"While small in number in recent years, sales of water rights are expected to accelerate as the pressure continues on a finite supply of water."
"Farmers of high-value crops, developers and cities all are looking for water."
"The state Department of Ecology is trying to encourage the water market by acting as a clearinghouse for information for both potential sellers and buyers. The agency has itself been a buyer to bolster instream flows."
"We have a firm belief in a market solution...That is what we want to be focusing on a lot over the next decade."
These quotes are all from a recent article: Yakima River Basin -- A Market Solution By David Lester, Yakima Herald-Republic.
Water Markets are being touted by many as the solution to the problem of allocating finite water supplies. By their own admission there are various interested parties in areas where marketing is being tried and the expectation is that there will be many more.
I can see the value of this approach in areas yet to be developed, or even in areas just reaching their full development. But what about areas that are already overdeveloped? If there are no sellers, nothing happens. If the price of water rises enough to move sellers, and full consumptive water use transfers to new users, the area likely benefits economically, but it still remains overdeveloped. That's not a solution. If your market only allows for 75% of the historic consumptive water use to be marketed (for conservation purposes) who pays for the value of the other 25%? And what if the economic returns can't make up the previous value of that 25%?
In Lester's posterchild case, a former irrigated alfalfa farm sold water rights to a classy, upscale winery 60 miles away who then drilled groundwater wells to take the former surface water rights. The argument was hundreds of thousands of dollars of additional economic gain and more jobs. This claim is no doubt true, but were the new groundwater wells evaluated to make sure they would have no negative impact (impairment) on existing wells in the new area? What if 10 new wineries want to do the same thing in the same area? What if a poorly managed, high pollution-risk factory bought and transferred these same water rights?
I can only assume that some regulating agency/entity would control all these less than undesirable outcomes, but then, you no longer have such a free market. And everyone knows what managed markets are capable of. Besides, who thinks a state agency bidding for water rights to keep a stream flowing will compete well with a world-class winery? Or a micro-chip production facility? Or even a corporate hog operation? It may not be a big thing to everyone, but the social fabric and economic base of an area relying heavily on a market-driven water rights allocation solution can easily change over time. Of course, in an overdeveloped water basin the economic and social bases are going to change anyway as the resource depletes - at best becoming smaller and less significant over time.
I'm not anti-market for water solutions. In fact, there are water and water right markets I don't fully understand - like the all-in water rights auctions and the many and varied state and local water banks created - including various lease markets. But I have yet to find a water or water rights market that addresses the social aspects of water rights and water usage, or, when taken to the nth degree doesn't eventually exclude all of the lower economic, but nonetheless equally important, water uses of an area. Are these simply trade-offs that must be endured for the overall good of the system? Is the highest bidder always the best use of water?
So I simply say take a look at marketing options carefully before committing. They all tend to look good and operate pretty well at first, but when they kick in and start running at full speed and efficiency, I'm not sure they all take me where I think we should go.