Kw. Easter et R. Hearne, WATER MARKETS AND DECENTRALIZED WATER-RESOURCES MANAGEMENT - INTERNATIONAL PROBLEMS AND OPPORTUNITIES, Water resources bulletin, 31(1), 1995, pp. 9-20
Because of its importance and the perceived inability of private secto
r sources to meet water demands, many countries have depended on the p
ublic sector to provide water services for their populations. Yet this
has resulted in many inefficient public water projects and in inadequ
ate supplies of good quality and reliable water. Decentralization of w
ater management, including the use of water markets, cannot solve all
of these water problems, but it can improve the efficiency of water al
location. When given adequate responsibility and authority water user
associations have effectively taken over water management activities a
t a savings to tax payers. Moreover, water markets add the potential b
enefit of improving water efficiency within a sector as well as provid
ing a mechanism for reallocating water among sectors. The key question
involves developing innovative mechanisms for reducing the transactio
n costs of organizing water users and of making water trades. Water ri
ghts need to be established which are recorded, tradable, enforceable,
and separate from land if markets are to operate effectively. Also, i
nstitutions are needed that effectively resolve conflicts over water r
ights, including third party impacts and water quality concerns.