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Water Markets, or Not?

Updated: Apr 13, 2019


Water is generally managed as a Common Property, especially relating to the hydrologic system that produces precipitation, but also the rivers that transport it, as well as the lakes and aquifers that store it.

USGS photo: Along I-80 in Nebraska

Water generally only becomes a Private Property after some Use Right, which is assigned by some entity representing the shared Other-interest in the Common Property, results in a withdrawal by the entity with the Use Right (see Lynne and Saarinen, 1993a, 1993b; Saarinen and Lynne, 1993). So, once the water drawn from an irrigation well in an aquifer, as in this image, is applied to the field (actually, the moment it enters the irrigation system of the irrigator), it suddenly becomes a Private Property. Intriguingly, though, even at that point it cannot be sold (or more of it bought) as Private Property, although the water now embedded in the field crop, e.g. the corn in this image, can be sold.


There are only rare instances wherein the corpus of water, itself, can be considered a Private Property, one of those instances being bottled water. Even in that case, however, it is more the bottle with the water in it is the Property, and not the water itself. Water in the tap in a city system is also not a Private Property; in fact, the "price" one pays for water in a city is simply the cost of pumping, treating and distributing it to your house. Water is not bought and in sold in most cities, but rather we pay only costs of access to it.


So, what is water marketing all about?


Water marketing is extremely uncommon. There are a few markets around this Spaceship Earth in Use Rights to withdraw water from aquifers, rivers and lakes, generally based on permits allocated by Government. Water is mainly allocated by Government, rather than by the Market, albeit some intriguing examples of Market&Government.


References


Lynne, G. D. and Saarinen, P. P. "Melding Private and Public Interests in Water Rights Markets." Journal of Agricultural and Applied Economics no. 25 (July, 1993a):69 – 83.

Lynne, G. D. and Saarinen, P. P. Water Markets: What Role Can They Play in Florida? Gainesville, FL: University of Florida, 1993b.

Saarinen, Phyllis Park and Lynne, Gary D. "Getting the Most Valuable Water Supply Pie: Economic Efficiency in Florida's Reasonable-Beneficial Use Standard." Journal of Land Use and Environmental Law 8, 2 (1993): ??.

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