Addressing Droughts with Water Markets

“The West is running out of water,” says the Economist. “Lake Mead, the largest reservoir in the United States, is at its lowest level since it was first filled in the 1930s.” This is “potentially the worst drought in 1,200 years” warns the Guardian. Moreover, frets the Washington Post, this isn’t just this year: “it’s our new, permanently arid normal.”

Click image to download a three-page PDF of this policy brief.

Many of these alarms were prompted by a major heat wave that hit the West in June, 2021. Since then, the West has cooled but remained dry: as of last week, about 22 percent of the West was in “exceptional drought” compared with just 2.5 percent a year ago. At the same time, the effects of the drought haven’t been as severe as might have been predicted. As of yesterday, for example, 5.9 million acres of land have been burned by wildfire, compared with an average of 6.9 million acres through this date over the previous 10 years. Continue reading