UncategorizedWater Markets

It’s all about water markets

 •  by Lois Henry

Almonds take too much water. Wait, alfalfa is the bad guy. What about those water hogging geeks in Silicon Valley? No, no, no — that “evil” fracking is to blame.

If it’s a day that ends in “y,” Californians are finding new water guzzling bogeymen to vilify. Meanwhile, economists are quietly shaking their heads. All this shaming and finger pointing is beside the point.

It’s all about water markets, they say.

Under truly free and open markets, prices reflect how people value water, which depends on how it will be used.

For instance, farmers will pay a lot for water to keep high value crops alive. They’ll pay less if they have access to groundwater. If they have land to fallow, it may make more economic sense for them to sell water if they own it. In all those scenarios, an open market means water goes to its highest use based on value.

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Lois Henry

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