Indeed, by allowing trades between urban and rural areas, water markets give access to water resources to users who might have been excluded from them in the event of a drought. In other words, the allocation flexibility embedded in water markets allows them to respond effectively and rapidly to severe supply shocks, such as those caused by droughts (Chong and Sunding, 2006). This welfare-enhancing reallocation is not always possible under a prior tradeless appropriation regime or traditional queuing-allocation system. These adaptive management arrangements allow temporary water transfers that are contingent on water availability and may help mitigate risks related to water scarcity or competition to access the water needed by cities.