This is the fundamental appeal of water markets—when water is valued as an asset, there is an incentive to use it more efficiently. If a farmer can produce the same crop yield with less water, he can sell his unused water for a profit. Farmers can get extra cash, cities can access more water for domestic uses, and conservationists can buy water and return it to the environment.
In the Australia water market, farmers are already buying and selling water regularly. In some cases, the market allowed farmers to maintain operations that might otherwise have been devastated by the Millennium Drought that gripped Australia from 1995 to 2010, says John Pettigrew, a retired fruit farmer who has sat on the board of several water authorities in Australia’s Goulburn Valley. Fruit growers were able to purchase the water they needed from dairy farmers, who in turn were able to purchase fodder for their stock or make other arrangements for their business.
Buying and selling water is fundamentally a business decision like any other, says Howard Jones, a grape farmer and chairman of the Murray Darling Wetlands Working Group. Farmers buy water to maintain high-value crops; they sell when they need capital, or when they’re retiring from farming. While some farmers might be drawn to the idea of selling to an environmental actor, he says, “first and foremost it’s about the cost of the water—few would quibble about where it goes.”
Still, transfer of water rights can be a politically fraught issue, and Richter is quick to stress that, in most cases, most of the water acquired in a WSIP model is returned back to the agricultural community. “It’s crucial to keep the farmers farming,” he says. “The primary purpose behind WSIPs is to move water back into the environment … But the secondary purpose is to help some of the water users who need more water for arguably good purposes, economically valuable purposes, gain access to some of that water they need.”