Wednesday, September 4, 2019

Water-Trading Market Runs Into Trouble Wall Street Journal 9.4.2019

A couple of years ago, the Colorado Water Congress had a session that featured the methods Australia had engaged in to manage water. One of the strategies mentioned included water-trading markets, a plan initiated in the country in 2007. The Wall Street Journal article described water-trading as a market-based system that incorporates cap and trade. Investors can buy and sell water shares, a segment of the market worth about $20 billion.  One of the oldest examples in the United States, the Big-Thompson in Colorado, "has never grown to make much of a difference in the overall supply". California has considered water-trading and Nevada's state engineer signed off on a plan at the beginning of the year in Diamond Valley.

The proponents of the market-based system hoped that the value of water would increase, encouraging high-valued uses of water. Instead of growing wheat, farmers have planted water guzzling crops, such as almonds, citrus fruits, and cotton. The article cited corruption, fraud, and theft as the reasons that Australia's Darling River has run dry and has not flowed for eight months, with devastating effects on fish and wildlife. Users of water have stolen water from rivers and streams and governmental officials "a former agriculture minister allegedly oversaw the purchase of a water license at a record price from a Cayman Islands company cofounded by the current energy minister."

In response to this article, Matt Kennedy, of AquaShares in San Francisco, California,  in the September 13, 2019 edition of the WSJ referred to the water exchanges that have succeeded. According to him, those include Oman's aflaj, Morocco's khettara, Iran's qanat, China's karez, Bali's subak, and Spain's Huertas. These efforts at water trading established the trust needed to avoid the problems that exist in the Australian model. He blamed the transactional approach of economists and suggested involving "anthropologists, hydroecologists, sociologists, and human rights lawyers. . . to also restore ecological health and ensure social equity." (p. A14)

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