On The System Of Water Right Transfer

There exist in China such problems as uneven tempo-spatial distribution of water resources, low per capita water availability, less adequate water use efficiency, and disparity between water supply and demand. To establish the water rights transfer system based on water rights theory is the effective approach leading to and required by the water-saving society. The water rights transfer system is based on the rationale of institutional economics. The difference of effectiveness of the same productive elements is in essence the result of institutional difference. The institutional system serves en facto as a cordon preventing transgression of behavior and protecting the rights of those who follow the rules. The responsibilities under the rules should be unequivocally defined for the purpose of efficiency. Institutional change includes induced change and compulsory change. High efficient institution system can help reduce transaction cost and provide incentives to promote cooperation and economy and facilitate internalization of external elements. The internal factor driving the change of water allocation system is the rarity of water resources which results in price variations. To avoid the possible tragedy of getting the water resources into a 'public land', it is imperative to define primary water rights and establish water rights trade system, so as to defend the benefits of the rights owners and facilitate sustainable water use by improving water use efficiency. The natural attribute of water and the rationalization of water related behavior are all included in the institutional arrangement and value targets of water rights.Water rights is the property rights of water resources, normally means the rights to use the water resources. Water rights have different ways of classification. In terms of the hierarchy of rights and its components, water rights should include the rights of ownership, use, and transaction. From the perspective of spatial distribution of water resources, waters rights involve both surface water and groundwater rights. Classified by acquisition means, water rights fall into riverine rights, priority appropriation rights, mixed or double-fold water rights, proportional water rights,and social water rights. The trade of water rights is partial or full transfer of water use rights. Practices performed in US, Chile, Australia and Mexico show that there is a need for incentive system with consideration given to potential benefits of such trade and the constraints. Successful water rights transaction needs the support of a range of policies. There were water rights provisions historically in China, but without presence of official or law-endorsed water rights trade. Since the founding of New China, the planned economy has determined that the water resource is allocated by the instrument of planning. In the 21st century, local water rights transfer cases have become open and got approval from governments. Such successful and influential cases include Dongyang-Yiwu water rights trade in Zhejiang Province, Zhanghe River trans-provincial water transfer, primary water rights identification in Lize County, Gansu Province, trans-sectoral water rights trade in Nixia Autonomous Region, and similar cases in Inner Mongolia. However, in general the water rights system is in trial stage in China, and the current problems focus on 4 aspects, i.e. ownership, legislative difficulty, inadequate institutional arrangement and less responsiveness of water pricing signal..Water marketing in China characterized by water rights transfer should start with the following aspects: the first is to clarify the definition of water rights. As prescribed in Constitution and Water Law, the State owns the water resources, and any individuals or organizations are only entitled to the rights of water use. Therefore it is a common understanding that the water rights in China refers to the rights of water use. But in reality, water rights shall include rights of water withdrawal, water use (consumptive and non-consumptive as well as ecosystem water use), wastewater discharge, and development of water resources by constructive means; the second is to make clear the concept and scope of water rights transfer. Water rights transfer is a form for the water rights to flow, and the transferring water rights is the water use rights (including water withdrawal, use, wastewater discharge and development construction); the third is to clarify the principles of water rights, for example the principles of sustainable water use, combination of water governance with market regulation, combination of equalitywith efficiency, clear identification of property rights, justness and openness, and etc; the fourth is to clarify the general conditions and procedures of selling and transferring State-owned water resources, which are: 1. promote the transference of the rights of State-owned water resources in a planned and stepwise manner; 2. carry out monitoring and assessment of water resources; 3. develop the ceiling of different water uses; 4. develop the primary class market for water rights transfer, which involves allocation of primary water rights and issuance of water rights certificate; 5. establish second class market for water rights transfer, where part or full of the water rights owned by the primary rights holders can be traded following the procedures that: (1) application for transfer (2) review and approval (3) transfer (4) bearer change of water rights certificate or re-issuance; 6. establish third class markets of water rights transfer, for selling or re-selling the acquired water use rights. In the process from primary to the third class markets, there will be no double taxation on resource use but there is commission fee or overhead to be collected for every transaction. The compensation for the third party is also necessary. The fifth is to push for the transference of the rights of State-owned water resources in terms of different water sources including surface water and groundwater. Surface water rights can flow across different basins and administrative zones, while in groundwater case, its trade is limited to users within the same groundwater unit. Any other benefits of water use including log drifting, shipping, husbandry and recreation, should be endorsed and licensed by the river basin organization on behalf of the State. The license for such purposes can be bided and auctioned. The wastewater discharge rights can be allocated to industries by means of bidding, auction, priced selling or even free of charge, then traded in the markets. Similar selling mechanism applies to the rights of water resources development projects. The sixth is to establish and improve water rights transfer mechanisms, including contractual mechanism, pricing mechanism, macro-regulatory mechanism and information release mechanism.