A Study on Water Markets and the International Experience Gained from their Establishment

Abstract

Water markets are considered an excellent economic instrument for water management as they lead to a more efficient allocation and use of the resource. Their establishment and operation has been promoted due to the fact that the steadily increasing demand is creating water scarcity problems in many regions of the world and that existing management policies are proving ineffective in addressing modern challenges. This paper attempts to carry out a comprehensive review of water markets as an alternative method for water management by presenting their main characteristics as well as the international experience gained from their establishment in different regions of the world. For this purpose, a systematic review of the international literature in the Google Scholar and Scopus databases was carried out using specific criteria. In particular, 144 studies were found that met the search criteria set and finally 91 of them were selected as a source of information for the writing of this paper. The processing of these papers provided information on how water markets operate, their background, the advantages and disadvantages associated with their establishment and their adoption by countries with different characteristics. The main conclusions that emerge are that water markets on the one hand increase the economic efficiency of water by encouraging the movement of water quantities to users who are able to attribute to them high economic value and on the other hand that their establishment and operation are linked to neoliberal economic policies that are often criticised and at the same time raise issues of social justice and equal treatment of different users.