Water Markets and Good
Watershed Governance: An
Inherent Conflict?
John Janmaat
Economics
UBC Okanagan
Critical Questions
•
•
•
•
What is good watershed governance?
What is a water market?
How do people feel about a water market?
How can a water market be implemented in
the Okanagan?
• Why should we bother?
Governance
• Governance relates to decisions that define
expectations, grant power, or verify
performance. It consists either of a separate
process or of a specific part of management or
leadership processes. Sometimes people set
up a government to administer these
processes and systems.
(http://en.wikipedia.org/wiki/Governance)
Good Governance
• Participation
– Everyone involved and affected has a voice.
• Transparency
– Decision process and justifications available to all.
• Effectiveness and efficiency:
– Resources used efficiently.
• Responsiveness
– Listen to public concerns.
• Accountability
– Responsible to public
• Consensus oriented
– Seeks to include all of public
• Equity and inclusiveness
– Concern for the less privileged
• Rule of Law
– Clear rules in place and government follows them.
Good Watershed Governance
• Application of good governance to watershed
issues.
• Can a water market be a part of good
watershed governance?
BC Water Act
• 2 (1) The property in and the right to the use
and flow of all the water at any time in a
stream in British Columbia are for all purposes
vested in the government, except only in so
far as private rights have been established
under licences issued or approvals given
under this or a former Act (British Columbia,
2008).
Alberta Water Act
• (2) The property in and the right to the
diversion and use of all water in the Province
is vested in Her Majesty in right of Alberta
except as provided for in the regulations
(Alberta, 2008).
Ownership of Water
• Water is owned by the crown
– Water users own a right to ‘use’ the water, a
usufructary right.
• Water rights – licences can be granted,
cancelled, or transferred.
• Water is ‘traded’ if two people arrange to
transfer a licence between themselves,
– In a ‘free’ market, what is ‘paid’ in exchange for
the water is determined by the traders.
BC Water Act
• 19 (1) On the application of the holder of a
licence, approval or permit and on compliance by
the holder and by the proposed transferee with
the comptroller's or the regional water manager's
directions as to giving notice, the comptroller or
the regional water manager, on the terms he or
she considers proper, may
• (a) transfer all or part of the rights and
obligations granted and imposed under the
licence, approval or permit from the holder to the
proposed transferee, …
Alberta Water Act
• 82(1) Subject to this section and sections 34, 81 and
83, on application, the Director may
• (a) approve the transfer of an allocation of water
under a licence and, subject to subsections (6) and
(7)(b), issue a new licence for the transferred allocation
of water subject to any terms and conditions that the
Director considers appropriate, including specifying in
the licence the land or undertaking to which the
licence is appurtenant, or
• (b) refuse to approve the transfer of an allocation
(Alberta, 2008).
Water Trading
• BC Water Act does not forbid trades
– But it isn’t much talked about.
• Are water licences bought and sold in BC,
separate from their appurtenant land?
– Unknown, reasons for appurtenancy change not
consistently recorded.
– Am investigating it right now.
• Alberta, trades are taking place.
– Trades recorded, but not price.
Attitudes about Water
• Irrigator attitudes surveyed in 2008.
Environment Perceptions
b) There is plenty of water in the Okanagan
to meet the needs of all users to at least
the middle of the century (2050).
a) There is currently plenty of water in the
Okanagan to meet the needs of all users.
14
25
Count (n=36)
15
10
5
8
6
4
2
Strong
Disagree
27
Weak
5
Neutral
4
Weak
No Answer
1
Agree
0
Strong
Disagree
29
Weak
Neutral
4
Weak
Agree
39
Strong
0
No Answer
0
10
Strong
Count (n=72)
12
20
d) The growth of cities and towns in the
Okanagan is the biggest threat to the supply
of water in the Okanagan.
c) Climate change is going to cause more
water problems in the Okanagan.
