Information Needs for Water Markets: Fair and Effective Water Markets Require Adequate Measurement and Reporting of Diversion and Use

Water markets have the potential to enhance climate resilience for agriculture and ecosystems in the U.S. Southwest. When appropriately designed and implemented, they can help water users adapt to short-term variations in water supply and ease long-term transitions to more sustainable levels of water use. However, this promise can only be realized if markets are truly fair and effective—that is, able to achieve their intended goals without causing significant negative side effects.

Adequate information about water diversion and use is a necessary precursor for fair and effective water markets because it defines what can be traded, enables tracking of trading transactions and changes in the physical and legal availability of water, and facilitates assessment of the impacts trading has on others. Unfortunately, in many areas across the Southwest, current water measurement and reporting may be inadequate to meet these basic information needs.

Our new synthesis report, Information Needs for Water Markets: Fair and Effective Water Markets Require Adequate Measurement and Reporting of Diversion and Use, explores what information on surface-water and groundwater diversion and use is currently available in the U.S. Southwest, what diversion and use information is needed to support fair and effective water markets, and how existing information gaps can be addressed. Based on expert discussions and additional research, many parts of the Southwest need more timely, accurate, and accessible data on water rights, water diversions, water use, and surface-water and groundwater conditions.

The report identifies clear opportunities for improvement. Researchers, diverters, and policymakers can all take concrete steps to enhance understanding of water diversion and use, increase the accuracy and utility of reported data, and address long-term funding and affordability challenges.