**5.4 Transferability of property rights and water conservation**

Transferability of the property rights has received greater attention in property right literature especially by scholars looking water markets. Proponents of transferable property rights argue that transferable property rights are very important in water resource management because they aide in water being allocated to its highest value and efficiently utilised. In very water stressed basins, water can be transferred from one sector to another and from one user to another as long as the property rights institutions allow transferability of rights. In the light of escalating water demands, transferring the property rights from low value uses to high value uses may help manage the demands at basin level. An analysis on the relationship between transferability and intentions of water users to conserve water using SPSS Spearman's Rho Correlations has been presented in **Table 5**.

The results from this study suggest a significant relationship between transferability of the right and intentions of water users to conserve water although the correlation effect is not strong enough. This finding may imply that water users find the transferability of their right as incentives towards conservation of water but not to a larger extent. As discussed earlier in the beginning of the paper, even though transferability of property rights has some significant benefits in water allocation, some authors critiqued the concept of transferability.

Scholars such as Anderson have argued "*since rights cannot be perfectly enforced, ownership will always be probabilistic; but when the probability of capturing benefits from a use is low, it is less likely that the owner will devote the resource to that use*" [97].


### **Table 5.**

*Transferability of property rights and water conservation.*

*Incentives for Managing Water Demands: Lessons from the Umgeni River Basin, KwaZulu-Natal… DOI: http://dx.doi.org/10.5772/intechopen.106238*

In Pakistan a survey of watercourses (1990) showed the existence of 70% active trading between farmers [98] while market type trading of water rights is seen to result in social benefits via improvement of water resource allocation efficiency. Allocative efficiency maximisation which leads to net economic returns maximisation is rarely attained in practice as there are supply and demand imbalances [99]. Water intersectoral reallocation, as long as economic efficiency is attained via transfer to a use of higher value, is a positive process as seen in [100]. However, in this case, a framework of intersectoral trading is created where a competitive situation arises [101] unless the transfer is facilitated by central economic policy *fiat* as is the case in Jordan's shift from agricultural to industrial use [102]. Transferable property rights may lead to overutilization and/or overexploitation of the resource as seen in [103]. For instance, when water has been allocated to the highest efficiency sectoral value uses, like from agriculture production to industrial uses, there are high chances that the new right holders will aim to optimise production per unit water allocation within the particular industrial process employed which differs from agricultural use. The resulting consequence can be increased degradation of the water resource thereby creating water stress in the river basin.
