Markets and Trading

A water market is much like a stock market for water​, but instead of ​trading stocks and bonds, sellers in water markets offer short- or long-term ​transfers of water. In some cases, sellers may sell water rights permanently. 

California has had a relatively active water market since the 1980’s with the majority of water transfers occurring with the same county or region. Despite significant growth in the number of water transfers in the 1990’s, the number of water transfer has remained largely stable with approximately 1.2 maf/year in transfers since 2000.

​Water ​trading can be an effective tool for water managers to provide flexibility in the allocation and use of water by moving water to where it is needed most, especially during times of drought. Water transfers can also help accommodate shifts in water demand over the long-term. Transfers, however, must be carried out in a responsible manner in order to assure that they do not result in adverse impacts to other water users or unreasonable impacts on the environment.

The benefits of a water market ​can only be realized if the market is managed effectively. An effective water market needs ​to have clear and established water rights, an ability to make transactions related to those water rights, and access to relevant market information.

Agency webpages for water transfers

Depending upon the source of the water to be transferred, approvals by state and/or federal agencies may be required.  Water transfers that require the use of State, regional, or a local public agency’s conveyance facilities require the owner of the conveyance facilities to determine that the transfers will not harm any other legal user of water, will not unreasonably affect fish and wildlife, and will not unreasonably affect the overall economy of the county from which the water is transferred.

DWR – Water transfers Transfers that involve use of the State Water Project export facilities in the Delta require approval from DWR.

State Water Board – Water transfers The State Water Resources Control Board (State Water Board) regulates temporary and long-term water transfers of post-1914 appropriative water rights from individuals, water districts and water agencies to South-of Delta purchasers and transfers among parties within local watersheds.

Bureau of Reclamation – Water transfers Water transfers and exchanges of Central Valley Project water can be made as long as the transfers can occur consistent with state and federal laws governing water transfers.

Explore water markets and water trading at the California Water Library

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