Across the western United States, environmental water transaction programs (EWTPs) restore environmental flows by acquiring water rights and incentivizing changes in water management. These programs have evolved over several decades, expanding from relatively simple two-party transactions to multiobjective deals that simultaneously benefit the environment and multiple water-using sectors. Such programs now represent an important water management tool and provide an impetus for collaboration among stakeholders; yet, most evaluations of their effectiveness focus exclusively on environmental outcomes, without adequate attention to impacts on other water users or local economies. To understand how these programs affect stakeholders, a systematic, multiobjective evaluation framework is needed. To meet this need, we developed a suite of environmental and socioeconomic indicators that can guide the design and track the implementation of water transaction portfolios, and we applied them to existing EWTPs in Oregon and Nevada. Application of the indicators quantifies impacts and helps practitioners design water transaction portfolios that avoid unintended consequences and generate mutually beneficial outcomes among environmental, agricultural, and municipal interests.(KEY TERMS: environmental flows; water scarcity economics; water markets; sustainability; water allocation; environmental indicators.)

A U.S. court decision unlocks vast potential to improve sustainable freshwater management

Although a wide body of scholarly research recognizes multiple kinds of values for water, water security assessments typically employ just some of them. In the present article, we integrate value scenarios into a planetary water security model to incorporate multiple water-related social values and illustrate trade-offs among them. Specifically, we incorporate cultural values for environmental flows needed to sustain ecosystem function (rights of waters), the water requirements of a human right to food (rights to water), and the economic value of water to commercial enterprise (commercial water rights). Pairing quantitative hydrological modeling with qualitative systems of valuing, we suggest how to depict the available water for realizing various combinations of the values underlying those rights. We account for population growth and dietary choices associated with different socioeconomic pathways. This pluralist approach incorporates multiple kinds of values into a water security framework, to better recognize and work with diversity in cultural valuation of water.

Environmental water markets have emerged as a tool for restoring flows in rivers across the world. Prior literature suggests that certain legal conditions are necessary for these markets to function. However, we find substantial market activity has occurred without these legal conditions through market and legal data collected in five core U.S. Colorado River basin states (Arizona, Colorado, New Mexico, Utah, and Wyoming) from 2014 to 2020. Ninety-five percent of the 446 water transactions sidestepped formal legal processes to transfer water rights to the environment. We also find that government regulatory and conservation programs, not private-sector investment, have driven most environmental water market activity. Government spending is the dominant funding source, with 90% of the $53 million spent coming from governments and 68% from the U.S. federal government alone. Finally, our analysis finds that current market activity would be insufficient to stave off future curtailment of critical water users under the Colorado River Compact and that $86–89 million annually in new investment is required to do so. In a basin experiencing a historic megadrought, our analysis suggests prioritizing such new investments over legal reform. Global implications are that such flow restoration is possible where legal regimes for environmental water markets do not already exist.

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