I said some stuff about water markets in this Q&A with Drew Beckwith of Western Resources Advocates:
Beckwith: That’s certainly an NGO concern, that an unbridled market does not take into account the environment and that water would just run uphill towards money.
Fleck: This is a problem with thinking about markets, right? A market is built by humans to meet a need. So you can build a market that would include environmental values for water and have an institutional framework that pays farmers to leave water in-river for an environmental purpose. It’s just an implementation detail of building a market, it’s not intrinsic to markets. This is a question of where you draw the boundaries in and around the market and what do you include. Markets are built by people to accomplish particular goals. They’re not some magic thing off on the side. This is one of the failures of our public understanding of economics that’s gotten us in all kinds of trouble. People build markets.