Document Type



Environmental Law




Water law scholars have long supported water markets for addressing critical water needs, especially in arid regions like the western United States, and that support seems to be growing among policymakers as well. But translating academic theories about water markets to the field has proved challenging. To be sure, water can be transferred from one use to another use in all western states, but water markets in those states are not presently capable of providing prospective buyers with a reliable source of water when and where they need it. The reasons are myriad, but are primarily related to the high transaction costs and significant lead times needed to consummate transfers. Under the current system, no municipal water supplier in the western United States can guarantee its customers the water they demand if they are forced to rely on the availability of water on the open market.

Remarkably, Australia has managed to adapt its water rights system in such a way that water markets have flourished. The water rights regime in the western United States is different in some significant ways from the Australian system, and thus it is unrealistic to think that the western states can duplicate Australia’s experience and success. But there are important lessons to learn from an Australian transfer system that has cut approval times for temporary transfers to less than five days and for permanent transfers less than twenty days.

One way for western states to make progress towards developing functioning water markets is to cabin the scope of a marketing program so that it has a better chance of garnering the support of affected parties, and in particular the farmers who will be selling their water to cities for domestic and industrial uses. By focusing on “conserved water”—defined here as water that was previously but is no longer consumed by the water user—states will find it easier to adopt reforms that can provide farmers with incentives to make some portion of their water available for other uses. Farmers can keep farming even as they find ways to use less water to grow profitable crops.

Agricultural scientists have made great progress towards identifying and refining techniques for maintaining stable crop production even while using less water. These techniques, which include deficit irrigation, crop switching, and rotational fallowing, have the potential to free up enough water to serve western communities for many years to come, even in the face of severe, sustained drought. But the law has yet to catch up with the science, and in most western states, transferring conserved water is not legally possible. Even where it is allowed, the process remains too cumbersome. This Article begins a discussion about overcoming the legal obstacles to marketing conserved water and suggests modest and practical reforms to current law that could finally open the western United States to robust water markets.