The Solution to California’s Drought: A Free Market in Water

If you’re going to be serious about using markets to allocate water, the first thing you have to do is let the market determine the price, says Reed Watson, the executive director at the Property and Environment Research Center, or PERC, a nonprofit think tank is based in Bozeman, Montana.

If California wants to ease the effects of its drought, Watson says, government should get out of the way and leave resource allocation to the market. You have to have markets that actually work, that allow competing users to resolve their competition amicably and efficiently.