Creating a Water Market in California: What Will It Take?


This case examines the creation of a water market in Southern California. Given the scarcity of water in the state, and the increasing demand for water in the agricultural sector that drives the economy, innovative measures have been developed to build a market where farmers can trade water rights. The work of the Fox Canyon Groundwater Management Agency offers insights into how provision of a public good—one that is accessible and used by all, such as clean air or water—can be made efficient through creative means, even in a highly regulated scenario. The case can be used to illustrate the challenges involved in bringing together different stakeholders with diverging interests to solve a “commons” problem; that is, one concerning a public good that is in the commons (accessible to all, with few restrictions).

This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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