ABSTRACT
This chapter reviews the experience of water trading in Spain. Trading has had a limited role so far, but may become an especially important instrument in water management, given the severity of water scarcity, recurrent droughts and the expected climate change impacts in Spain. This chapter reviews existing and predicted problems of scarcity. It analyzes trading since it became common practice in 2005 and summarizes the water trading that occurred during the four-year drought period from 2005 to 2008, when it was most active. The chapter considers whether trading has been so far effective to cope with scarcity and if it has promoted more efficient water use. The chapter analyses asks whether market allocation is perceived as equitable by all potential participants, and if there is evidence showing that environment has been improved. Improvements in production efficiency cannot compensate the costs of environmental deterioration or more inequitable outcomes, in the eyes of stakeholders or water users, even if a cost-benefit analysis may indicate that it does. Finally, it identifies the major strengths and weaknesses of the existing regulation of trading.
