As the population of the American West continues to rise, increasing conflicts over water are inevitable. Complicating matters, the existing supplies are often far from demands and are often shared between states. To satisfy future demands, states must learn to transfer and share water. There are currently three methods for resolving water disputes between states: litigation in the Supreme Court, congressional allocation, and Interstate Compacts. All three are costly and take many years to reach a conclusion.
However, most resources, like oil or timber, do not require special allocation methods. Instead, the market efficiently and equitably allocates these resources. While requiring regulation, water markets are also able to match water supply and demand. In recent years, every Western state has increased support of water markets within its borders.
Encouraging water markets between the states would result in more efficient and equitable interstate distribution of water. Additionally, water markets increase water-use efficiency and provide incentives to move water to higher uses. Potential barriers to markets operating between the states are either unconstitutional or insignificant.
Marketing Interstate Harmony: Interstate Water Markets as an Alternative to Resolving Water Conflicts,
Tex. A&M L. Rev.
Available at: https://scholarship.law.tamu.edu/lawreview/vol2/iss3/7