Abstract
Water usage is governed through a variety of mechanisms, including government administration and market tools. From 2006 to 2008, the region of Barcelona, a water scarce area, suffered a drought comparable to the one faced today by the U.S. West. This article surveys a variety of techniques that were and could have been used to address these scarcity challenges. Spanish water regulations established water markets in 1999, but neither the design nor its implementation was optimal. In addition to the design and implementation flaws, the response to the 2007-2008 drought crisis showed how emergency measures highjacked water markets as a viable solution to water scarcity. Emergency responses bailed out urban voters while no structural solutions were adopted to make water use in the agricultural sector more efficient. Thus, neither the urban suppliers nor the agricultural sector had incentives to participate in a water market, and the drought was managed using ad hoc solutions. The U.S. West can draw lessons to tackle the current and future droughts from Spain’s responses to its water crisis.