Water resources are being stretched to the limit in Alberta and irrigation activities account for more than 70 percent of consumptive water use in the province. Conflicts among users and potential users may be looming. Pollution of surface water and groundwater and outbreaks of water-borne pathogens have been increasing. Freshwater systems are likely to deteriorate further with impending climate change. Following passage of the Alberta Water Act in 1999 and the Irrigation Districts Act in 2000, which allowed limited transfers of water among water users, the Alberta government issued its Water for Life Strategy in late 2003. The strategy’s principal goals include (1) evaluation of the use of economic instruments to manage water demand by 2007; (2) demonstration of best management practices by 2010; and (3) a 30 percent increase in productivity and efficiency over 2005 levels by 2015. This seems to presage a new era in water management in Alberta, but will the necessary changes in water management be forthcoming? This study examines the need for demand-based management and the constraints that make effective changes in water policy problematic. Evidence from a recent study in the St. Mary’s River Irrigation District highlights problems with water markets.


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