October 26, 2014--The West needs a water market to fight drought (Wall Street Journal)

The drought in the Western U.S. from California to Texas has generated gloomy editorials and op-eds predicting dire consequences and even water wars. But the West is not running out of water, nor are prolonged fights over water inevitable. Modest changes in water use could have big results: A reduction of just 4% in agricultural consumption would increase the water available for residential, commercial and industrial uses by roughly 50%, according to our analysis of U.S. Geological Survey data. Yet even after the current drought ends, the West will continue to suffer water shortages thanks to population growth, economic development and the effects of climate change. When engineers designed the water infrastructure in arid states in the West, they assumed that future droughts and floods would follow historical patterns. But precipitation patterns have changed. Traditional solutions—diverting more water from rivers, building new reservoirs or drilling additional groundwater wells—are no longer ways to substantially increase the water supply. In a new report for The Hamilton Project at the Brookings Institution, we, along with co-author Peter W. Culp, propose that states use market tools to promote water trading. That is, farmers or other users who reduce their consumption should be allowed to lease or sell the conserved water.

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