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Water Cap and Trade

Water Market scenarios for Southern Europe: new solutions for dealing with water scarcity and drought risk. (France, Italy, Spain)

Structural water deficits and drought risk are expected to become more frequent, putting at stake the current mechanisms of water management and allocation. The establishment of water markets or systems of tradable abstraction quotas could represent a possible alternative. The use of a “cap and trade” approach could simultaneously guarantee environmental protection as required by the Water Framework directive and enhance flexibility in allocation to maximize water use utility and possibly reducing conflicts. The present research proposal aims at investigating the potential for water market scenarios in Southern Europe, focusing in particular on their socio-economic implications by mobilizing complementary socio-economic methods and tools. The research project will address the following questions and issues: Which type of water market scenarios could be proposed for Southern Europe? Which potential for water re-allocation through market mechanisms? Are water market scenarios socially acceptable? What is the order of magnitude of transaction costs that are likely to result from establishing and operating water markets? What can be learned from the Spanish experience with water markets?

Cap&Trade IWRM Paris20111025.pdf709.12 KB
Final report Vfinal.pdf2.26 MB