WMI: BUYING DOWN DEMAND

Water markets are emerging that signal a shift from reallocating limited supplies to instead buying out demand for the benefit of the broader system.

Over the last half century, large parts of the American West have allowed for water uses that are simply not sustainable — drawing down aquifers, depleting reservoirs, and stretching river compacts written for a wetter world. Engineering is unlikely to close the gap, and mandatory curtailment of water rights remains politically challenging. In these situations, governments have turned to a new style of water market, paying water users to leave water in the ground or in the river for the benefit of the basin. In this Water Market Insider, we inventory and examine demand management programs that exemplify this relatively new type of water market activity. Whether these programs represent a durable new tool or an expensive stopgap is a defining question for Western water policy in the decade ahead.