The article talks up the market-based solution devised in Australia.  While in theory I'm pretty skeptical of market-based solutions to environmental problems, in theory I could imagine how it would work.  Markets, when they function, can encourage actors to reduce expensive imputs, and encouraging end-users to be more water efficient was the whole point of the system.

However, I find it rather amazing that a few speculators didn't just swoop in and buy all the water, then set monopoly prices.  Australia's water market must be pretty heavily regulated.

I think Australia will depopulate faster in percentage terms than the American southwest over the next 50-100 years. Australia is a desert. You can't run a modern urban society off of a desert. I drove around New South Wales in 2008 including up to the Murray river in Mildura, and most of what I saw was this for endless miles, in cloudless 40C+ heat. It reminded me of the southern portions of California's central valley, only over a much larger area. A lot of it looked like it had already been left fallow for years. Man's folly and audacity rolled into one if I ever saw it.

you are the media you consume.

The state of California is deep into the third year of a record drought. An excellent map from the University of Nebraska shows that nearly 91% of the state is undergoing "severe to exceptional" drought. Seventeen communities scattered across the state are expected to run out of water by mid-May. Last year was California's driest since it became a state in 1850. This year looks to be the driest in over 400 years, according to climatologists at the University of California Berkeley.

Scientists say more is in store. Bill Patzert, a climatologist at NASA's Jet Propulsion Laboratory believes a 20-year drought cycle began in 2000. Scott Stine, a professor of environmental studies at Cal State East Bay, told the San Jose Mercury News, "We continue to run California as if the longest drought we are ever going to encounter is about seven years. We're living in a dream world."

So what's the big deal? As they say, this time it's different. The ongoing California drought provides a disturbing glimpse of future water shortages and their impact on agricultural production and food security.

What has GRACE shown us about California?

Our earlier study showed that between October 2003 and March 2010, the Sacramento and San Joaquin River Basins lost about 30 cubic kilometers of freshwater, nearly the equivalent of the full volume of Lake Mead. Of this, we determined that about two-thirds was due to groundwater depletion in the Central Valley.

During the drought of 2006-2010, state and federal surface water allocations were drastically reduced, forcing farmers to tap groundwater reserves far more heavily than in `normal,' wetter years.  The resulting volume of depleted groundwater was so great that it was registered by a satellite `scale' that orbits about 400 km above Earth's surface.

Our new report is an update to this previous work, and it points to one critical question for California. One of the key numbers to emerge from the report is that the combined Sacramento and San Joaquin River Basins have already lost 10 cubic kilometers of freshwater each year in 2012 and 2013. To put that number in perspective, it is roughly the amount of water used by the entire population of California, for household, municipal, and industrial use (that is, for nearly everything else besides agriculture and environment).  It is also the steepest decline in total water availability that our team has witnessed in the 12 years that we have been monitoring California water resources with the GRACE mission.