Existing water governance systems are proving to be quite ineffective in managing water scarcity, creating severe risk for many aspects of our societies and economies. Water markets are a relatively new and increasingly popular tool in the fight against growing water scarcity. They make a voluntary exchange possible between interested buyers and sellers of water rights. This paper presents direct evidence from seven water markets around the globe to document key economic and ecological challenges and achievements of water markets with respect to water scarcity. We specifically approach water markets as localized cap-and-trade systems, similar to those for carbon emissions. We examine whether water use remains within the set limits on use of water rights (i.e., under the cap), the degree to which water markets help protect the health of ecosystems and species, and whether (as predicted by economic theory) the explicit pricing of water is accompanied by improving efficiency, as less productive water users decide to sell water to more productive water users.
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February 06 2014
Water markets as a response to scarcity Available to Purchase
Peter Debaere;
Peter Debaere
aDarden School of Business, University of Virginia, Charlottesville, Virginia 22903, USA
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Brian D. Richter;
bThe Nature Conservancy, 5834 St George Avenue, Crozet, Virginia 22932, USA
Corresponding author. E-mail: [email protected]
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Kyle Frankel Davis;
Kyle Frankel Davis
cDepartment of Environmental Sciences, University of Virginia, Charlottesville, Virginia 22904, USA
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Melissa S. Duvall;
Melissa S. Duvall
cDepartment of Environmental Sciences, University of Virginia, Charlottesville, Virginia 22904, USA
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Jessica Ann Gephart;
Jessica Ann Gephart
cDepartment of Environmental Sciences, University of Virginia, Charlottesville, Virginia 22904, USA
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Clark E. O'Bannon;
Clark E. O'Bannon
cDepartment of Environmental Sciences, University of Virginia, Charlottesville, Virginia 22904, USA
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Carolyn Pelnik;
Carolyn Pelnik
dFrank Batten School of Leadership and Public Policy, University of Virginia, Charlottesville, Virginia 22904, USA
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Emily Maynard Powell;
Emily Maynard Powell
eDepartment of Urban and Environmental Planning, University of Virginia, Charlottesville, Virginia 22904, USA
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Tyler William Smith
Tyler William Smith
fSchool of Engineering and Applied Science, University of Virginia, Charlottesville, Virginia 22904, USA
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Water Policy (2014) 16 (4): 625–649.
Article history
Received:
October 15 2013
Accepted:
January 04 2014
Citation
Peter Debaere, Brian D. Richter, Kyle Frankel Davis, Melissa S. Duvall, Jessica Ann Gephart, Clark E. O'Bannon, Carolyn Pelnik, Emily Maynard Powell, Tyler William Smith; Water markets as a response to scarcity. Water Policy 1 August 2014; 16 (4): 625–649. doi: https://doi.org/10.2166/wp.2014.165
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