Establishing tradable water rights: Case studies of two irrigation districts in South Africa

Abstract

The study revealed that a market for unused “outer land” water rights had emerged along the Lower Orange River. A discriminant analysis showed that water rights were transferred to farmers with the highest return per unit of water applied; producing table grapes; and with high-potential arable “outer land” without water rights. The institutional arrangements facilitating market development were well defined, reliable, enforceable water rights, that were transferable between irrigable properties; a large number of willing sellers, and an administrative function performed by the Department of Water Affairs and Forestry defining a transparent transfer process, supervising and recording transactions. A second study in the Nkwaleni Valley in Northern Kwa-Zulu-Natal found that no water market had emerged despite the scarcity of water in the area. While 41% of farmers wanted to purchase water rights, no willing sellers of water rights existed.

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