Simone Borghesi

In the last few years, the increasingly problematic issues of water scarcity and pollution have led to a rise in the application of tradable permits to the water sector. However, a critical evaluation of their application is still missing from the literature. To overcome this problem, the present work aims at providing a critical survey of the main schemes of tradable water abstraction rights and pollution rights in operation in various countries. The advantages and disadvantages that emerge in each case are emphasised, in order to explain fully to what extent this market instrument can be employed in the water sector, and thus derive useful indications for future applications. Despite the potential benefits of tradable permits and the success reported in some contexts, from the present casestudy analysis it turns out that several factors, including lack of sufficient market competition, may sometimes hinder their functioning in practice.