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Water reallocation is the transfer of use rights between users who have been allocated a certain amount of water (through formal water use rights or entitlements, or informal arrangements), after it has been determined the initial allocation is physically impossible, or socioeconomically unfavourable. Resource reallocation can help adapt to unforeseen circumstances (e.g. critical water shortages during the dry season), reduce stress on renewable water supplies and help optimize water use benefits to meet constantly changing societal demands.
Water reallocation can either be voluntary, i.e. where water users choose to sell water use rights to others, or non-voluntary, where a central authority makes it mandatory for users to redistribute their rights.