The world must increase its usable water supply and effectively manage water demand. These are the key findings in a new report from Rabobank. The report "Agricultural Water - Free Flowing Markets Sustain Growth" focuses significant attention on water markets as a tool that has been proven to be effective at delivering water where it's most valued. According to the research, markets are an important part of ensuring that the proper allocation of water can occur, and helping ensure that the agricultural industry has access to enough water to be economically viable and can feed a growing world population.

"We encourage food and agri suppliers and other leaders to be directly involved in the establishment of water markets to protect the long-run economic sustainability of the agriculture industry," says Vernon Crowder, analyst at Rabobank. "Globally, local governance and investment will be required in order to ensure stable water supplies but also to replenish current deficits caused by years of overuse in many countries. Water markets will increase the overall net benefit to society, increase the incentive for expanded investment, while decreasing risk for the agriculture sector as a whole."

The report goes on to examine the situation in some of the major agricultural regions of the globe. In North America the report focuses on California, the Colorado River Basin and the Ogallala Aquifer with the following:

California - As represented by tree rings, the last four years in California have marked the worst drought seen in the last millennium. This has forced Californians to create policies which will help manage and replenish basins in the future. In the meantime, water marketing has enabled most California ag producers to reduce the economic impacts of severe drought conditions, but improvements to its water trading system are needed to deal with ongoing increases in demand and tighter supplies.

Colorado River Basin - More than 80 percent of the water delivered from the Colorado River Basin is used for agricultural purposes. Increasing demand from agriculture, municipal and industrial users severely threatens the sustainability of the basin. The US Bureau of Reclamation predicts that a 20 percent decrease in runoff could lead to a 60 percent or 70 percent decrease in storage, along with a 15 percent increase in salinity.

Ogallala Aquifer - The Ogallala Aquifer is a name for thousands of smaller aquifers that stretch from South Dakota into Texas, reaching into Wyoming, Nebraska, Colorado, Kansas, New Mexico and Oklahoma. In a 2013 study published by Kansas State University, it was estimated that, between 1960 and 2010, nearly 30 percent of the total volume of the Ogallala Aquifer had been depleted. If the use of water continues at a similar rate, the projection is that, by 2060, nearly 70 percent of the aquifer's total available water will be tapped.

The report concludes by encouraging food and agri suppliers and other leaders to be directly involved in the establishment of water markets to protect the long-run economic sustainability of the agriculture industry. Globally, local governance and investment will be required in order to ensure stable water supplies but also to replenish current deficits caused by years of overuse in many countries. The research proposes that water markets will increase the overall net benefit to society, increase the incentive for expanded investment, while decreasing risk for the ag sector as a whole.