56 Pages Posted: 2 Apr 2019 Last revised: 6 Aug 2019
Date Written: March 4, 2019
Water should be priced reflecting its true value in times of scarcity. Water markets can contribute to this goal. But this paper claims that those water markets must take into consideration affordability, environmental protection, and community values, not only the profit-maximization objectives of corporations.
There are plenty of forces pushing water to be the new oil as it becomes scarcer due to climate change and demand increases due to population growth and lifestyle changes. The forces may be unstoppable. In addition to traditional water rights exchanges, water markets include, among others, large multinational conglomerates bidding for our water utilities, investment in water reuse, and specialized investment funds for water-related companies. These lucrative investments in water are profiting from regulatory gaps and many perceive them as commodifying and corporatizing an essential and common good: water. These new investments sidestep traditional water law doctrines aimed at preventing speculation and ensuring that externalities are internalized. Thus, without the protection offered by these water law doctrines, these new investments unduly generate profit. Regulatory gaps must be closed and water law regulations must ensure that neither efficiency nor fairness are compromised.
Scholarship on water markets broadly understood is either in favor of free markets or set against any form of market. This article instead offers a portfolio of measures to ensure that water markets are properly regulated. Water markets can be a positive tool for water management ensuring that scarce water ends up in the hands of those who value it the most. This does not need to come at the expense of the human right to water, the community of origin, or the environment. States can implement measures to mitigate the negative consequences of these new and expanded water markets. Among the measures analyzed, there is the joint management of surface and groundwater and the limit on who can hold a water right and how much water a water right holder can be entitled to.
Mark Twain purportedly said that, “Whisky is for drinking and water is for fighting.” Water scarcity will certainly cause fights as there will not be enough water for all users. Markets may help reallocation but law can put up a fight and reduce the risk that corporate interests may cause losses in efficiency and fairness when disrupting current water allocation.
Keywords: property rights, corporations, water rights, water, communities, markets, water markets, fairness
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