Abstract
Efforts to address water scarcity have traditionally relied on changing the spatial and temporal availability of water through water importation, storage, and conveyance. More recently, water managers have invested heavily in improving water use efficiency and conservation. Yet as new supply options become harder to find and/or appropriate, and demand hardens, society must consider other options to, if not reduce scarcity, minimize the impacts of such scarcity. This paper explores the role water markets are playing in addressing water scarcity in the American southwest: a water-limited arid and semi-arid region characterized by significant population growth rates relative to the rest of the US. Focusing on three representative southwestern states—Arizona, California, and Texas—we begin by highlighting how trends in water supply allocations from different water sources (e.g., surface water, groundwater, and wastewater) and water demand by different water users (e.g., agricultural, municipal, and environmental) have changed over time within each state. We then present recent data that shows how water trading has changed over time—in terms of value and volume—both at state level and sector level aggregates. We end with a discussion regarding some institutional adjustments that are necessary for water markets to achieve their potential in helping society address water scarcity.
Highlights
One of the most pressing challenges confronting the US in the 21st century is water scarcity.Population growth, which will increase the demand for water throughout the US, has risen by nearly7%, or approximately 22 million people, since 2010 (Figure 1)
Following each state-level discussion, we provide data on water market trends and transactions within each state and discuss how those trends may relate to water scarcity characteristics within each state
What this review has shown in evaluating three western states, is that water scarcity is likely to increase significantly moving forward, primarily due to population growth and the added water demand associated with such growth
Summary
One of the most pressing challenges confronting the US in the 21st century is water scarcity. We focus on how the demand and supply of water are trending in representative states in the southwest—Arizona, California, and Texas—and the increasing role of water markets in helping states to address such scarcity. Two of these states—Texas and California—have accounted for nearly. Relative to US averages, the southwestern states of Arizona, California, and Texas confront higher population growth (2.45% vs 1.15% between 1920 and 2018), higher temperature (61.1 ◦ F vs 52.5 ◦ F), and less precipitation (20.68 in vs 30.48 in) Such differences increase water demand and decrease the supply of runoff from precipitation events resulting in rising water scarcity.
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