Water Markets & Tradable Permits

Sopheak & Huy

Our Focus

Water Markets & Transferable Permits

Water Auctions

Tradable Pollution Permits

Lessons Learnt

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Water Markets & Transferable Permits (1)

Water markets & transferable water rights: Sales of water allocations

Applications: Surface or ground water; seasonal or permanent rights transferring

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Water Markets & Transferable Permits (2)

Functions: Water transferred from lower- to

higher-value uses Making the strong property rights of

existing holders approachable A cheaper way for

communities/farmers to obtain water

Used by environmental champions4

Water Auctions

Public authorities: Water available to the highest bidders at public auctions

Water lots: Daily, weekly, seasonal or annual basis

Auctions: Useful VS Conflicts of Interest

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Trade Pollution Permits (1)

Individual polluters: Buy and sell quotas of emission

Conditions for successful water markets and auctions:A clear and permissive legal frameworkA procedure for considering the impacts of these trades on the 3rd parties (compensation)

Recognition of the potential environmental impact of trades and solutions

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Trade Pollution Permits (2)

Physical means of transferring waters b/w potential users

Strong provision by Government for effective market operation

Regulation to avoid monopoly

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Lessons Learnt (1)

Charging systems: Vulnerable groups protected

Mechanism for initial allocation of rights: Fair, equitable, and effective

Efficient and effective auctions in some situations ($ vs water allocation)

Administrative costs may outweigh benefits => Make the trading systems less complicate

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Lessons Learnt (2)

Markets: High value use & assist conflict resolution

Water auctions: Grant permission water allocation under competitive conditions but must prevent monopoly

Markets = Democratic system

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The End!

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