Water is a Girl’s Best Friend: Examining the Water Valuation Dilemma

This Article examines the application of basic market principles to water transactions and the problems it creates. It considers how the basics of supply and demand can create inaccurate price signals resulting in water supply depletion and other unintended consequences. The Article proposes market adjustments that could be made to increase the usefulness of markets as a corollary to a system of legal permits. Price can be used as a behavior trigger, but the present system is not doing this effectively. What is missing in the current system of valuation. Finally, the article proposes possible market changes that would shift markets away from the problems they currently create towards becoming a useful tool for sustainability. These proposals include internalizing the values of water dependent resources such as ecosystems in the price of water so dewatering can take these impacts into consideration. Further, municipal water price structures need the ability to adjust price to include water savings as cost savings; and agriculture users must pay more for water, but also be protected by markets. This Article concludes that markets can be an effective corollary to legal management of water resources, but only if true capture of value is included