Urban water markets are clearly part of the wider Australian water-reform agenda. The mounting enthusiasm for urban water markets can be traced to at least two sources — the broad success of urban-utility reform in other sectors and the accomplishments of the rural water market. This paper has focused primarily on the latter of these motivations. In essence, we have argued that many of the features that have buttressed the success of rural water markets are absent from a potential household-to-household water market. Nevertheless, there is unquestionably scope for markets in the context of wider inter-sectoral redistribution of the resource and this should be regarded as the ‘low-hanging fruit’ in the water-reform orchard of some jurisdictions.

In addition, the experience with rural water markets gives some indication of the challenges associated with property rights and the political and institutional changes that would be required to support an urban water market. It would be unwise to underestimate the magnitude of these problems.

Modifications to urban water pricing also has merit, but this should not be considered in isolation. Overcoming the Balkanised approach to different water users (Freebairn 2005) should be the major focus of immediate reform. Similarly, there are a range of industry design issues ranging from the extent of private-sector involvement to the level of competition at different stages of the supply chain. In this instance, decisions should be based on sound empirical understanding and an appreciation of political realities. Regrettably, the latter tend to be in more plentiful supply than the former when it comes to urban water reform.