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Improving Water Markets Performance In Spain: Lesson-drawing From The Mdb In Australia

Congress: 2015
AbstractFreshwater scarcity is a growing concern worldwide. Most of the semi-arid regions like Middle East, Mediterranean Europe, Australia, northwest China or the western U.S. are facing growing problems of freshwater scarcity relative to demand, making it difficult to achieve a reliable water resources supply in this zones. By altering the hydrological cycle, climate change will exacerbate the water management problems that these regions already face and will have significant and sometimes dramatic consequences: higher sea levels, more variable rainfall, more frequent and intense floods and droughts and rapid desertification (GWP 2009).Projections of the impact of climate change also suggest that it would further aggravate the water stress felt in many places around the world. In the case of the Murray-Darling Basin (MDB) in Australia, average surface water availability could reduce by as much as 13 percent by 2030 (CSIRO Climate Adaptation Flagship, 2008), and up to 20% more droughts by 2030 have been predicted to befall the country (Mpelasoka et al., 2008). In Spain, despite being present throughout the entire country, water stress show up to be higher in the southern river basis of Andalucía and Segura, reflecting unsustainable use of water resources (Lanen, 2013). As a result, the consequences of water sector vulnerabilities resulting from climate change are posing fundamental challenges to achieving development aspirations to government, corporations and communities, being presently increasingly concerned about the future availability and sustainability of water supplies. Better water management is thus essential to adapt to climate-induced changes in water resources and challenges of water management.

In the past decades, water markets have been suggested as a policy instrument to provide water sustainability and efficiency, also becoming an effective and relevant mechanism in addressing water-shortage problems in different regions of Australia, California, Chile and Spain (Characklis et al., 1999; Easter et al., 1998; Gómez-Ramos, 2013; Hadjigeorgalis, 2008; Kiem, 2013; Michelsen and Young, 1993; Palomo-Hierro et al., 2014; Wheeler et al., 2013). Specially in arid and semi-arid areas, where balancing limited water resources between human-use allocation and instream flow needs was crucial (Rosegrant et al., 1995). Water markets have therefore proven to be effective in reallocating water to its highest valued use, by allowing free movement of water and a greater ability to deal with climate variability and climate change through reallocation of water between users and different uses (Loch et al., 2013; NWC, National Water Commission, 2011; Rosegrant et al., 2014).

In Australia, the ability to trade water has emerged as a central part of water management. First tentative steps towards water markets by capping surface water diversions and permitting the more flexible reallocation of water between irrigators took place in the 1980s and 1990s. Today, basin water markets in the MDB account for over 80% of all entitlement trade and seasonal allocation trade in Australia, representing around 30% of water allocated in a given water year (NWC, National Water Commission, 2011). In Spain, Law 46/1999 incorporated formal water markets into the Spanish legal and regulatory framework in 1999, allowing spot water markets and the creation of water banks. Though it has been fifteen years since water trading was allowed, limited improvement has taken place in their performance. Since their implementation, there have been relatively few water transactions, most of them during the drought period (2005 to 2008) in a spot market and among agricultural users. Thus, after taking due account of relevant differences in time, institutional structure and country characteristics, it is presumed that Spain could certainly benefit from the experience of other countries. The challenge is to identify the relevant lessons for Spain from countries that have undergone water markets implementation successfully. Following this purpose, Australian water markets and MDB in particular, appear to be a perfect alternative for lesson-drawing, since they are considered to be an exemplary case study for other countries that are tempted to create water market and they both share similar water resources use pattern, climate and weather conditions.

Therefore, in view of the actual and important linkages between water market development, institutional constraints and management goals (Grafton et al., 2011a), the purpose of this article is twofold. First, provide a comparison and explore the similarities and differences between Australian and Spanish water resources management and water governance with a special focus on water markets, in order to understand the main features that leaded to the current level of performance in both countries. Secondly, to identify a set of policy lessons from the experience of water markets in the Murray-Darling River Basin in Australia that are deemed to be relevant for improving Spanish water markets. For this purpose a comparative 'lesson-drawing' analysis drawn from the Australian experience in water markets will be provided, forasmuch as this approach is concerned with whether or not lessons (projects, programmes or best practice) can be transferred from one case study region to another.

2011 IWRA - International Water Resources Association - - Admin