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. (

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

Environment Priorities

Market Benefits

Market Concerns

Further Concerns

Final Opinion

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

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

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 Current System Purveyor Managed Market Participation Transparency Effectiveness and efficiency Responsiveness Accountability Consensus Oriented Equity and Inclusiveness Rule of Law

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: web.com/nwi/water_governance/governance-at- a-glance/water-markets.cfm web.com/nwi/water_governance/governance-at- a-glance/water-markets.cfm – Murrumbidgee water exchange – Murray irrigation limited