Premium
A Private Property Rights Regime for the Commons: The Case for Groundwater
Author(s) -
Provencher Bill,
Burt Oscar
Publication year - 1994
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243748
Subject(s) - property rights , commons , private property , groundwater , stock (firearms) , welfare , economics , social welfare , control (management) , microeconomics , natural resource economics , business , market economy , law , political science , geography , geotechnical engineering , archaeology , engineering , management
We compare the social welfare of pumping groundwater under central (optimal) control to that obtained under a private property rights regime in which firms are granted tradeable permits to the in situ groundwater stock. When firms are risk averse, both regimes are suboptimal, and the matter of which regime yields greater welfare is an empirical one. When firms are risk neutral, central control dominates the private property rights regime. Still, a stochastic dynamic programming model of Madera County, California, demonstrates that even in this case, the private property rights regime is a promising alternative to central control.