How to reallocate water rights when environmental goals conflict with existing entitlements

Emerging concerns for environmental flows translate into reforms that aim to preserve minimal flows in rivers. These policy measures have consequences for traditional right-holders: how to share between consumptive users the new scarcity created by the protection of instream flows? This paper compares different policy mechanisms in France, Australia and California in an attempt to answer the questions of how to allocate water restrictions and compensations and how to pursue simultaneously efficiency, equity and acceptability objectives. It measures the shortcomings and advantages of different voluntary approaches: auctions, contracts and negotiations.