Water markets have long been proposed for California
as a water management tool to increase water use
efficiency. Variability of precipitation across time and
space, a fast growing population with strong
environmental concerns, a vocal agricultural sector, and
a powerful service economy combine to create pressure
on limited indigenous water supplies. While continued
investments in conservation are needed to continue to
reduce demand-side pressure, California water
policymakers are seeking innovative market-based
solutions to cooperatively and efficiently allocate water.
So far, California has failed to create the key elements
that would support a dynamic water market. This paper
will review efforts to initiate a water market in
California, provide an update on the state-of-the market,
and suggest some solutions.