Introduction to special section on Water Markets and Banking: Institutional Evolution and Empirical Perspectives

] This special section on Water Markets and Banking:Institutional Evolution and Empirical Perspectives presentsvarious economic approaches and legal and institutionaldiscussions to better understand the issues surrounding theallocation of water. The interest in water markets and waterbanking stems from the growing recognition that demandfor water is outstripping its availability worldwide. Noveland innovative adaptation strategies for decision making areneeded to address increasing scarcity in the face of climatechange, drought, and continuing population growth. One setof adaptive strategies being explored consists of market-type allocation institutions, but how do we design theseinstitutions within the variety of legal settings that existaround the world and how well do alternative marketstructures and arrangements function? The first three papersin this special section present case studies using alternativeeconomic methodologies to understand the operationof water marketing and banking in Australia, the UnitedStates, and South Africa. Other authors present an analysisof prices observed for water trades in the southwestregion of the United States to explore how market pricesconvey information about the operation of the institutionitself. By looking at the experience in the Chilean watermarkets, another paper focuses not on the history of pricesbut on a wide-ranging and qualitative assessment of thesuccess of the market institution. In another paper we arepresented with a comparison of formal and informal watermarkets in Australia. Finally, two papers address legal andinstitutional issues in the design of water market allocationinstitutions.[