ABSTRACT
Water marketing can provide a basis for extending the alliance into the 1990s, by encouraging efficient use, discouraging detrimental environmental effects, and reducing the drain on government budgets. As with all aspects of free market environmentalism, water marketing depends on well-specified water rights; that is, rights must be clearly defined, enforceable, and transferable. America’s environmental awakening and a burgeoning demand for recreational facilities, coupled with the declining quality of many streams, have drawn attention to the importance of instream flows. The protection of instream flows is regarded as a responsibility of state agencies, which must balance competing uses. Claims to instream flows in the upper reaches of a river would create fewer problems, because diversions could take place at fewer upstream points. All goods have some potential for free riding, and the free-rider problem has not precluded the private provision of some instream flows.
