If economic instruments are to play a role in the resolution of water quantity problems, then two important preliminary steps will be to assess what those problems are and to ascertain what scope there is for resolving them with policy reforms. The next section of the paper addresses these two issues. The following section reviews the importance of property rights and compensation to any broadly based policy reforms. Subsequent sections report on research into the use of water markets and water pricing to address problems associated with water quantity allocation. Three empirical studies are summarized that attempt to quantify the potential role to be played by these economic instruments in southern Alberta. Brief concluding comments follow.
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