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Reforming water allocation policy through markets in tradable water rights: lessons from Chile, Mexico, and California

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  • Rosegrant, Mark W.
  • Gazmuri S., Renato

Abstract

Increasing water scarcity, rising costs of irrigation subsidies, and general economic liberalization are creating strong incentives for comprehensive water reform with establishment of tradable water rights and the development of markets in these rights. Experiences in Chile, Mexico, and California indicate that water allocation through markets in tradable water rights offers a viable approach to improving the efficiency of water allocation, and should receive serious consideration from developing country policy makers. Laws establishing tradable rights should be simple and comprehensive, should clearly define the characteristics of water rights and the conditions and regulations governing the trade of water rights; should establish and implement water rights registers; delineate the roles of the government, institutions, and individuals involved in water allocation and the ways of solving conflicts between them; and provide cost-effective protection against negative third party and environmental effects which can arise from water trades.

Suggested Citation

  • Rosegrant, Mark W. & Gazmuri S., Renato, 1994. "Reforming water allocation policy through markets in tradable water rights: lessons from Chile, Mexico, and California," EPTD discussion papers 6, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:eptddp:6
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    References listed on IDEAS

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    1. Falck Zepeda, José & Barreto-Triana, Nancy & Baquero-Haeberlin, Irma & Espitia-Malagón, Eduardo & Fierro-Guzmán, Humberto & López, Nancy, 2006. "An exploration of the potential benefits of integrated pest management systems and the use of insect resistant potatoes to control the Guatemalan Tuber Moth (Tecia solanivora Povolny) in Ventaquemada,," EPTD discussion papers 152, International Food Policy Research Institute (IFPRI).
    2. Paul Lewin, 2005. "Análisis de la Eficiencia del Mercado de Derechos de Aprovechamiento de Aguas en Chile," Others 0503005, University Library of Munich, Germany.
    3. G. Donoso & O. Melo & C. Jordán, 2014. "Estimating Water Rights Demand and Supply: Are Non-market Factors Important?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(12), pages 4201-4218, September.
    4. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    5. Paul J. Block & Kenneth Strzepek & Mark W. Rosegrant & Xinshen Diao, 2008. "Impacts of considering climate variability on investment decisions in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 171-181, September.
    6. Palomo-Hierro, Sara & Loch, Adam & Pérez-Blanco, C. Dionisio, 2022. "Improving water markets in Spain: Lesson-drawing from the Murray-Darling Basin in Australia," Agricultural Water Management, Elsevier, vol. 259(C).
    7. TUDOR, Monica Mihaela & CHITEA, Mihai Alexandru, 2012. "The Irrigation System In Brăila − A Farmer Economic Focused Approach −," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 3(1), pages 89-97.
    8. Venkatachalam, L., 2008. "Market-based instruments for water allocation in India: issues and the way forward," Conference Papers h042916, International Water Management Institute.
    9. Mónica Ríos & Jorge Quiroz, 1995. "The Market of Water Rights in Chile: Major Issues," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 32(97), pages 317-346.
    10. Delorit, Justin D. & Parker, Dominic P. & Block, Paul J., 2019. "An agro-economic approach to framing perennial farm-scale water resources demand management for water rights markets," Agricultural Water Management, Elsevier, vol. 218(C), pages 68-81.
    11. Jordi Honey-Rosés, 2009. "Reviewing the arguments for market based approaches to water distribution: a critical assessment for sustainable water management in Spain," Sustainable Development, John Wiley & Sons, Ltd., vol. 17(6), pages 357-364.
    12. Brennan, Donna C. & Scoccimarro, Michelle, 1999. "Issues in defining property rights to improve Australian water markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(1), pages 1-21, March.
    13. Fang, Lan & Nuppenau, Ernst-August, 2006. "Application of a Spatial Water Model in a Chinese Watershed," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25437, International Association of Agricultural Economists.
    14. He, Lixia & Horbulyk, Theodore M. & Ali, Md. Kamar & Le Roy, Danny G. & Klein, K.K., 2012. "Proportional water sharing vs. seniority-based allocation in the Bow River basin of Southern Alberta," Agricultural Water Management, Elsevier, vol. 104(C), pages 21-31.
    15. Werner Frank U., 2000. "Wassermärkte als Instrument zur Steuerung der Wassernachfrage?," ZFW – Advances in Economic Geography, De Gruyter, vol. 44(1), pages 32-40, October.
    16. Paul Holden & Mateen Thobani, 1995. "Tradable Water Rights: A Property Rights Approach to Improving Water Use and Promoting Investment," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 32(97), pages 263-290.
    17. Johnson, S. H. III., 1997. "La transferencia del manejo de la irrigacion en Mexico: una estrategia para lograr la sostenibilidad de los distritos de riego," IWMI Research Reports 158351, International Water Management Institute.
    18. Lofgren, Hans & Doukkali, Rachid & Serghini, Hassan & Robinson, Sherman, 1997. "Rural development in Morocco: alternative scenarios to the year 2000," TMD discussion papers 17, International Food Policy Research Institute (IFPRI).
    19. Francesco Prota, 2002. "Water Resources And Water Policies," Working Papers 8_2002, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    20. Chant, Lindsay & McDonald, Scott & Verschoor, Arjan, 2004. "The Role of the 1994-95 Coffee Boom in Uganda's Recovery," Conference papers 331235, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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