The urban market for farmers' water rights

Allocation stress, that is, access conflicts between the agricultural, domestic, industrial, urban service and environmental uses of water, is set to become more intense in the future because of global population growth and climate change. Because of the dominant role of irrigation water use at the global level, it is imperative to explore the possibilities of reducing farmers' use of water or, at the very least, of slowing its growth. One process by which the scale of irrigation is reduced occurs when farmers choose to sell their water rights to actors that apply these released flows in towns and cities for household, manufacturing and urban service uses. In this paper a theory of price and volume determination of such markets is presented, using concepts of urban actors' maximum bid price and farmers' minimum release price for water rights. The limits of the theory are then discussed with respect to timescale, water concessions, part-sales, sales of land, the legal context, third-party effects, market structure and transaction costs. The main conclusion is that the market equilibrium approach is rarely applicable and that fieldwork will in general have to deal with arcane, one-off bilateral trades. Copyright © 2003 John Wiley & Sons, Ltd. Les contraintes d'allocation de l'eau, c'est-a-dire, les conflits d'acces a l'eau entre secteurs agricole, domestique, industriel, urbain et de l'environnment, vont augmenter dans le futur, a cause du changement du climat et de la croissance de la population mondiale. Le role dominant de l'irrigation tend de reduire l'usage de l'eau dans la secteur agricole. Cette reduction se produit quand les fermiers vendent leur droits a l'eau aux acteurs urbains. Dans cet article on presente une theorie des prix et quantites de ces marches. On presente aussi les limites de la theorie et on conclut que l'approche par equilibre du marche s'applique rarement et qu'il faut en pratique considerer egalement des transactions obscures et bilaterals. Copyright © 2003 John Wiley & Sons, Ltd.