The United States continues to enjoy relatively abundant water resources. Control over these resources grew enormously over the past century. However, the water demands to support a $5-trillion economy and nearly one-quarter of a billion people, most of whom expect virtually unlimited quantities of high-quality water to be available at a nominal price, have grown even more. Although the nation has achieved considerable success (albeit at a high cost) in cleaning up its waters, protecting and restoring water quality will be a continuing challenge. In particular, reducing nonpoint source pollutants and protecting drinking water supplies from toxic substances are problems currently lacking effective solutions. An effective strategy for meeting water-quality objectives will need to target the resources designated for achieving these ends to the areas where they will produce the greatest net benefits.
The costs of using water will rise in the future; only the nature of the costs is in doubt. When water is underpriced for uses such as irrigation and waste disposal, more of society's costs take the form of deteriorating aquatic ecosystems, loss of instream values, restrictions on development resulting from the inability to secure adequate water supplies, and perhaps more frequent interruptions in service. On the other hand, when the costs are borne by users who have incentives to conserve and opportunities to sell water rights, then the resource is used more efficiently, the highest-value uses are assured of an adequate supply, and the nation derives greater net benefits from its resources. By facilitating and reducing the costs of adapting to changing supply and demand conditions, this approach also would provide a renewed realization that there is plenty of water to meet everyone's demands.
The author is indebted to John Fedkiw for providing numerous source materials as well as insightful and detailed comments on several drafts of this chapter, and to Emery Castle, Larry Mac- Donnell, David Moody, Paul Portney, Kyle Schilling, John Schefter, Norm Starler, Clive Walker, Richard Wahl, and three anonymous reviewers for their constructive comments.