35
25
Count (n=72)
15
10
5
20
15
10
Strong
Disagree
6
Weak
Neutral
0
Weak
Agree
66
Strong
0
No Answer
0
Strong
Disagree
9
Weak
Neutral
5
Weak
Agree
56
Strong
0
25
5
2
No Answer
Count (n=70)
30
20
Environment Priorities
e) Household needs (drinking, bathing, etc.)
are more important than supplying water for
irrigation.
g) When water is needed for the environment,
it must come first from savings outside of
agriculture.
30
15
Count (n=72)
Count (n=70)
25
10
5
20
15
10
5
Strong
Disagree
15
Weak
Neutral
9
Weak
48
Agree
No Answer
0
Strong
0
Strong
Disagree
32
Weak
Neutral
14
Weak
Agree
24
Strong
2
No Answer
0
x) Ensuring that there is enough water for
the environment (fish spawning, protecting
wetlands, etc.) must take priority over other
water uses.
f) Water that is saved by increasing
irrigation efficiency must be retained for
agricultural uses.
15
Count (n=67)
20
15
10
10
5
5
Strong
Disagree
22
Weak
Neutral
12
Weak
Agree
33
Strong
5
No Answer
0
Strong
Disagree
9
Weak
Neutral
9
Weak
52
Agree
2
Strong
0
No Answer
Count (n=70)
25
Market Benefits
h) If farmers are required to reduce their
water use for the environment, they should be
compensated for the impact on their business.
o) The option to trade water would encourage
more water conservation, and thereby benefit
the environment.
30
20
Count (n=67)
20
15
10
10
5
m) People who waste water should pay more for
it.
Strong
31
Disagree
5
Weak
31
Neutral
No Answer
5
Weak
0
Strong
Disagree
3
Weak
Neutral
2
Weak
Agree
62
Strong
No Answer
5
Agree
5
0
15
Strong
Count (n=67)
25
p) The option to trade water would provide me
with more options when there is a shortage.
35
20
Count (n=64)
25
20
15
10
15
10
5
5
Strong
Disagree
26
Weak
Neutral
4
Weak
Agree
34
Strong
8
No Answer
0
Strong
Disagree
5
Weak
Neutral
0
Weak
65
Agree
2
Strong
0
No Answer
Count (n=70)
30
Market Concerns
s) It will be very difficult to come up with
a water trading mechanism that farmers will
have faith in.
u) The option to trade water will lead to a
higher price for water.
25
25
Count (n=60)
15
10
5
15
10
5
Strong
Disagree
9
Weak
Neutral
5
Weak
Agree
No Answer
46
v) Water trading will become a tool for
developers to secure their water needs, at
the expense of agriculture.
t) People who agree to buy or sell water are
likely to back out of the deal later.
20
30
25
Count (n=66)
15
10
20
15
10
5
5
Strong
Disagree
4
Weak
Neutral
0
Weak
62
Agree
6
Strong
0
Strong
Disagree
18
Weak
Neutral
10
Weak
24
Agree
20
Strong
0
No Answer
Count (n=52)
12
Strong
0
Strong
Disagree
15
Weak
Neutral
6
Weak
Agree
46
Strong
5
No Answer
0
20
No Answer
Count (n=67)
20
Further Concerns
n) If I agree to use less water during one
season, my future entitlements would be less
secure.
r) I would consider trading water only with
other farmers that I knew well.
30
25
25
Count (n=59)
15
10
5
15
10
5
q) Knowing that water I save would help
another farmer who needed it (very sandy
soil, well ran dry, etc.) would be an
important reason for me to conserve water.
Strong
Disagree
41
Weak
1
Neutral
17
Weak
No Answer
13
Agree
0
Strong
Disagree
23
Weak
Neutral
4
Weak
Agree
41
Strong
4
No Answer
0
20
Strong
Count (n=68)
20
w) Management of the water used within
agriculture is best done by the irrigators
themselves.
30
25
Count (n=71)
20
15
10
15
10
Strong
Disagree
13
Weak
Neutral
4
Weak
Agree
54
Strong
1
No Answer
0
Strong
Disagree
14
Weak
Neutral
5
Weak
48
Agree
5
Strong
0
20
5
5
No Answer
Count (n=67)
25
Final Opinion
l) Water is so essential that it would be
wrong to sell it.
