New report makes recommendations for emerging water markets in Canada. In March, the Conference Board of Canada released a report conducted by the Polis Water Project, UBC Program on Water Governance, and LOOP Initiatives addressing water markets, a growing matter of debate in Alberta. The new report discusses the value of water markets to cope with the emerging challenge of water scarcity and rigid century-old water allocation systems. However, it cautions that public interest and aquatic ecosystem protections be incorporated within any water market systems.

The report released on behalf of the Conference Board of Canada, Going with the Flow? Evolving Water Allocations and the Potential and Limits of Water Markets in Canada, explores the value and constraints for water markets to overcome increasing water scarcity in specific areas of Canada. Higher demand and scarcer supplies means the value of rights to water are increasing. With southern Alberta closed to new surface water rights, demand to buy and sell existing water rights is growing.

Among other recommendations, the report suggests that any jurisdictions pursuing water markets should establish basic ground rules including strong mechanisms to protect third parties, aquatic ecosystems, and the public good. According to the report, for an effective market that protects third parties, aquatic ecosystems, and the public, government must commit political, administrative, and financial resources for basic water science and regulatory capacity that includes monitoring and enforcement.

The report also recommends policy makers and stakeholders promote dialogue on the role of markets, improve understanding of policy alternatives, clarify trade law implications, and proceed cautiously. This report provides an excellent overview of the benefits and shortcomings of using market systems to allocate water among existing and potential users, including aquatic ecosystems. The report also includes Alberta as a case study.

The ability to buy and sell water rights has been possible since the Alberta’s most recent Water Act was passed in 1999. Although less than 30 transactions (i.e., transfers of water rights) have occurred so far in the South Saskatchewan River Basin, many people involved in Alberta’s water community are debating the merits of water markets. The government is currently reviewing the entire water allocation system, including the system to transfer water rights; the Alberta Water Council is finalizing recommendations to government for a reformed water rights transfer system; and water deals, like that for the mega-entertainment complex in Balzac north of Calgary a few years ago, have firmly placed the concept of water markets in the southern public’s consciousness.

Authors Oliver Brandes of the POLIS Project on Ecological Governance, Linda Nowlan of University of British Columbia Program on Water Governance, and Katie Paris with LOOP Initiatives completed the report.