Water Trading Innovations: Reducing Agricultural Consumptive Use to Improve Adaptation to Scarcity

Water trading programs have found it necessary to become stricter in requiring and monitoring reductions in agricultural consumptive use to make water available for other purposes at specific times and locations. A number of innovative approaches to structuring transactions to reduce consumptive use and to monitoring changes in water consumption are summarized here. Online trading systems are reviewed for their potential to reduce transaction costs, which have been an impediment to more active trading in many regions. Cost-effective verification of reduced consumptive use and low transaction cost protocols to implement trades are making temporary and intermittent arrangements more feasible in many areas. These breakthroughs help pave the way for more trading to meet environmental and recreational flow needs, uses in which the value of added flows varies across specific locations, seasons, and dry-wet cycles.