 TRANSFERABLE WATER ENTITLEMENTS WHICH SATISFY HETEROGENEOUS RISK PREFERENCESChris M. Alaouze Australian Journal of Agricultural Economics, 1991, vol. 35, issue 2, 12 Abstract: Irrigators in Victoria have a water entitlement which is composed of a highly secure water right and additional water which may be purchased if available. Water entitlements in NSW are based on the irrigated area with the actual volume of water received in any year depending almost entirely on seasonal conditions. Musgrave and Lesueur (1973) argued that these entitlements could be replaced by a portfolio of entitlements, with each type of entitlement in the portfolio guaranteeing a nominated minimum value of water at a different probability. Thus, irrigators could purchase a portfolio of water entitlements which would suit their individual risk preferences. The purpose in this paper is to show how a water authority can construct a portfolio of water entitlements which satisfies these requirements and also to demonstrate that the entitlements in the portfolio satisfy a first degree stochastic dominance relationship. A worked example is presented in which these results are illustrated. Keywords: Environmental Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:ajaeau:22762 Access Statistics for this article More articles in Australian Journal of Agricultural Economics from Australian Agricultural and Resource Economics Society Contact information at EDIRC. |
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