CB sent this comment in response to my request for more information on working water markets:
I just heard a talk by Mike Young, professor of Water Economics and Mgmt at the Univ. of Adelaide. His talk was on the reforms of water policy and law that have occurred in Australia during the past 15 years, which are nothing short of remarkable.I agree with all of these policies because they protect property rights, adjust rights to REAL flows, allow trading with the lowest costs, and take third-party/environmental impacts into consideration (via "smart markets").
They have completely separated water rights from land, converted them from water quantity-based to share-based (to account for variability in streamflows), and most amazingly, created a system in some areas where water rights are traded via a web-based service that matches sellers and buyers with no intervention by third parties. Potential third party effects are accounted for when the markets are established in the way they operate. Basically putting transaction costs up front to facilitate trade after market establishment.
It’s really a testament to both the ingenuity of the Aussies and the extreme direness of the water situation down there that they could implement such sweeping changes in such a short time.
Can California (and other Western states) do the same? Obviously -- but not until the various claimants stop playing winner-take-all games (i.e., lawsuits) and agree that they need to put their money where their mouth is (hear that enviros?), quantify their rights (hear that farmers?), stop playing waiting games (hear that urbans?), and make tough decisions (hear that politicians?)
Bottom Line: We CAN manage our limited water supplies on a sustainable basis, but we have to change the status quo to do so.
3 comments:
Hmmm - it doesn't feel nearly as optimistic here in Australia. There are endless compromises and fudges by the states that border the main problem river, the Murray.
Ken - the talk by Prof. Young did not give the impression that all was rosy down under (sorry if my email to David did, though). But as someone who has looked at water issues from both the technical and legal perspectives I find it highly encouraging that there can even be a rational discussion about reforming water laws to reflect changing realities.
We may need many more years of drought in the Colorado River watershed before anything similar is likely to happen in the U.S. - or more likely several years of drought coupled with a greater realization that there is no significant new source with which to augment supplies. As long as there are people out there touting untapped and easily accessible new supplies to engineer us out of drought (with generous dollops of taxpayer funding) real institutional change will not happen here. Australia doesn't have any of those options - they are experiencing water crises in the wet parts of the country so they have nowhere else to look. Hence the radical changes underway there.
Those who want to know more about what is happening can find lots of papers and droplets on www.myoung.net.au
Mike Young
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