Re-embedding economic relationships within the social context: what does this mean for environmental water trading?

When we use the market to facilitate the acquisition and management of environmental water, how much are we giving up to market norms? Are we redefining the environment in the context of the water market, and if so, what does that mean?

This tension between the drive to protect the environment, and the methods we can use to achieve this protection, is emerging as one of the critical issues for my research. I’m interested in what happens to legal and policy definitions and perceptions of the natural environment when it is clothed in a corporate form, given tradeable water assets and the legal and institutional capacity to operate within the water market and the water supply systems as just another user. In Australia, our environmental water holders are using the market to acquire and manage their water portfolios. I think there’s some evidence that this is changing the way that the environment itself is seen (and which I’ll explore another time), and it connects broadly to the behavioural economics research into the way that market norms can overwhelm and irreversibly replace social norms of interaction.

But is this tension always apparent? Is there a way of reconceptualising the market so that it operates within a social context? Can we use the market to strengthen social values around the environment, so that social norms are actually enhanced as a result of environmental water trading? I think this may be what is happening in the western USA, where environmental water trusts require a social relationship with the local community. Unless other water users can see that there is a win-win, then there is no support for trading water to the environment. In this context, the activities of the environmental water trusts are actually enhancing the understanding and support for environmental protection, in a non-confrontational way.

I’ve been searching for an analytical tool that can help me to understand the differences I can see in the way that environmental water is being managed in the US and Australia. On Wednesday, I was lucky enough to meet with Dr Bettina Lange, a specialist in socio-legal theories of regulation at the Centre for Socio-Legal Studies at Oxford University. She shared her insights into the way that markets can be seen as embedded within a social context. She edited a special issue of the Northern Ireland Legal Quarterly in 2011, which drew on the work of Karl Polanyi to discuss the way that capitalism can disembed the market from its social context, and whether there can be a corresponding ‘counter-movement’ to re-embed the market within social norms.

Bettina generously helped me to understand this approach, and the opportunities it offers to understand the shifting relationship between market norms and social norms. It’s early days, but I feel like this could be a watershed moment in the development of my thinking.

(And apologies for the pun. It’s just not possible to talk about water resource management without punning from time to time.)