Water Markets or Solidarity: What Blueprint for Rio2012
On 25 January 2012, the Ecologic Institute hosted a Dinner Dialogue in Berlin, sponsored by DG Environment, at the Habel Weinkultur restaurant with Professor Mike Young, Executive Director of The Environment Institute of the University of Adelaide and a Member of the Wentworth Group of Concerned Scientists, and Professor Guillermo Donoso Harris, Professor of the Department of Agricultural Economics at the Universidad Pontificia Católica de Chile. The topic of this Dinner Dialogue was the role of water markets in achieving sustainable water management, efficient provision of adequate drinking water and sanitation services, sufficient investments in water infrastructure and water-based adaptation to climate change highlighted by the UN-Water for Rio2012. R. Andreas Kraemer, the director of the Ecologic Institute, moderated the discussion.
In the context of water scarcity, water markets in Chile and Australia offer two different perspectives. In Australia, water entitlements issued to irrigators are traded on water markets which were developed in the context of the National Competition Policy established in 1992. The aim was to use the markets as the prime mechanism to make water use and many other services provided by the government more efficient. In Chile, the first water rights appeared in the 1800s and went through the waves of different political systems. Today, while water rights remain public property, river flows are allocated to facilitate water transfers and create an efficient market.
The 14 participants around the table discussed different aspects of water markets based on the Australian and Chilean experiences and lessons learned from these two experiences.
- The concept of establishing water rights for water uses and the possibility to create water markets in Europe were discussed. In Europe, the establishment of rights for water use tend to have an unfair connotation, and the idea to introduce temporary rights for specific uses was put forward.
- Water allocation and re-allocation is a delicate issue that may generate long-term negative environmental outcomes and would need to be homogenous.
- Inter- and intra-sectoral trade in balancing trade-offs was also mentioned as well as the importance of technical capacity which may contribute to a more efficient water use.
The Dinner Dialogue was an appetizer to the EPI-Water Conference that took place in Berlin the two following days.
- Ecologic Institute Project: Evaluating Economic Policy Instruments for Sustainable Water Management in Europe (EPI-Water)