This is going to be a short post simply to ask the above question. It’s obvious to me that policymakers, academics and commentators are in love with the idea of a spot market for water- in other words, an instantaneous market that connects buyers and sellers of water and puts the resource to its “highest and best use.”
There are obvious spatial problems with this idea that I’ve addressed at some length here. Put briefly, unlike many other markets that we like to use as models, buyers and sellers of water have to be hydrologically connected by stream, pipeline, or canal. That the prices match is not sufficient.
This article by the RAND Corporation is the first proposal that I’ve seen that gets that. It proposes the use of sophisticated modeling to match supply and demand across time and space:
Large users would trade directly with the ISO [Independent…
View original post 341 more words