Water Markets

With demand for water fast outstripping its supply, experts are turning to water markets as an innovative strategy to manage water. Like all markets, water markets allow for the trade—buying and selling—of water for commercial or noncommercial uses. The price of water in a water market is determined by the exchange of water rights. Such rights are either customary or established through laws and regulations and they define entitlements to and ownership of water.

Meeting demand by expanding existing water systems is becoming increasingly difficult due to prohibitive environmental and economic costs. In countries where water use exceeds its natural recharge, groundwater levels are dropping—reducing available water and raising the cost of pumping, or causing salt water intrusion and contamination. Moreover, water is highly underpriced, ...

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