The most important issue facing how water is used and developed is that most basic of economic questions: how to allocate scarce resources among competing uses over time. Until recently, issues of supply and quality had dominated the literature on water. It was seen as a cheap commodity and analysts rarely considered the economic issues surrounding it. Today, people are more aware of water and the need for its effective management. As population pressures affect the demand for water across North America and throughout the world, more care and management of water resources is necessary. In short, there is a need to understand the economic issues of water. The cost of water is increasing, and new thresholds of water treatment will make the economics of water increasingly important. The purpose of this book is to develop an understanding of the role of economics in determining public policy toward water resources and to illustrate how basic economic principles can be applied to issues surrounding the allocation of water resources.