Efforts to address water scarcity have traditionally relied on changing the spatial and temporal availability of water through water importation, storage, and conveyance. More recently, water managers have invested heavily in improving water use efficiency and conservation. Yet as new supply options become harder to find and/or appropriate, and demand hardens, society must consider other options to, if not reduce scarcity, minimize the impacts of such scarcity. This paper explores the role water markets are playing in addressing water scarcity in the American southwest: a water-limited arid and semi-arid region characterized by significant population growth rates relative to the rest of the US. Focusing on three representative southwestern states—Arizona, California, and Texas—we begin by highlighting how trends in water supply allocations from different water sources (e.g., surface water, groundwater, and wastewater) and water demand by different water users (e.g., agricultural, municipal, and environmental) have changed over time within each state. We then present recent data that shows how water trading has changed over time—in terms of value and volume—both at state level and sector level aggregates. We end with a discussion regarding some institutional adjustments that are necessary for water markets to achieve their potential in helping society address water scarcity.

California agriculture will undergo significant transformations over the next few decades in response to climate extremes, environmental regulation and policy encouraging environmental justice, and economic pressures that have long driven agricultural changes. With several local climates suited to a variety of crops, periodically abundant nearby precipitation, and public investments that facilitated abundant low-priced irrigation water, California hosts one of the most diverse and productive agroecosystems in the world. California farms supply nearly half of the high-nutrient fruit, tree nut, and vegetable production in the United States. Climate change impacts on productivity and profitability of California agriculture are increasing and forebode problems for standard agricultural practices, especially water use norms. We highlight many challenges California agriculture confronts under climate change through the direct and indirect impacts on the biophysical conditions and ecosystem services that drive adaptations in farm practices and water accessibility and availability. In the face of clear conflicts among competing interests, we consider ongoing and potential sustainable and equitable solutions, with particular attention to how technology and policy can facilitate progress.

The incentives for resource extraction and development make the conservation of biodiversity challenging within tropical forestlands. The 2007 establishment of the Royal Belum State Park in the Malaysian state of Perak offers lessons for creating protected areas in tropical countries where subnational governments are major forestland owners. This article elucidates the social and political forces that influenced Royal Belum’s creation. Those forces included Malaysian conservation groups’ efforts to establish the ecological uniqueness of the site and rally public support to protect it; the Perak state government, which is the landowner under Malaysia’s constitution, seeking a protection option that would minimize the economic costs to it (and perhaps generate net economic benefits); and the federal government providing a legal framework and support for park protection and ecotourism development. Successful long-run protection of Royal Belum will require action beyond simply designating the area as protected.