DO WATER MARKETS WORK - MARKET TRANSFERS AND TRADE-OFFS IN THE SOUTHWESTERN STATES

Many authors argue that markets will (and should) become a common means of transferring water rights in the western United States. Previous studies have estimated benefits from potential transfers and identified institutional arrangements conductive to market development. This article describes five southwestern water markets and evaluates market processes using transactions data from each study area. While the evaluation is necessarily preliminary due to the limited availability of data on market transactions, the markets analyzed here appear to be relatively efficient in allocating water between municipal and agricultural uses.