The diversity of water markets: Prospects and perils for the SDG agenda

Abstract

Water markets are used in a wide variety of contexts to (a) increase access to water, and (b) increase water use efficiency by reallocating water to uses with a higher economic value. The global prevalence of water markets may help or hinder achievement of Sustainable Development Goal 6, making it essential to understand their role in water management. However, an overarching understanding of what water markets are and how they work across different regulatory and geographic contexts is surprisingly elusive. The literature separates water markets based on their formality and the nature of the goods and services being sold (typically either domestic water or agricultural), but growing water scarcity and increasing urban water demands means that agricultural and urban water use can no longer be considered separately. This review brings together two disparate strands of literature on water markets: (a) markets as a tool for re-allocation between agricultural uses (including both water rights and irrigation services), and (b) urban water markets to expand access to safe water supplies. Based on a review of 148 studies of water markets, this article explores the similarities and differences between urban and agricultural markets across the spectrum of regulatory formality to identify key findings in water market operation and outcomes, including critiques of market function. Bringing together the work on urban and agricultural water markets highlights important lessons on the role water markets can play in achieving SDG 6.

Sachet water in Ghana: A spatiotemporal analysis of the recent upward trend in consumption and its relationship with changing household characteristics, 2010–2017

“…Aside from the practical considerations of water quality and environmental degradation, there are concerns that Ghana’s rapidly expanding sachet water market may threaten the ideals of universal access to affordable drinking water [ 5 ]. Left unchecked, sachet water has the potential to directly compete with the public water utility [ 6 ], undermining the traditional notion of water as a basic human right and establishing a system of water governance which views water as a discrete private good [ 54 ]. In Ghana the provision of sachet water is not viewed by the state as part of an essential public service [ 5 ], even though for many Ghanaians it is their only source of clean drinking water [ 55 ].…”

“…In Ghana the provision of sachet water is not viewed by the state as part of an essential public service [ 5 ], even though for many Ghanaians it is their only source of clean drinking water [ 55 ]. On the one hand, the lack of regulation leaves consumers vulnerable to price fluctuations, varying water quality, and inconsistent supply [ 3 , 7 , 54 ]. Despite some efforts towards regulating water quality, including the introduction of a quality seal issued to producers who pass an inspection by Ghana’s Food and Drug Authority [ 56 ], the sheer number of producers—many of which are unregistered [ 5 ]—renders the enforcement of regulations a Sisyphean task.…”

“…As the sachet water industry spreads across the country to participate in diverse water markets it appears increasingly unlikely that a top-down regulatory framework will be effective at addressing quality and environmental concerns and widening access to clean, affordable drinking water [ 54 , 57 ]. In the face of rapid environmental and socioeconomic change the involvement of local stakeholders in managing their water is recognised as a key strategy for achieving water security, as advocated by SDG 6.b (“support and strengthen the participation of local communities in improving water and sanitation management”) [ 25 ].…”

The embedded economics of water: Insights from economic anthropology

“…In taking this view of water, scholars working from conventional economic frameworks typically conduct research to find “efficient” and “optimal” solutions for water management in which “water prices reflect marginal costs and property rights enable efficient water use as supply and demand fluctuate” (Garrick et al, 2020, p. 4). Policy reforms based on this research attempt to manage incentives (often through adjustments to pricing and property rights) with the goal of altering human behaviors around water use (e.g., Grafton, 2017; Hanemann & Young, 2020; O'Donnell & Garrick, 2019; Wheeler & Garrick, 2020). This conventional economic approach provides crucial insights and applications, including the development of policies that have been successful in managing complex and interlocking challenges such as natural occurring aridity; competition for fresh water; and the need to balance human and environmental water requirements (see Garrick et al, 2020 for a complete review).…”

Bottom-up capping (BUC) policy under bargaining techniques for inter-sectoral groundwater trading: a case study from Iran

“…Nevertheless, water authorities usually cap groundwater permits during a top-down process and inform to their owners (Jafary & Bradley, 2018;O'Donnell & Garrick, 2019). Such command-and-control policies, which ignore various stakeholders' utilities, are often challenging to implement and may even face social resistance (Marchiori et al, 2012;Aghaie et al, 2020).…”