Introducing water banks: principles and importance

Increasingly, water scarcity is a major global challenge. Ongoing water shortages have attracted policy makers’ attention, to endeavor have more effective water resource allocation methods to balance between human needs and protecting natural capital (e.g. riverine ecosystems and riparian areas). This situation has changed water management and policy and to focus more on existing water supplies and toward demand management. Some of these measures include economic tools, such as water markets, voluntary agreements, and the establishment of water banks. Water banking is an institutional arrangement for managing a system of deposits and withdrawals that is specifically designed to facilitate water transfer among different users. The common goal of a water bank is moving water from lower-valued to higher valued uses. Combined with an active water market, the water bank serve as the intermediary that matches buyers to sellers via a set of rules, including information on price, volume of water, etc. The most important opportunity is to facilitate long-term flexibility to increase water security. Water banking to solve water-related issues by reallocating water, whether within or across catchments can help provide water resources to high-valued uses in emergencies and droughts. Thus, a well-functioning water bank can help improve water governance and management. This chapter examines the structure of water banks and the conditions for their establishment and provides several examples of water banks across the world.