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Abstract A changing climate and often unregulated water extractions have exposed over 2 billion people to water stress worldwide. While water managers have explored a portfolio of options to reduce this stress, supply augmentation through reuse of treated municipal wastewater is becoming increasingly attractive. Wastewater treatment plants protect water quality and prevent sewage from contaminating waterways. Increasingly, this resource is utilized for numerous human (e.g., irrigation, drinking water, groundwater recharge) and conservation (e.g., stream and river recharge) needs in water stressed regions. To understand the role treated municipal wastewater plays in impacting conservation objectives we identified the intersection of wastewater treatment plant locations and occurrences of threatened and endangered (T&E) species in California and compared the permitted contribution of effluent to baseflow quantities of the receiving waterbody to assess the degree to which changes in effluent could affect instream waterbodies. We found a positive correlation between the presence of treatment plants and T&E species in California watersheds—a quarter of species have 100% of their range in watersheds with at least one treatment plant. This correlation is greatest for species associated with terraces and riparian habitat, followed by aquatic habitat and aquatic emergent vegetation. One‐third of watersheds in our analysis can receive most of their cumulative watershed baseflow from effluent and are characterized by dense urbanization or agriculture. Our analysis demonstrates that the fates of T&E species and effluent are interconnected in ways important for water policy, suggesting that species conservation goals should be considered when making decisions about effluent reuse. 

Several ways to address the looming ecological disaster that is the Salton Sea have been proposed — including water importation. Here we considered two options: importing ocean water from the Sea of Cortés and leasing water from agricultural users in the Imperial Valley. We estimated the monetary costs for importing Sea of Cortés water to the Salton Sea and compared that with the costs of transferring water from agricultural users to the Salton Sea. We found that leasing water from agriculture would be substantially cheaper than ocean water imports. Additionally, all the infrastructure for leasing water from growers exists, which means water transfers could begin immediately. That is important given the present and increasing environmental and human health damages that are occurring at the Salton Sea. 

Efforts to address water scarcity have traditionally relied on changing the spatial and temporal availability of water through water importation, storage, and conveyance. More recently, water managers have invested heavily in improving water use efficiency and conservation. Yet as new supply options become harder to find and/or appropriate, and demand hardens, society must consider other options to, if not reduce scarcity, minimize the impacts of such scarcity. This paper explores the role water markets are playing in addressing water scarcity in the American southwest: a water-limited arid and semi-arid region characterized by significant population growth rates relative to the rest of the US. Focusing on three representative southwestern states—Arizona, California, and Texas—we begin by highlighting how trends in water supply allocations from different water sources (e.g., surface water, groundwater, and wastewater) and water demand by different water users (e.g., agricultural, municipal, and environmental) have changed over time within each state. We then present recent data that shows how water trading has changed over time—in terms of value and volume—both at state level and sector level aggregates. We end with a discussion regarding some institutional adjustments that are necessary for water markets to achieve their potential in helping society address water scarcity.