A major concern with the California water market is the threat to its aquifer. A groundwater transfer scheme exists where users sell off surface water and replace it with water from the ground. It also works the other way with users selling the groundwater then buying the surface water from others in order to irrigate. The best way to ensure preservation of the aquifer is to eliminate this trade in groundwater.

Another concern is the way water banks are set up to operate. The Kern Water Bank is one of the top five freshwater wetlands in the state. Despite its wetland status, it operates as an economic system, rather than an ecological one. Water is withdrawn when the market demands which means the wetland can dry out completely. This can cause rapid fluctuations in the water table and the drying up of wells, as well as leaving dead fish stranded to die without water. The Natural Resource Defense Council has expressed concerns about water banks leaving both people and fish in the dust.

A final concern is water hoarding with the buying up of water rights to sell when the price is right. This has occurred in both Australia and Chile. Speculators in Australia have also allegedly caused price crashes to bring about the rapid sale of water. The free market in water has the potential to turn into a corrupted system of underhand dealings.


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