Market-based governance and water management: the limits to economic rationalism in public policy

ABSTRACT

Markets are powerful mechanisms for social coordination but critics claim that there are potential negative impacts. Market exchange can exacerbate inequalities in society. The invisible hand of market decision-making can lead to major social choices not being publicly aired. Market mechanisms can crowd out moral motivations with negative consequences. Water markets have long been promoted as one of the most efficient ways to reallocate water by economists. Focusing on an exemplary implementation of the water market in Australia, our results suggest that some features of the way market-based governance systems work match the concerns of market critics.

KEYWORDS:

• Governance
• markets
• water management
• economic rationalism

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Lyndal Hasselman has worked as a strategic planner and evaluator in government, as a private consultant and researcher. Her work is motivated by the need for practical solutions and improvements in the way that water and other natural resources are managed by governments and community.

Gerry Stoker is Centenary Research Professor at IGPA, University of Canberra and Professor of Governance at the University of Southampton. He has authored or edited 32 books and over 100 articles.

ORCID

Lyndal Hasselman http://orcid.org/0000-0003-4548-4646

Gerry Stoker http://orcid.org/0000-0002-8172-3395