A market-based proposal for encouraging water use efficiency in a tourism-based economy

Barbados is almost wholly reliant on groundwater as its source of water largely due to replenishment during the wettest 1-3 months of the year. Annual renewable freshwater resources place it in the top 15 of the world's most water scarce countries. Acknowledging the scope of the problem, government officials have noted that the amount of water available for economic activity has become very limited and might therefore affect future development. Most of the proposed measures to date have focused on mains replacement and increased energy efficiency but little thought has been given to demand-side management. This study therefore attempts to provide a framework for managing the water resources in the island's single largest industry: tourism. It is conceptualised that a system of tradable permits would not only enhance the management of water resources, but should also reduce the cost of water resources to hotels.