California Water Markets

With support from the S.D. Bechtel, Jr. Foundation, PERC is hosting a workshop series exploring policy reforms that can increase the gains from trading water in California without sacrificing environmental protections or the rights of other water users. Decades of research have shown that water use efficiency and improved water quality result when institutions strengthen water rights and reduce transaction costs in water markets. Nonetheless, despite the abundant evidence that water markets can be harnessed to reduce resource conflicts and encourage mutually beneficial water trades, policy makers often resist implementing water market reforms.

PERC’s workshop series is creating a forum for water policy entrepreneurs to explore how and where water markets are working, why implementation is difficult, and how to best address the resistance to more robust water marketing in California. The first workshop was held in May, 2011 at the Hoover Institution on Stanford University’s campus and brought together an even mix of academics and practitioners with an expertise in California’s water world. The participants identified the key institutional barriers to more robust water marketing in California and generated ideas for overcoming those barriers.

The second workshop was held in August, 2012 in Orange County and was attended by a diverse group of scholars, water users, government officials, water attorneys, and conservationist groups. This workshop explored specific policy reforms aimed at increasing water marketing in California without sacrificing environmental protections or the rights of other water users. Topics addressed included the state’s transfer review process, groundwater adjudications, and designating water judges.

The third event will be held in 2013 and will target policy entrepreneurs and opinion leaders in Sacramento. After further vetting the ideas generated at the first two workshops, PERC will develop and distribute a handbook which identifies specific policy opportunities for lowering the transaction costs and increasing the gains from trading water. We will also develop and distribute case studies highlighting water market success stories.

2011 Water Policy Workshop

2012 Water Policy Workshop

Scott River Water Trust: Improving Stream Flows the Easy Way Case Study

Water From the Desert: Entrepreneurs Tap into Unlikely Water Sources Case Study