Adapting to Drought in Australia and California: Creative Water Transfers in a Water‐Scarce World

This column focuses on the use of water exchanges and associated price mechanisms to mitigate the impact of shortages and uncertainty in two geographic areas of these countries ‐ California and southeastern Australia. They are similar in terms of climate and population; California's population is approximately 35 million versus southeastern Australia's population of 20 million, which embodies four out of five of Australia's largest cities. Both California and southeastern Australia share the dilemma of balancing scarce water resources between agricultural uses and the rapidly growing needs of cities and industry ‐ each critical to future prosperity. And in both areas, agricultural water use makes up the overwhelming share of total developed water ‐ approximately 70% in Australia and more than 80% in California.