Water resources in European legal systems have always been vested in sovereign power, regardless of their legal nature as goods vested in State property or as res communes omnium not subject to ownership. The common legal foundation of sovereign power over water resources departed once civil law jurisdictions leveled the demesne on ownership model, by introducing public ownership in the French codification of 1804, while common law jurisdiction developed a broader legal concept of property that includes even the rights to use res communes.

Safe water is widely recognized as both a fundamental human need and a key input into economic activity. Across the developing world, the typical approach to addressing these needs is to segregate supplies of water for domestic use from water for large-scale agricultural production. In that arrangement, the goal of domestic water supply is to provide small amounts of clean safe water for direct consumption, cleaning, bathing and sanitation, while the goal of agricultural water supply is to provide large amounts of lower quality water for irrigated agriculture.

In recent decades, markets have become widely used for environmental resources. Prime examples include water rights where trade enables water to be allocated to the most profitable crops, and allows farmers more flexibility to cope with climatic variability (Bjornlund 2003). Similarly, tradable rights for air pollution minimize the cost of meeting air quality targets (Stavins 1998). The same principles can potentially be widely applied to biodiversity conservation. In this issue, we are fortunate to have a short but diverse series of papers on tradable rights in conservation.

Rio Grande water is intensively managed and regulated by international and interstate compacts, Native American treaties, local water rights, and federal, state, and local agencies. Legislation and engineering projects in the early twentieth century brought about water impoundment projects and channelization of the Rio Grande which led to the eventual loss of floodplain habitats.

When water entitlement and water sharing systems are mis-specified, that is specified in amanner that lacks hydrological integrity, inefficient investment and water use is the result.Using Australia's Murray Darling Basin as an example, this paper attempts to reveal theeconomic consequences of entitlement mis-specification.