Water rights
markets have become popular in recent years as a method to transfer assets
serving less economic uses to those uses generating greater return or serving
more people. Critics name as problems: conversion of natural resources to
commodities, aggrandizement of priority-based allocation benefits, causation of
artificial value, and personal enrichment of transferors. The notion that water is a public asset is
also offended. But transactions in water
rights are not easy. The attributes of
the individual rights taken to market are not uniform. In fact they are highly disparate, due to
their source of origin (common law, state or federal statute), defined place of
use, and, where rights (and consequent resource allocation) are prioritized by time
or category of use, by power to dislocate other existing rights. As a consequence, water rights transfers are
often highly regulated, with the objective of minimizing disturbance to water
source or conflict among water users in the transferor or transferee water use
system. Also, as a consequence, attempts
at creating water markets more like commodity markets, where fungible assets
are exchanged, have not yet been successful.
You will find a presentation on the subject of water markets’
place in the spectrum of securities, commodity, real estate and public works market models here:
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