The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin1

Leidner, Andrew J., M. Edward Rister, Ronald D. Lacewell, and Allen W. Sturdivant, 2011. The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin. Journal of the American Water Resources Association (JAWRA) 47(3):597‐610. DOI: 10.1111/j.1752‐1688.2011.00527.x Abstract: Regional water management on the United States’ side of the middle and lower portions of the Rio Grande basin of Texas has been aided by a functioning water market since the early 1970s. The water market operates over a region that stretches from the Amistad Reservoir to the Rio Grande’s terminus into the Gulf of Mexico. This article provides an overview of the organizations, institutions, policies, and geographic particulars of the region’s water‐management system and its water market. In recent years, this region has experienced high population growth, periodic droughts, and a reallocation of water resources from the area’s agricultural sector to the municipal sector. Demand growth for potable water and a relatively fixed supply of raw water are reflected in increasing prices for domestic, municipal, and industrial water rights. Rising prices in the presence of scarcity and the transfer of water from lower‐value to higher‐value uses indicate that the market is operating as suggested by economic theory. Reasons for the market’s functionality are presented and discussed. Finally, suggestions are presented which might mitigate potential complications to market operations from aquifer depletion and aid the management of instream river flows.