Water Markets: The Complexity of Trading Private Rights to a Public Good

Water markets are being explored as a potential tool for reallocating water among competing uses as climate change increases pressure on water availability. However, implementing water markets requires navigating the legal and institutional complexity of water as both a public resource and a privately held right to use that resource. In Washington state, water is held in trust by the state for the public, while individuals and entities obtain water rights that allow them to divert water for specific purposes such as irrigation, municipal supply, or industrial use.

Researchers surveyed irrigators across the Okanogan, Methow, Walla Walla, and Yakima river basins to better understand perspectives on these competing principles. Many respondents expressed strong support for private property rights associated with water rights, while also supporting restrictions on transferring water out of local basins. Nearly half of respondents agreed with both positions, highlighting the tension between protecting property rights and preserving local agricultural economies and communities. These findings illustrate the social and policy challenges that must be addressed if water markets are to play a role in adapting water management to a changing climate.

This work was supported by the USDA National Institute of Food and Agriculture, project #1016467.