Water Markets for Texas FAQ
Texas 2036 has released Water Markets for Texas, a major multi-year study analyzing how voluntary, well-structured water markets have operated in two regions of the state and what lessons they offer for any Texas communities preparing for its long-term water needs.
We answer a dozen frequently asked questions about this report below:
1. What is this report?
Water Markets for Texas is a multi-year analysis of how voluntary, well-structured water markets have operated in two Texas regions, the Edwards Aquifer and the Rio Grande, and what lessons they offer for other parts of the state.
2. Why is Texas 2036 releasing it now?
Although the next regular legislative session is in 2027, policymakers, regional planners, and water managers begin developing proposals far in advance. Texas 2036 is releasing the report now to inform conversations as communities across Texas explore ways to ensure future water supplies are available during drought.
3. What problem does the report address?
Texas is experiencing rising water demand driven by population growth, economic expansion, and recurring drought. In several regions, demand is projected to outpace local supply. The report analyzes whether voluntary market tools can help Texas manage these long-term pressures.
4. What is a water market?
A water market is a structured system that allows willing buyers and sellers to transfer water rights under clear rules, with monitoring and oversight that protect all parties. It is not privatization of water; it is a regulated mechanism for reallocating existing water rights.
5. Where do water markets already exist in Texas?
Two regions have long-running markets:
- Edwards Aquifer (San Antonio region)
- Rio Grande (Middle and Lower Rio Grande Basin)
Both regions have decades of experience with voluntary transfers among water users.
6. What have these markets achieved so far?
According to the report:
- They have helped cities meet rising municipal demand while allowing agriculture to continue to thrive.
- They have increased drought resilience by allowing water to shift to higher-value uses during shortages.
- They have reduced conflict by replacing priority calls or litigation with voluntary, rule-based transfers.
- They have encouraged conservation by giving agricultural producers financial incentives to save water.
7. How much water has moved through these markets?
In the Rio Grande region alone, more than 300,000 acre-feet of irrigation rights have been voluntarily converted to 120,000 acre-feet of multiple-use rights, which include municipal and industrial uses since 1971, helping cities secure supplies without major new infrastructure. In the Edwards Aquifer, over 1,000,000 acre-feet of rights were sold or leased between 1997 and 2020.
8. Why does this matter for Texas right now?
Texas continues to grow rapidly, adding the equivalent of a city the size of Fort Worth roughly every two years. Several regions, including the Hill Country, North Texas, and the Permian Basin, face tightening supplies. The report gives state and local leaders a long runway to evaluate water market tools.
9. Are water markets a replacement for conservation or infrastructure?
No. The report emphasizes that water markets complement planning, conservation, and infrastructure. Markets provide flexibility, but they do not create new water or replace the need for long-term investments.
10. What barriers prevent water markets from emerging elsewhere in Texas?
The report identifies several factors:
- Inconsistent groundwater rules across regions
- Limited monitoring, metering, and data transparency
- Fragmented regulatory oversight
- Difficulty ensuring transfers protect all parties without clear, enforceable rules
11. What policy questions might Texas policymakers consider in the future?
While the report does not make legislative recommendations, it identifies foundational issues policymakers may want to examine:
- How to clarify and secure water rights in regions where they are ambiguous
- How to improve monitoring and metering
- How to ensure transparency and protect third-party interests
- Whether regions with recurring shortages might benefit from voluntary transfer tools
12. Does the report take a position on mandatory markets?
No. All markets discussed are voluntary. The report evaluates where voluntary markets have worked and what conditions are needed for them to function responsibly.