Water markets in federal countries: comparing coordination institutions in Australia, Spain and the Western USA

Abstract

Water markets are a prime example of decentralized resource allocation, yet their success often depends on strong coordination institutions, particularly as water is redistributed across sectors and political borders. The territorial division of authority in federal countries creates potential intergovernmental coordination challenges in river basins shared by multiple jurisdictions. This paper compares water markets and associated institutional reforms in Australia, Spain and the Western USA -three federations with longstanding experience with water markets but different approaches to distributing authority and intergovernmental coordination. We conduct an institutional mapping of national and subnational roles in market-based water allocation reforms across the three countries and employ process tracing techniques to examine coordination challenges and institutional responses associated with water markets. We find that (1) policy goals addressed by water markets vary across -and within -the three countries, reflecting differences in the level of decentralisation, but (2) all three countries have required capable coordination institutions to address the distributional conflicts associated with water markets. Coordination institutions can take multiple forms, and include both formal and informal venues for planning, financing and conflict management matched to local conditions.

An Overview of American Interstate Ecological Governance and the Enlightenment for China

“…A study comparing coordination institutions in Australia, Spain and the Western USA showed that all three countries have required capable coordination institutions to address the distributional conflicts associated with water markets. Coordination institutions can take multiple forms and include both formal and informal venues for planning, financing and conflict management matched to local conditions [23].…”

Governing water in federal river basins

“…The exclusion of key stakeholders can undermine accountability and legitimacy. Accountability mechanisms are particularly important for water reallocation in interstate river basins, as highlighted by Garrick et al (2018); accessible information on reallocation and its impacts on other national and local policy goals underpins the legitimacy of water markets.…”

“…However, such local autonomy can also pose constraints on interstate coordination and accommodation of national interests, as exemplified by the comparison of reservoir operations policies in the USA and Canada (Benson 2018). Garrick et al (2018) start from a comparison of institutional arrangements to manage water trade in three federal countries (Australia, Spain and the USA). They find that effective interstate and centrallocal coordination is needed regardless of the level of decentralisation to deal with the distributional conflicts associated with reallocating water across political borders in interstate river basins.…”

“…All the papers focus on institutional mechanisms, governance arrangements and policy tools that are in place to manage decision-making processes in a context of distributed authority and institutional overlaps. Some articles analyse water governance arrangements through comparison, examining multiple countries or river basins in order to detect common trends and lessons learned from different settings (Benson 2018; De Stefano and Hernandez-Mora 2018; Garrick et al 2018;Heinmiller 2018;Muller 2018;Wheeler et al 2018). Several papers emphasise the importance of observing institutional arrangements over time (Chokkakula 2018;De Stefano and Hernandez-Mora 2018;Empinotti et al 2018;Garrick et al 2018), as decentralisation and intergovernmental relationships are constantly evolving to adapt to changing societies and power dynamics.…”

Estimating the Economic Value of Interannual Reservoir Storage in Water Resource Systems

“…Holistic approaches promoting efficient water allocation in water systems are needed (Cai, 2008;Lund et al, 2006). The need for appropriate water valuation is underscored by regulatory frameworks that promote economically efficient water allocation, for example, the Water Framework Directive (European Commission, 2000 in the European Union or the emergence of water markets in the western United States (Hadjigeorgalis, 2009;Hansen et al, 2014;Wheeler et al, 2017), Australia (Garrick et al, 2018;Lewis & Zheng, 2018;Owens, 2016;Wheeler et al, 2013), or the United Kingdom (Erfani et al, 2015;Parker, 2007).…”