Professor Barton “Buzz” Thompson comments on the importance of markets in conserving water for The New York Times.

This summer, California’s water authority declared that wasting water — hosing a sidewalk, for example — was a crime. Next door, in Nevada, Las Vegas has paid out $200 million over the last decade for homes and businesses to pull out their lawns.

It will get worse. As climate change and population growth further stress the water supply from the drought-plagued West to the seemingly bottomless Great Lakes, states and municipalities are likely to impose increasingly draconian restrictions on water use.

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Adding to the challenges are the obstacles placed in the way of water trading. “Markets are essential to ensuring that water, when it’s scarce, can go to the most valuable uses,” said Barton H. Thompson, an expert on environmental resources at Stanford Law School. Without them, “the allocation of water is certainly arbitrary.”

Two studies to be presented at a forum next week organized by the Hamilton Project at the Brookings Institution and the Stanford Woods Institute for the Environment make the case that markets and prices are an indispensable part of the tool kit to combat scarcity. They are essential to induce both conservation and investment in water-saving technology, and to steer water to where it is valued most.