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Tulane Environmental Law Journal




Water issues are often contentious. How much water can one individual use? What must the water quality of water returned from use be? How much water must be allocated to uses such as maintaining sufficient instream flows for aquatic species? For the last century, the United States has largely such answered questions through command and control regulatory schemes rather than through markets and common law dispute resolution processes. The choice of regulation by institutions over other mechanisms has meant a reliance on centralized decisionmaking and a rejection of both the market's more decentralized institutions and the common law.

Recently, water market proposals have become a significant part of the debate over how to resolve competing claims on water. In addition to the United States, active water markets are present in Chile and Australia. Spain, France, and Great Britain are also considering market oriented water policies.

Water markets create incentives for conservation by offering water rights holders the potential to sell the water they conserve. Markets also facilitate reallocation of water to alternative uses. Many fear, however, that water markets will harm environmental quality and some countries have incorporated restrictions on market transfers with the purpose of protecting the environment. Such restrictions hamper the development of markets by increasing the cost of trading thereby limiting the potential to improve the efficiency of water allocation or encourage conservation. In this Article we propose a set of principles to guide policy makers as they consider water law reform measures. In Part II, we describe a set of principles for water law reform. In Part III, we evaluate existing institutions based on these principles. Part IV concludes the Paper with an agenda for reform.

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Tulane University School of Law

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