In a landmark report, the Global Commission on the Economics of Water recently identified water markets as a fundamental solution to the world’s escalating climate-driven water crisis. The logic is simple: When something is scarce, it becomes more valuable. By pricing water appropriately and creating markets to allocate water based on demand, we could promote more efficient use and incentivise conservation. Yet while the concept of water markets appears promising, Chile, Australia, the United States, and other countries’ experiences show that implementation can prove challenging.
-Written by Eduardo Araral, associate professor, former vice dean for research, and former co-director of the Institute of Water Policy at the National University of Singapore’s Lee Kuan Yew School of Public Policy