ABSTRACT
It’s free. No one pays a nickel for the privilege of extracting water from an aquifer, river, or lake in Florida. After a water use permit is obtained, the only cost for withdrawal is a pump and the electricity to take the water out of the source. No payment has to be made to the state or water management district for withdrawing 10,000 or even 10 million gallons of water a day. The water is free even if the withdrawal makes water unavailable to other users and even if big profits are made from the water withdrawal. Not charging anything for water leads to the misallocation of water, which is, after all, a valuable economic resource. In contrast to how water is given away, Floridians normally expect to pay for a commodity at a price that bears some relationship to the value they receive. How can a state bring the economic value of water into the decisions made by water users? Two principal alternatives have been considered in Florida: water markets and water use fees.
