I am delighted for this project in China, creating seven pilot water markets. I hope we research them very carefully all along.
It is worth remembering that part of the motivation of the Australian water market was to drive farmers out of farming. Or at least to make them hate leaving farming less (comforted by the money from their water right). It worked, too. Irrigated acreage in the Murray-Darling Basin dropped by half in their drought, and is still only back up to two-thirds the pre-drought extent. I don’t know how comforted they felt.
I am starting to think that many of the people who advocate water markets are on autopilot, reacting to the 90’s when farm groups felt all-powerful and there was never going to be any possibility of reforming water rights. It isn’t that they loved markets so much, but it was the sole hope of getting some water out of big boys in ag for cities. If the big boys in ag made a killing selling cities water, well, that was a shame but it was the only possible way to move the water. That dynamic doesn’t feel as strong any more. Cities aren’t as urgent about getting more; they’ll look to their own sources (wastewater, greywater, desal) first to avoid the hassle. Or we aren’t looking to move chunks of water around so much as facing the possibility of having much less water. There’s much less water, but other mechanisms besides markets for leaving some instream (like the ESA). Or the drought is raising questions of reforming the water rights system directly, rather than leaving them in place and moving water by markets.
Water market advocates! If you haven’t revisited your reasons for thinking of markets as good policy for a few years, now would be a good time to double check them. A water market may no longer be your best policy option.