Monthly Archives: February 2016

Water Markets to Help Water Transmission

The easiest way to reduce the costs and complexities of water transmission is to simply use less water. This is not always easy because there are fundamental limits to the minimum water needed by industry.

One way we can minimise the use of water is by putting it to the most effective uses. By placing a limit on the water we use to a sustainable level, we can still make money out of the resource but without incurring the expense of bringing in water from other resources.


The way to do this is through a water exchange. Wikipedia has an excellent introduction to water trading. This lets farmers trade their water rights so that the farmers who can make the most out of the water will pay for it. This has been most successful in Australia where farmers in the Murray-Darling Basin can trade their water with other farmers.

An industry around water brokering has been set up. There is an online water exchange and many real estate agents will also broker water. This market effectively moves water from worse uses to the best.

As a result, water transmission costs are reduced because less water needs to be moved if all potential farmers don’t receive water. Another benefit is that the economy prospers into the future. This is because resources aren’t wasted providing water to farms that shouldn’t be watered in a dry year.

Finally, the environment is the biggest winner when it comes to water markets. By placing a limit on the water that can be taken, there is no possibility of too much water being taken out. As a result, wetlands thrive and the environment is almost as good as before irrigation started.

Water markets have been successful in Australia and they are being replicated all across the world.