Open AccessPrice Evaluation and Allocation of Water under Alternative Water Rights System - Part II
Author(s) -
David Zilberman,
Eithan Hochman
Publication year - 1995
Language(s) - English
Resource type - Reports
DOI - 10.32747/1995.7573067.bard
Subject(s) - transaction cost , resource allocation , resource (disambiguation) , water pricing , continuation , environmental economics , water resources , lead (geology) , water trading , groundwater , microeconomics , business , water resource management , natural resource economics , economics , water conservation , computer science , environmental science , market economy , ecology , engineering , computer network , programming language , geomorphology , biology , geology , geotechnical engineering
This project is a continuation of US 2081-91. Together they develop a conceptual and empirical framework to analyze alternative forms of water reform that lead to efficient pricing of water. Our analysis demonstrates that the transition from water rights systems to water trading may lead to improved resource allocation even when overall availability of water resources declines. We introduce two systems of water trading, passive markets and active markets, and show that passive markets lead to efficient resource allocation with lower transaction costs. We demonstrate that both methods of trading are superior to block pricing. We identify the political economic situations that would lead to each type of water resource allocation. Examples from Israel and California are used to demonstrate the conceptual results.