WATER TRADING

by, Madiha Tariq

Introduction

Conditions

Types

Pros and cons

INTRODUCTION

Water trading is the process of buying and selling of water rights. Water right in water law refers to the right of a user to use water from a water source, e.g., a river, stream, pond or source of groundwater.

Water trading is a voluntary exchange or transfer of a quantifiable water allocation between a willing buyer and seller.

In a water trading market, the seller holds a water right or entitlement that is surplus to his current water demand, and the buyer faces a water deficit and is willing to pay to meet his water demand. Water trading should be Pareto efficient, which means that the socially optimal water allocation is an allocation such that no person can be made better off without making someone worse off.

CONDITIONS FOR WATER TRADING

Allocation of vested rights Voluntary buyers and sellers

Information
Transferable from land rights Changeable types of water use

TYPES OF WATER TRADING

Permanent trading of water allocations Leasing of water

Seasonal water assignments(meeting additional short term water needs)

BARRIERS TO TRADE

High infrastructure costs or constraints

High transaction costs

Legal barriers

Social barriers

PROS OF WATER TRADING

helps people clearly see the value of their water as a secure asset encourages water-use efficiency

enables new industries to acquire water without jeopardizing the environment, or affecting other water users. Economic theory suggests that trade in water rights is a way to reallocate water from less to more economically productive activities.

CONS OF WATER TRADING

Water acquisition by private companies Environmental degradation

Higher demand, higher price

WATER TRADING AROUND THE GLOBE

United States, Chile, South Africa, Australia and Spain's Canary Islands . Australia's water trading scheme to be the most sophisticated and effective in the world. Some other countries, especially in South Asia, also have informal water trading schemes.