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Improving the ability of a water market to efficiently manage drought
Author(s) -
Characklis Gregory W.,
Griffin Ronald C.,
Bedient Philip B.
Publication year - 1999
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/1998wr900094
Subject(s) - allocative efficiency , business , lease , allowance (engineering) , prioritization , natural resource economics , flexibility (engineering) , agriculture , water resource management , water right , water resources , environmental planning , environmental science , finance , economics , geography , operations management , biology , ecology , neoclassical economics , process management , management , archaeology
Some water markets maintain institutional elements that provide allocative advantages to specified water users. In the Lower Rio Grande Valley, water rights are designated as either municipal or agricultural (irrigation), with certain prioritization advantages afforded to municipal accounts. While sales of rights between municipalities and irrigators are allowed, the priority disparity results in a prohibition on leasing between sectors. Concern over meeting future urban demand has led municipalities to purchase rights well in excess of current needs. The inability to lease municipal water to irrigators removes a significant and growing fraction of available water from the market. The additional flexibility provided by leasing provides a valuable tool for managing seasonal drought. In this analysis the justification for prioritized municipal water is investigated. Results indicate that the added security municipalities may derive from higher prioritization during drought is accompanied by economic inefficiencies in regional water allocation. It is argued that eliminating municipal protection and the consequent allowance of intersectoral leasing would contribute to regional well‐being at small cost to municipal water users.