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A strategic environmental water rights market for Colorado River reallocation

Author

Listed:
  • Philip Womble

    (Stanford University
    Stanford University
    Stanford University
    University of Washington)

  • Steven M. Gorelick

    (Stanford University
    Stanford University)

  • Barton H. Thompson

    (Stanford University
    Stanford University
    Stanford University)

  • J. Sebastian Hernandez-Suarez

    (Stanford University
    Stanford University
    Universidad de los Andes)

Abstract

The Colorado River system is among the world’s most overallocated basins, struggling to supply water to the southwestern United States and Mexico. Consequently, 90% of the basin’s native fish species are endangered, threatened or extinct. Driven by a 24-year megadrought, the United States allocated over US$4 billion for drought mitigation, including water market transactions that pay farms, cities and industries to divert less water across the US Southwest. We developed a model of how strategic water markets can restore imperilled fish habitat, integrating hydrology, ecology, economics and water rights within the river’s headwater state of Colorado. While least-cost water-use reductions improve over one-third of restorable river habitat, strategically spending 8% more nearly triples habitat improvement. Ten transactions attain 26% of that improvement for 1% of the cost. Water markets that do not legally protect conserved water are 29% less cost-effective than markets that do. Overall, strategic investing and legal reforms yield outsized ecological benefits.

Suggested Citation

  • Philip Womble & Steven M. Gorelick & Barton H. Thompson & J. Sebastian Hernandez-Suarez, 2025. "A strategic environmental water rights market for Colorado River reallocation," Nature Sustainability, Nature, vol. 8(8), pages 925-935, August.
    • Handle: RePEc:nat:natsus:v:8:y:2025:i:8:d:10.1038_s41893-025-01585-x
    DOI: 10.1038/s41893-025-01585-x
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    References listed on IDEAS

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    1. Carey, Janis & Sunding, David L. & Zilberman, David, 2002. "Transaction costs and trading behavior in an immature water market," Environment and Development Economics, Cambridge University Press, vol. 7(4), pages 733-750, October.
    2. Brian D. Richter & Dominique Bartak & Peter Caldwell & Kyle Frankel Davis & Peter Debaere & Arjen Y. Hoekstra & Tianshu Li & Landon Marston & Ryan McManamay & Mesfin M. Mekonnen & Benjamin L. Ruddell , 2020. "Water scarcity and fish imperilment driven by beef production," Nature Sustainability, Nature, vol. 3(4), pages 319-328, April.
    3. Dustin Garrick & Bruce Aylward, 2012. "Transaction Costs and Institutional Performance in Market-Based Environmental Water Allocation," Land Economics, University of Wisconsin Press, vol. 88(3), pages 536-560.
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