Water-Scarce Economies and Scarcity Values: Can Water Futures Trading Combat Water Scarcity?
Water futures trading can be an important tool for water-scarce economies. This paper argues that it can help reduce the scarcity value of water (defined here as the value that can be generated if the limit on water availability is relaxed by one unit), even without a physical market. ‘Scarcity value’ measures the degree of deprivation and creates the basis for disputes. The paper argues that water futures trading reduces the scarcity