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Water 2015, 7(2), 652-678; doi:10.3390/w7020652

Water Markets in Spain: Performance and Challenges

1
Department of Agricultural Economics, University of Córdoba, Campus Rabanales, Edif. C5, Ctra. N-IV km 396, Córdoba 14014, Spain
2
Department of Economics, Pablo de Olavide University, Ctra. de Utrera km 1, Seville 41013, Spain
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Academic Editor: Miklas Scholz
Received: 24 November 2014 / Accepted: 2 February 2015 / Published: 10 February 2015
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Abstract

Law 46/1999 incorporated formal water markets into the Spanish legal and regulatory framework, allowing spot water markets and the creation of water banks. The implementation of water markets in Spain aimed at improving the efficiency of water use by reallocating water towards uses with higher added value. However, the performance of water markets in Spain has been rather disappointing, since they have been operative only during drought periods, and even under these extreme scarcity situations, trading activity counted for less than 5.0% of total water use. The narrowness of the market suggests that there are some barriers hampering their effective functioning. This paper examines the evolution and performance of water markets in Spain, relying on a transaction costs analysis framework. This analysis allows the identification of the main factors impeding water markets from operating effectively as a water reallocation tool. This analysis also provides some guidelines on how to overcome these obstacles and, thus, how to improve the efficiency of water use. View Full-Text
Keywords: water demand management policy; water markets; water banks; market performance; barriers; Spain water demand management policy; water markets; water banks; market performance; barriers; Spain
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Palomo-Hierro, S.; Gómez-Limón, J.A.; Riesgo, L. Water Markets in Spain: Performance and Challenges. Water 2015, 7, 652-678.

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