Observatorio de I+D+i UPM

Memorias de investigación
Research Publications in journals:
Water markets design and evidence from experimental economics
Year:2007
Research Areas
  • Agricultural policy,
  • Applied economics
Information
Abstract
Market mechanisms are gaining increasing acceptance all over the world as a way of making more efficient use of scarce water resources. Designing regulatory frameworks that ensure both inter- and intra-temporal efficient allocations is a daunting task, especially if supply is stochastic and there is ample storage capacity. In addition to defining tradable rights, specific provisions must regulate the use of reservoirs. Commonly, water statutes include provisions that establish asymmetries regarding the allocation of water, andmarket restrictions that banwater trading across different users. In this article, we use data collected in a laboratory to test two specific market regulations included in the 1999Water reform in Spain. First, junior right holders are not allowed to buy water from senior users. Second, the law does not explicitly define water rights over units left in reservoirs for the following season. Results suggest that trading restrictions among water right holders lead to welfare losses for senior users. It is shown that removing this restriction would increase senior right holders¿ benefits, without reducing those of junior users. Results show that defining water rights over saved units across periods would increase the average stock levels of reservoirs, and reduce market price instability. The lessons learned from the Spanish experience are applicable to settings characterized by unstable natural water supply and the availability of large storage facilities. Keywords Experimental economics · Market design · Spanish water policy ·
International
Si
JCR
Si
Title
ENVIRON RESOUR ECON
ISBN
0924-6460
Impact factor JCR
1,237
Impact info
Volume
38
Journal number
1
From page
311
To page
330
Month
SIN MES
Ranking
Participants
  • Autor: Alberto Garrido Colmenero (UPM)
Research Group, Departaments and Institutes related
  • Creador: Grupo de Investigación: Economía Agraria y Gestión de los Recursos Naturales
  • Departamento: Economía y Ciencias Sociales Agrarias
S2i 2020 Observatorio de investigación @ UPM con la colaboración del Consejo Social UPM
Cofinanciación del MINECO en el marco del Programa INNCIDE 2011 (OTR-2011-0236)
Cofinanciación del MINECO en el marco del Programa INNPACTO (IPT-020000-2010-22)