Reallocating water resources in the Middle East through market mechanisms

The growing demand for water by countries in the eastern Mediterranean raises the need to explore ways and means to ameliorate water scarcity. Economists have for some time proposed methods of more efficient exploitation of existing water supplies. Specifically, by employing market incentive mechanisms to encourage voluntary water sharing among countries and regions is likely to lead to greater efficiency in water utilization. This paper explores the efficiency gains associated with re-allocating fresh water resources in the eastern Mediterranean through water rights markets. The results suggest that all parties involved might benefit to a greater or lesser degree from trading in water rights.