Conflict and water are two words that go hand in hand in our world of increasing resource scarcity. California has not been able to escape this conflict. The drought over the last five years has exacerbated the conflict to a crisis. Rivers, lakes, and waterways are all at very low levels, impacting the natural and physical environment. Excessive groundwater use has caused the land to sink. Farmers have left large tracts of land dormant where crops once flourished. Many Central Valley communities are without access to water. All of this pits water consumers against agriculture against environmentalists.

California has tried to overcome these problems by implementing a water market where users buy and sell water. However, the way the system is set up actually discourages users. Many regulations which protect the environment are in conflict with the efficient transfer of water. So the conflict continues even with the proffered market solution.

The main criticism seems to be the complexity of the system with its piecemeal regulatory framework. Transfers take a long time to be approved and costs are high. Many farmers don’t even try to use the system as the lag between the need for water at any point in time and approval is too long. There have also been issues with transparency and incompleteness in the reporting of transfers and data collection.

The only ones benefiting from the water market seem to be the the large scale buyers and sellers. The transfers that do take place do not benefit local communities, small farmers, or the environment.

In April this year the Environmental Defense Fund released a set of reform recommendations for the California water market. This sounds reasonable enough except for the misgivings that always seem to go with any system that capitalizes on a natural resource. It is not enticing to think that water markets will be dictating our ability to access what is a basic human right.


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