The cost of free water : water resources allocation and use in the Curu Valley, Ceara, Northeast Brazil

This study explains the current situation in the Curu Valley. It explores institutional alternatives for the achievement of more efficient water resources allocation and use. The study analyzes the existing institutional arrangements and ensuing incentives for water allocation and use in Ceara , with emphasis on the Curu Valley. It focusses on two models which are discussed and promoted most actively internationally: (1) the water marketing and (2) negotiation approach to water resources allocation. The trade-offs of these two alternatives are analyzed in relation to the various transaction costs incurred (e.g., institutional, financial and social transaction costs) if either were to be implemented in the Curu Valley. The results show that neither the current nor informal institutional arrangements in the water sector provide incentives for efficient water allocation and use in the valley, indicating that engineering measures alone are not sufficient to resolve water scarcity. The study also shows that the institutional requirements for a water market, as compared to a negotiation approach similar to the French Model for river basin management, where collective negotiation rather than individual decision-making is stressed, are basically the same. The annexes list informants consulted concerning various aspects of institutional arrangements and stakeholders in the Curu Valley, and present sample interview forms for project and private irrigators.