Contested Waters: An Environmental History of the Colorado River

8: The Water Market Banking and Selling the Colorado River

207 The Water Market Banking and Selling the Colorado River Throughout the history of the Colorado River, the humans who depend on it have often competed with each other over how to divide these contested waters. Metropolitan areas have grown beyond what the river can reasonably support, and unsettled indigenous claims create additional demands on a meager resource. Ongoing drought and climate change add even more pressure to this over-tapped lifeline, and solutions are anything but clear. Conservation techniques, recycling, and transferring water between users have become some of the important answers to problems in the Colorado River basin.1 As the world’s population is rapidly approaching 7 billion , the scarcity of water now occupies more attention than most other environmental issues. In 2008 the awardwinning documentary film Flow (For the Love of Water), directed by Irena Salina, demonstrated this worldwide interest. Proclaiming that the wars of the future would be fought over water, Salina highlighted the pressures of water scarcity and the effects of privatization. According to water 8 the water market 208 experts she interviewed, the commoditization of water is already widespread, and its continued growth is inevitable. Although there are significant problems in marketing water, this system could work to address growing water shortages in a fair and equitable way, albeit only with government regulations. In many regions, the failure of publicly administered utility companies to adequately supply their constituents with clean and safe water has made it possible for private companies to grow and take over market share within a wide variety of conditions. For a decade and a half, Australia has used a kind of water market to address its shortages between supply and demand. Since 1997 it has operated a water exchange through several entities (such as the National Water Exchange) that transact both temporary trades and permanent sales of water rights.2 Assessments of these exchanges seem generally positive, with analysts citing increased income for farmers who sold or leased water rather than growing crops. Similar water exchanges have also been successful in Chile, India, Pakistan, and China, to name a few. Currently, China might face the worst water crisis worldwide, with an ongoing drought that has steadily worsened since it began in 2009. As early as the mid-1990s, Chinese farmers informally marketed their water; after 2002 the government made significant efforts to treat and recycle wastewater as part of its growing water market.3 The questions in these countries are not about whether water should be marketed but about where the water comes from and who reaps the benefits . As large water companies such as Suez, Vivendi, and Thames vie for market share in far-flung places such as India and South Africa, the discussion about the commoditization of water seems almost moot. Globally, water underwent privatization during much of the twentieth century. Scholarship on water marketing appeared as early as 1968.4 Many scholars voice the concern that the growing southwestern water market will deprive some people of a basic right to water and have unintended impacts on third parties.5 In this chapter I seek answers to several questions. What are the long-term impacts of water marketing on the environment, agriculture, and urban populations? Who reaps the economic benefits and who loses? How can negative impacts of water marketing be addressed to preserve everyone’s right to water? An examination of these issues in the American southwestern context can serve as a microcosm in which to seek answers to the global questions dominating water marketing discussions: can and should water be considered a commodity that can be owned by an individual? Or should water be preserved as unique, a social good not owned by any one person? Is there a middle ground between the two views? These are not simple questions, and no single study will likely be able to answer them adequately for all circumstances. Yet the example of water marketing in the American Southwest seems to support its benefits, although the water market 209 only with important restrictions through government regulation. While a regulated market has not yet been perfected, this study indicates that a middle ground might actually be successful in both conserving water and allocating it fairly. How the Market Functions It is not particularly easy to trade or market a river’s flow. Such an effort requires agreed-upon measurements and innovative exchanges. So far, the majority of southwestern...