Some difficulties in setting up water markets

Water markets – willing buyers and willing sellers, to get water moved from places with a lot to places that need it really bad – are a hot topic of conversation right now, what with California’s big drought and all. Brian Devine at the University of Colorado has a nice post up this week explaining why they’re hard to implement in practice. Brian has a lot of good examples of the practical problems of implementing such a market, not the least of which is the physical movement of the water. I’d like to single out one small but incredibly important point:

I go to this mythical new water market and sell my consumptive use (let’s assume I actually know what this is, unlike 90% of the farmers out there).

This seemingly trivial problem – how much water am I actually using, and how much is saved by not irrigating this year? – is not trivial. For my book research, I’m looking right now at an example in Arizona that’s showing great promise, but the investment in calculating this bit – how much water saved? – is a huge effort, and coming up with an answer that everyone agrees with and trusts is a crucial piece of success. This is the sort of thing that takes a lot of work to get right if we’re going to make water markets work.

Brian’s entire post is worth reading.