Azurix trades water online in the American West
The Texas water group, Azurix has set up a web-based exchange for the sale, storage and transport of water in the American West.
The exchange, called Water2Water.com, is based on a business-to-business e-commerce programme developed by Ariba of California.
The website has been designed for municipalities, agricultural customers, land owners and environmental groups. Users can post their water needs online and attract buyers and sellers.
This is likely to come as welcome news for Californian farmers whose access to water is currently rationed under the terms of complex state water projects. Water2Water.com offers them the chance to generate revenue by temporarily allowing another party to use their allocated water in times of excess, or allow them to buy water during droughts. In the past, farmers have found the latter difficult and have had virtually no price mechanism to help them determine what their water might be worth.
Some observers have labelled the service as too experimental since there is currently no US federal legislation obliging owners of pipelines to make unused capacity available to other parties wishing to transport water. Variable water quality is also seen as a potential problem.
But the Azurix move has been generally welcomed as an innovation that could help in removing considerable inefficiencies from the present water market in the west. Free market advocates claim that subsidised prices have created excessive demand for water and encouraged inefficient uses in the past. “Our ultimate goal is to redefine the way water is allocated,” said Patrick Meyers, product manager of Water2Water.com.
To start with, the primary focus will be agricultural water trading, where Azurix expects Water2Water.com to facilitate water trading within irrigation districts, Meyers told World Water magazine. Trades would then follow from one user group to another. “80-85% of California’s water is used in agriculture, creating a massive shortfall. If we could move some of this to municipal users, then the state would have a water surplus,” he added.
Azurix anticipates that Water2Water.com’s initial customers will be in the western US states, where water use is high, accessible supplies are limited and demand is increasing. As interest grows and regional water markets develop, the company expects to extend the service to a national customer base and also to the global marketplace, as there are active water markets in other countries that have a need for an open, market-based exchange.
“Water2Water.com will allow participants in the water market to transact business more efficiently,” said Rebecca Mark-Jusbasche, chairman and CEO of Azurix. “It also will allow us to work with state and federal agencies to help streamline the time consuming, paper-based procedures that currently accompany the approval process relating to water transfers.”
The website uses Ariba’s business-to-business software for transfers, including pricing mechanisms such as auction, reverse auction and bid/ask exchange. In addition to bringing buyers and sellers together, Water2Water.com also offers weather information, crop and commodity prices, soil moisture content, and crop specific news.