Droughts, deluges, and (River) diversions: Valuing market-based water reallocation
By: Rafey, Will
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Material type: 
BookPublisher: The American: Economic Reviews Description: 113(2), Feb, 2023: p. 430-471.
In:
The American: Economic ReviewsSummary: This paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the market's reallocation. I apply this framework to the largest water market in human history, located in southeastern Australia. Observed water trading increased output by 4–6 percent from 2007 to 2015, equivalent to avoiding an 8–12 percent uniform decline in water resources. Reallocation and average surplus both increase substantially during drought, implying that water markets can be most valuable when climatic variability is most severe. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 113(2), Feb, 2023: p. 430-471 | Available | AR128640 |
This paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the market's reallocation. I apply this framework to the largest water market in human history, located in southeastern Australia. Observed water trading increased output by 4–6 percent from 2007 to 2015, equivalent to avoiding an 8–12 percent uniform decline in water resources. Reallocation and average surplus both increase substantially during drought, implying that water markets can be most valuable when climatic variability is most severe. – Reproduced
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