A Coasian Approach to Efficient Water Allocation of a Transboundary River

David B. Willis and Justin S. Baker

Journal of Agricultural and Applied Economics, 2008, vol. 40, issue 2, 473-484

Abstract: The United States and Mexico recently resolved a decade-old water dispute that required Mexico to repay the accumulated water debt within one year. A Coasian analysis estimates the social welfare gains attainable to each country under an alternative debt repayment scheme that allows repayment over a longer time horizon and in a combination of dollars and water, instead of solely in water. Assuming average water supply conditions, under the agreed 1-year repayment contract, U.S. compensation value is 534% greater and Mexico's compensation cost is 60% less relative to when compensation is paid exclusively in water.

Date: 2008
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