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Provide aid to develop a framework for water markets

While market-driven water transfers are presently legal, and usually subject to the approval of state authorities, most states do not have an established process by which to consider the impacts of water transfers to the broader society. There is a need for informational and monetary assistance to effect a more just process of rights trading, since the present system only addresses the concerns of ``first-order'' stakeholders such as the direct buyers and sellers of water rights (Gollehon, 1999). Economic studies of water markets indicate that overall economic efficiency is improved on a state-wide level, with a net loss of water available for agricultural use. However, these studies note that economic costs and benefits fall on different populations within the state. Income loss is typically concentrated within sub-county areas, with some small farming communities severely impacted (Carter et al., 2000). Long lead times of notice prior to an actual water transfer seem to be one of the few methods of mitigating the suffering of small farming communities. In La Paz County, Arizona, where water market transfers led to a 14% unemployment increase in a single year, virtually all residents responded affirmatively to the statement: ``The losses to the community associated with the transfer of water are of such a nature that they cannot be compensated'' (Charney and Woodward, 1990).


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Next: Fund the construction of Up: Quantity-Focused Policies Previous: Quantity-Focused Policies   Contents
Andy Wingo 2001-12-10