ABSTRACT
The development of the legal framework for “Spanish water markets” has responded to some specific circumstances. These have been vital to its acceptability and have determined some of its legal characteristics. They are the following:
The need for water resources to be reallocated. This means reallocating water use rights that had previously been allocated. This need is due to insufficient water availability to be able to supply water to the different water demands generated by a dynamic society such as the Spanish one at the beginning of the twenty-first century. There are no further resources to be allocated in the majority of the river basins. They have all been allocated already. Any new demands can only be attended to by reallocating resources that have already been allocated to other uses.
The introduction of economic incentives in the management of water and other natural resources. Since the 1980s there have been proposals by economists specializing in environmental resources for introducing economic incentives in water management to avoid wasteful usage or deterioration of water resources. Prices of water in transactions would be one of the valid economic signals that would lead to improvement in water use and management. What is indicated here is not exclusively for water, but instead would also serve for other natural resources. The best-known example is that of the commerce around greenhouse gases – subscribed to by various instruments of international and community law – and which, to date, has yet to show any appreciable improvements in air quality.
The example of other countries. The debate on trading that took place at the beginning of the 1990s was on the knowledge of actions occurring in other countries. Books, conferences, and interventions by public authorities focused on the experience in some areas of the United States of America – notably including the example of the Californian drought bank that operated in 1991. Likewise, the situations in Chile and Australia were examined. From analyzing these experiences it was clear to legal reformers that there were different market models: some were more interventionist and others were more inclined towards deregulation and private initiative and even speculation (Chile). What needs highlighting in reference to the debate in Spain – as is explained later – is the common characteristics of “comparative right” and how it is constituted.
The agrarian recession. With the volatility of crop prices the agricultural recession has been a constant over the last few decades, in the sense of a decline in the number of employees in the sector, in income, and in the scale of the share of agriculture in GDP. Under these circumstances, proposals naturally emerge for reallocating water resources used in the agricultural sector to other sectors (population and industrial supply). Agriculture would be the main candidate for reallocation given the large quantities of water resources used in this sector compared to the total (with variations from area to area, this percentage is undoubtedly around 70%). Farmers are expected to benefit from this as the introduction of trading also has the intention of offering economic resources to farmers in exchange for a reduction in their use of water.
The ineffectiveness of water reallocation implemented by the public ruling bodies. The methods for water reallocation established in the “traditional” legal framework either do not work or are inefficient. The existing methods in the law are the water use rights reviews, the expiry of rights, the compulsory purchase of water use rights, and the administrative reallocation. All these were (and still are) contemplated by the law, before its reform, as means by which resources could be freed for other uses. Compulsory purchase and legal reallocations have a compensatory aspect that could also be encountered in the water use right review when this is required by water plans and causes damage to right holders (cf. art. 65 AWLT). Only the declaration of expiry of concessions contains no possibility of compensation (cf. art. 66 AWLT).
