Irrigation and Markets

Many have been discussing the benefits of the market place in allocating water.  The claim is the effectiveness of the market place in ensuring water reaching its highest economic use while also ensuring that the end uses pay the full cost of supplying and replacing the water - sustainability.  Conservation and efficient use are also rewarded with a market solution.  If these are your goals, I think the market pundits have it right.

However, one thing to keep in mind is that irrigated agriculture (probably not even the very highest value specialty crops) will be able to compete with most other water uses - particularly municipal and industrial.  With a market driven paradigm, irrigated agriculture will all but eventually disappear and this water moved to higher economic uses.  While this might be viewed a good thing by some, it will have consequences to our food supply and its quality.  The dry land production of all crops, from vegetables to field corn and wheat, diminishes in quality and quantity without irrigation.  To maintain current production, 1 to 3 acres of new, dry land cropping will have to come into production for evey converted irrigated acre - depending on where the conversions occur.  Of course, some areas only irrigate and cannot sustain dry land cropping at all.

I just can't see how agriculture is going to compete in a pure water market without some assistance.  Of course, said assistance (subsidies) are seriously frowned upon by the pure market supporters.  With subsidies, food costs remain low.  Without them, food costs will rise - dramtically.  Once again, I don't know the answers, but a pure market seems like a choice with serious downsides.  I wonder if a water market can be instituted for all other uses but for ag?