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a) Explain the concept of transferable water permits (TWP) as a means of managing the allocation of water in a river in which the demand for water is greater than the supply.
b) Explain the advantages of such a system compared to a regulatory allocation system (historical rights to abstract water, given on a ‘first comefirst served basis’). In your answer explain: i. how you would implement the TWP system (there is currently a permit system based on a ‘first come-first served’ allocation); ii. what type of information you would need; iii. what pre-conditions would need to exist to ensure a competitive water market environment; and iv. how you would deal with the return flow problem.
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