Water Allocation in the West: Challenges and Opportunities

W hen considering the role of water in an economy, it is useful to reflect on the “Diamond-Water Paradox” made famous by Adam Smith: “Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it.”