Water trading is the process of buying and selling water access entitlements, which is also known as water rights. Depending on the regulatory framework of the water rights by a particular country, the terms of the exchange can be permanent or temporary. Permanent trade is the exchange of water rights. For example, an entitlement holder permanent sells their water claim to other water seeking party. However, temporary trade refers to the annual trade of water allotment to water seeking party. Water trading includes the voluntary transfer of predetermined amount of water between the buyer and seller, in order for the buyer to meet his needs. Water trading is a revolutionary concept that offers a practical solution to all those in need of water in urban areas for water requirements such as daily water consumption, agricultural, and industrial sector applications. According to some economists, water trading can encourage more effective water allocation which will benefit the water trade market players in their business expansion. Although, there are several disagreements about effectiveness of water trade across the globe, due to lack of awareness concerning environmental and social outcomes of water trading schemes.
Factors Driving Growth of the Global Water Trading Market:
Rapid urbanization, increasing global population growth, and economic developments in developing as well as developed nations have increased demand for cleaner water. For instance, according to United Nations Conference on Trade and Development (UNCTAD), the urban population share has been increased by 56.2 % across the globe. These factors have also created several issues for water management and resulting in lack of access to the sufficient and drinkable water. Improper water management has reduced the quality of water across the globe, and resulting in increasing several health-related concerns. However, water trading is benefiting the effective water management across several nations such as the U.S., Australia, South Africa, Chile, Iran, etc. The increasing adoption of water trading by the consumers across the globe due to enormous need for clean water is expected to fuel growth of the water trading market. Furthermore, the death toll from water-borne illnesses is rising, and they lack the funds to build infrastructure to tackle these health related issues. For Instance, according to a report published in 2020 by United Nations, water-borne diseases are responsible for 80% of overall diseases and deaths in developing nations. These factors have boosted global demand for cleaner water, thereby driving the market growth for water trading.
Trends of the Global Water Trading Market:
Many nations are now following the trend of clean water and benefiting from worldwide water trading. Countries such as Australia, Brazil, the U.S., etc. are with an abundance of fresh and clean water, provide a lucrative market for water trading. These countries can generate large profits by investing in global markets for clean water or exporting water to other countries. However, water trade has resulted in the restriction and closure of public access to pure and healthy water in a number of locations.
Global Water Trading Market - Impact of Coronavirus (Covid-19) Pandemic
In December 2019, the World Health Organization declared the COVID-19 virus outbreak as a public health emergency. The pandemic has spread to over 100 countries, resulting in massive mortality all across the world. Global industrial, tourism, and financial markets have been especially hard hit. The downward pressure on the world economy, which had previously shown signs of improvement, has increased again. The virus's spread has added harmful aspects in slow-down of the global economy growth. According to various international authorities such as International Monitory Fund (IMF) and World Bank, the world economy is going through its most difficult period since the financial crisis. The coronavirus's global detrimental impacts are already visible, and they will have a significant influence on water trading market in 2020. Furthermore, the COVID-19 pandemic has affected production activities in the multiple industries such water treatment, chemical, automotive etc. across the globe. The high degree of its impact on the global economy and its important sectors including water, wastewater, and related industries such as agriculture and commercial have resulted in slow-down of water trading activities across the globe.
Global Water Trading Market – Regional Insights
Water trading access rights is increased across the world, as water resources are stretched by increasing urbanization, climate change, and rise in global population.
North America is expected to be the prominent market of water trading. Wherein, U.S. is one key contributor. Water trading in the U.S. varies by different factors such as according to the state's water code, system of water rights, and governmental bodies involved in regulating water trading. Arizona, California, Colorado, New Mexico, and Texas are some U.S. states that have active water trading market.
In Asia Pacific, Australia is the most advanced water trading market. The Murray-Darling Basin, a large geographical area in Southeastern Australia comes under water trading schemes. The Murray-Darling Basin receives around 90% of the region's water. Australia Water Services Association operates on a volume metering system. In the volume metering system, market players do not simply apply to possess the water rights, but they pay for the quantity of water they consume.
Europe, Latin America, and Middle East and Africa (MEA) also contributes to the global water trading market. In Europe, U.K. is only authorized water trading only on licenses and is open for water trading since 2001.
Key Players in the Global Water Trading Market:
Key players operating in the global water trading market include Severn Trent, Murray Irrigation, Integra Water Services, Aqua America, California Water, Thames Water, Yorkshire Water, Anglian Water, and South Staffs Water, among others.
Global Water Trading Market: Taxonomy
Global water trading market is segmented into: