Document Type

Working Paper

Publication Date

9-2019

Working Paper Number

2019-01

Abstract

As water becomes increasingly scarce relative to demand, it becomes increasingly important to maximize the value that we derive from it. For years, economists have been advocating increased reliance on water markets as a means of rationalizing water use, the objective being to facilitate the allocation of water to its highest-value uses.1

Yet in many parts of the arid West, water markets have been surprisingly slow to take hold. Despite some recent progress, perhaps nowhere is this truer than in California.2 The conditions of extreme drought recently experienced by the state make it even more incumbent to better understand why water markets have been so slow to emerge.

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