15
10
5
Strong
Disagree
12
Weak
Neutral
1
Weak
52
Agree
7
Strong
0
No Answer
Count (n=65)
20
Attitude Summary
• Recognition of pending scarcity and pressures.
• Benefits of market incentives recognized.
– Strong support for some of these.
• Concerns about implementation issues
– Protecting agricultural water.
– Ensuring contracts honored.
• BUT: STRONGLY opposed to selling water.
– Resolution: Australian model?
Ownership of Licences
Holders of Largest Total Licence Quantity
OKANAGAN INDIAN
OKANAGAN-SIMILKA
BLACK MOUNTAIN I
PENTICTON CITY O
OSOYOOS INDIAN B
SIMILKAMEEN IMPR
KEREMEOS IRRIGAT
SUMMERLAND CORP
LOWER SIMILKAMEE
WESTBANK IRRIGAT
GLENMORE-ELLISON
SOUTH EAST KELOW
LAKE COUNTRY DIS
PENTICTON INDIAN
1318052 ONTARIO
2763 OTHERS
Ownership of Licences
Largest Licence Holders in the Oldman Watershed
1410 Others
CITY OF LETHBRIDGE
BOW RIVER IRRIGATION DIS
MAGRATH IRRIGATION DISTR
BLOOD INDIAN BAND COUNCI
ST. MARY RIVER IRRIGATIO
UNITED IRRIGATION DISTRI
RAYMOND IRRIGATION DISTR
ALBERTA ENVIRONMENT
TABER IRRIGATION DISTRIC
LETHBRIDGE NORTHERN IRRI
Australian Model
• Water rights differ
– Australia, proportional appropriation
– Western NA, prior appropriation
• Most delivered by purveyors (like BC/Alta)
– Based on availability, determine allocations.
– Allocations are banked, and can be traded.
– Purveyor a ‘bank’, managing water accounts.
– Water ‘rented’ for season or ‘sold’ for good.
Australian Model
Deposits
Acct #1
Acct #2
Acct #3
Reservoir “Bank”
Transfers
Inflows
Market
Withdrawals
User #1
User #2
User #3
Application to Okanagan
• Infrastructure already or soon to be present.
– Most water provided by purveyors.
– Purveyors metering, can manage accounts.
– Allocation model already practiced.
• Determination of total available, from purveyor licence.
• Reduction in allocation if shortage.
• Farm level sophistication increasing
– Precise water management tools.
– Expertise available
Application to Okanagan
• Secures water for agriculture.
– Allocation belongs to irrigators, not district.
– To supply outside agriculture, district buy from
farmers.
• Makes ‘seepage’ transparent.
• Paid for conservation, not loosing water to others.
• Flexible in crisis
– Minimum flow protection, buy needed when dry.
– Most flexible make reduction.
Good Governance?
Criterion
Participation
Transparency
Effectiveness and efficiency
Responsiveness
Accountability
Consensus Oriented
Equity and Inclusiveness
Rule of Law
Current
System
Purveyor
Managed Market
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Okanagan Water Purveyors
• Purveyors good at what they do
– Determine available water
– Deliver water (management and monitoring)
– Educate water users
• Australian style reforms enhancements
– Build on existing strengths
– Provide greater flexibility.
– Increase responsiveness to unknowns.
Conclusion
• From Alberta to Australia, water trading is
spreading.
– St. Mary’s and Taber irrigation district.
• Water purveyors in position to manage water
market.
– Same position in system as purveyors in Australia
and Alberta.
• Markets and Good Governance: No Conflict!
Further Information
– Australian water governance:
http://svc044.wic032p.serverweb.com/nwi/water_governance/governance-ata-glance/water-markets.cfm
– Murrumbidgee water exchange
http://www.murrumbidgeewater.com.au/
– Murray irrigation limited
http://www.murrayirrigation.com.au/watexch/