by Laura Huggins
For those of us living in the West, it’s a no-brainer that water is more valuable than gold. But if it’s so valuable then why isn’t it trading in a similar fashion to gold? Short answer: a maze of institutional barriers.
PERC and Hoover Institution fellow Gary Libecap gets to the heart of the matter in “Water Woes.” In Libecap’s words, “The West’s water policy is a minefield in which policymakers and politicians are inclined to step gingerly–or not at all.” But because the demand for water is growing at an extraordinary rate, and because supply is short for a number of reasons, “the path of least resistance is no longer an option.”
Eventually, the value of water will bear fruit through well-functioning water markets. Libecap offers a few ideas to help speed up the process:
- Surface-water rights must be better defined and quantified, and recorded in state registries.
- Private water rights need to be endorsed as a basis for use and exchange by state legislatures.
- Private water banks need to be encouraged.
- The no-injury harm rule for assessing water trades should be defined precisely and the range of objectors limited to those with a direct stake in the process.
- The public-trust doctrine should be invoked only as a last resort.
- Retail urban water pricing needs to be reformed to promote efficiency.
The region’s fabled quality of life turns on easy access to water, and only well functioning markets can offer the prospect of delivering that water at reasonable cost.