WATER SUBSIDIES, WATER TRANSFERS, AND ECONOMIC EFFICIENCY

Mark Kanazawa

Contemporary Economic Policy, 1994, vol. 12, issue 2, 112-122

Abstract: Water pricing subsidies and restrictions on water transfers are integral features of federal water supply policies in the western United States. Critics claim that these features discourage efficient use of water. However, current analyses ignore an important feature of federal water supply contracts: entitlement ceilings. This paper analyzes the implications of entitlement ceilings for federal water policies and several proposals for policy reform, including eliminating transfer restrictions, reducing pricing subsidies, and imposing groundwater pump taxes. Analysts may overstate both the efficiency losses resulting from Bureau policies and the amount of water that would be freed up from agriculture if the proposed policy reforms were instituted.

Date: 1994
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https://doi.org/10.1111/j.1465-7287.1994.tb00427.x

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