fore.
Update: This promotional video was released on 4/19 and I thought it was good fit here.