18. Water Trading in the Tagus River Basin (Spain)

Population and economic growth, coupled with rapid and extensive urban development, pushed to the limit the capacity of the upper and middle stretches of the Tagus River Basin to meet an increasing water demand, within the range of available resources and current water regulation infrastructures. In this context, voluntary agreements to transfer water use rights from agriculture to urban uses gained social support and political acceptance as an alternative to cope with the recurrent water supply deficit during dry periods. This was mainly because of their lower cost as compared to the best available alternatives already in place (efficiency improvements, use of strategic reserves, additional water works). Since the early 1990s pioneer voluntary agreements to formally transfer water between water utilities and irrigation districts sprung up for the first time in Spain. This chapter assesses two trades in the Madrid Region (including the capital city, Madrid’s metropolitan area and other towns). These trades can be arguably considered as ‘embryonic’ examples of formal water use right trades in Spain.