All Dried Out: How Responses to Drought Make Droughts Worse
29 Pages Posted: 20 Jul 2015 Last revised: 2 Sep 2016
Date Written: July 19, 2015
Water usage is governed through a variety of mechanisms, including government administration and market tools. In 2006-2008 Barcelona’s region, a water scarce area, suffered a drought comparable to the one faced today by the US West. This article surveys a variety of techniques which were or could have been used to address these scarcity challenges. Spanish water regulations established water markets in 1999 but neither the design, nor its implementation were optimal. In addition to the design and implementation flaws, the response to the 2006-2008 drought crisis shows how emergency measures highjack water markets as a viable solution to water scarcity. Emergency responses bail out urban voters while no structural solutions to make water use in the agricultural sector more efficient are adopted. Neither the urban suppliers nor the agricultural sector has, thus, incentives to participate in a water market and droughts are to be managed using ad hoc solutions. Lessons for the US West can be drawn because that crisis’ responses are no different than the ones that could be undertaken by states west of the 100th meridian to tackle the current drought.
Keywords: water, drought, emergency, water markets
JEL Classification: K32
Suggested Citation: Suggested Citation