Effectiveness of Texas Water Bank Evaluated by A&M International's Yoskowitz

In 1993, the Texas Legislature passed legislation to create the Texas Water Bank, which is now a part of the Texas Water Development Board (TWDB). The idea was that the water bank could promote the buying and selling of water supplies and water rights, thus possibly alleviating water shortages. The legislation (Texas Senate Bill 1030) was intended to create a market atmosphere in which the bank would bring together sellers and buyers.

Recently, an economist at Texas A&M International University (A&M International) evaluated the structure of the water bank and how it has operated. The goal is to determine the extent to which the bank has been effective at facilitating water marketing. Dr. David Yoskowitz, assistant professor and researcher in the Economics and Finance Department at A&M International, conducted these studies.

Some of the broad issues being investigated include assessing whether the bank can be flexible in how water trades are allocated, if the tenure of water rights holders is secure, and whether opportunity costs are taken into account. The project is also studying the fairness of the overall water banking process, the parties that participate in the bank, and effects on third parties. Much of Yoskowitz's research involves comparing the Texas Water Bank to California's Drought Water Bank, which was established in 1991.

So far, Yoskowitz notes, there has been little participation in the Texas Bank. For example, bank users so far include only one depositor, 14 registered sellers, and just 2 registered buyers. Individuals may contact the TWDB or visit a World Wide Web page to obtain a list of buyers and sellers and where the water source is located. However, pricing information is not shown.

In general, Yoskowitz says the characteristics of the Texas Water Bank reflect a well-defined commodity market that allows water to be easily bought and sold and moved to areas with higher-valued uses. Unlike the California water bank, the Texas bank allows prices to be determined by potential buyers and sellers. Additionally, Yoskowitz found that the Texas Water Bank is much more open-ended about who can participate. For example, non-profit associations can trade water supplies in Texas, while the market was limited to government agencies and cities in California.

A key obstacle that needs to be overcome, Yoskowitz says, is that the amount of groundwater that is available to be bought and sold needs to be quantified in greater detail.

"In both Texas and California the availability of surface water supplies is relative well-known. But the groundwater is difficult to measure and can only be estimated in terms of well yields. This makes it difficult to bank groundwater rights," he said.

Dr. Yoskowitz also suggests that the TWDB needs to publicize the Texas Water Bank more effectively, and recommends the Board work with river authorities and groundwater districts to educate potential users. He also recommends that questions regarding the cancellation of water rights need to be addressed.

"Water may be put to beneficial use by a lease, but this does not necessarily protect the water right holder from the possibility of cancellation," he said.

For details about this project, contact Yoskowitz at yosko@tamiu.edu or (956) 326-2509.

To learn more about the Texas Water Bank, visit their web page at http://rio.twdb.state.tx.us/assistance/WaterBank/waterbankMain.htm or contact bank manager Dan Beckett, at (512) 463-9893.

Journalists who need additional information or help with media requests and interviews should contact the Office of Public Affairs and Information Services at pais@tamiu.edu