Price determination and efficiency in the market for water rights in New Mexico's Middle Rio Grande Basin

Matthew T. Payne and Mark Griffin Smith

International Journal of Water Resources Development, 2013, vol. 29, issue 4, 588-604

Abstract: Water rights markets in the western United States have expanded over the last 40 years, as a result of population growth in the West and Southwest, and limited development of new storage. Until 2008, house prices, home construction and population growth appeared to be locked in an ever-increasing upward trend. With little historical experience to the contrary, water right market prices similarly appeared to be driven by real estate development. The collapse of the housing market in the last four years provides an opportunity to examine the connection between the real estate and water markets. It is found that Middle Rio Grande Basin water right prices are influenced by housing prices, per capita income in the buyer's county, buyer type, point of diversion, and transaction volume. However, significant price dispersion remains, raising the question of how efficiently this market is currently working.

Date: 2013
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DOI: 10.1080/07900627.2012.730670

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