When it comes to water in Washington state, some politicians are willing to waste water – harming fish and our economy – as long as they retain the ability to hand it out based on politics.

A recent headline in The Seattle Times blared, “Wall Street spends millions to buy up Washington state water.” The article outlines an effort to buy unused water rights from farmers and sell them to others who can use the water more effectively.

This is a prospect that scares some in government. The Times quotes the Washington Association of Counties saying:

“We’re potentially allowing a marketplace to develop here that could be pretty destructive in the future,” said Paul Jewell, a policy director for the Washington State Association of Counties. “With a growing population and growing need for water, we’re going to be beholden to private interests with a profit motive for something that’s supposed to be a public resource.”

This is a good example of how the desire of politicians to control resources is bad for the environment.

First, our current water system encourages waste. If a water right isn’t used for a few years, it can be lost. This “use it or lose it” rule means that farmers with water rights are rewarded for wasting water to ensure their rights are maintained for future years.

Second, relying on politicians to define what should be done with a “public resource” is risky. Washington just endured a nearly two-year fight where rural residences on well water became a pawn in a fight between politicians in Olympia.

Markets, on the other hand, allocate water based on where demand is greatest. In some cases that means transferring surplus water to cities, to other farmers, or even to environmental groups looking to leave the water in streams. If an environmental group is willing to pay for the water to keep in in the stream for fish, they can do that. The farmer with the water right benefits from the revenue and keeps the water right, and fish benefit from having the water in the stream.

Finally, we know water markets improve environmental sustainability and increase the value of farmland. The latest example comes from California. A new study found that after groundwater property rights were introduced in southern California, the ability to sell the water based on market prices “generated substantial net benefits, as capitalized in land values.” Trading water rights encouraged more efficient water use and conservation.

Contrast the two approaches. In Washington, there is an incentive to waste water in order to preserve a water right. In the aquifer in the California example, markets create an incentive is to conserve water so the remaining amount can be sold, reducing shortages and increasing revenue to farmers.

Phrases like “Wall Street” are used to make water markets sound scary. As the California example demonstrates, however, allowing farmers to make the best use of their water rights is not only good for farmers, it is good for the environment.