Texas water law should be updated to embrace free market transactions that have been incorporated into other Texas statutes governing markets such as electricity, telecommunications, and insurance.

Key points:

  • The best instrument for optimizing allocation of scarce water resources is the exercise of private property rights in a competitive marketplace, otherwise known as a water market.
  • There are several barriers and impediments in Texas to well-functioning water markets, including legal uncertainties, local government intervention, supply concerns, and broader political, community, and social barriers.
  • Ultimately, Texas’ water laws should be reformed to remove current legal barriers and encourage the development of private water markets.