Wednesday, January 27, 2010

Smart Market for Groundwater?

Another call for water markets to save the day - this time "Smart Markets" from the University of Canterbury.  Claiming to be a "triple win" situation.  The developers say:  "The “smart market” consists of a daily or weekly auction in which commercial users could trade water, cleared by a computer model. The computer model balances water in the catchment over time, ensuring rivers have flows and aquifers have sustainable levels."  What's a commercial user going to do if no water is available that week?  I guess he either raises his offer price or forgoes the use of water - hardly viable options for municipal water providers and many others.

They go on to say:  "Groundwater is even more complex due to underground flows and more serious due to over-allocated catchments. The new work solves all these problems in one stroke."  Great writing - makes one believe that solving these problems in one stroke is painless and easy as pie.  The market simply prices out enough people that sustainability is achieved.  It will be no less painful than any other method of achieving sustainability.  Besides, I still contend that purely allowing water to go to the highest bidder will affect agriculture (food production) unless other conditions are applied to compensate.  Currently ag use is the majority use in most areas with the least ability to compete in a market situation against municipalities and industry.  The triple win for water supply looks to me to be a tripling in everyone's grocery bills.

As always, maybe I'm missing the point completely, but achieving sustainability by any means is a daunting social, economic, legal and hydrologic task.  Markets usually address just the economics and hydrology of this problem and tend to ignore the social and legal aspects (trouble ahead?).  I'm just not convinced they are the best way in any situation but for the simplest of cases - small area, limited number of use types, not severly overappropriated, etc.

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