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Innovative Approaches to Water Allocation: The Potential for Water Markets
Author(s) -
Howe Charles W.,
Schurmeier Dennis R.,
Shaw W. Douglas
Publication year - 1986
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/wr022i004p00439
Subject(s) - allocative efficiency , predictability , flexibility (engineering) , market system , environmental economics , business , renting , quality (philosophy) , transaction cost , natural resource economics , economics , microeconomics , finance , engineering , mathematics , philosophy , statistics , civil engineering , management , epistemology
Exchange through markets is one way of allocating water. In many settings this method possesses a number of desirable attributes to a greater degree than alternative allocative mechanisms: flexibility, security, predictability, fairness …. Markets have shortcomings, too, especially related to quantity and quality return flow effects, but these can be mitigated through changes in the administrative framework of the water rights system. It is shown that an economically efficient water allocation system must integrate quantity and quality management and would be neither a priority nor a proportional rights system. However, the nature of the water rights system may not be very important if short‐term rental markets are operative. The potential for intrastate and interstate water markets is discussed.