Water Reallocation: Drivers, Challenges, Threats, and Solutions for the Poor

With rapid growth in demand for water, the resource is increasingly being transferred from agriculture to cities and industries. This paper examines trends and expected future changes in sectoral water demand, which drive water transfers. It then describes alternative mechanisms for water reallocation, including administrative reallocation, market‐based reallocation, collective negotiation, and other means, including combinations of mechanisms, and illegal transfers. Transfer mechanisms and implications for rural livelihoods and the environment are illustrated for case studies in the western United States and Asia. The paper concludes with a series of suggestions for alternative policies and institutions for reallocation that could help reduce adverse consequences for the poor.