Water Markets and Third-Party Effects

Jean-Marc Bourgeon, K. Easter and Rodney B.W. Smith

American Journal of Agricultural Economics, 2008, vol. 90, issue 4, 902-917

Abstract: We examine potential third-party effects arising from trading water from one region (rural) to another (urban). Using labor, water and heterogeneous land, rural agents produce a traded agricultural good and nontraded service good. Absent job market frictions, increased water trading improves per capita regional welfare, but aggregate service income can increase (decrease) while individual land rents decrease (increase). If labor experiences job market frictions, water trading can trigger socially inefficient land fallowing, and a decrease in per capita regional welfare. Simulation results confirm the no-job-market-friction model predictions. Copyright 2008, Oxford University Press.

Date: 2008
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Related works:
Working Paper: Water Markets and Third Party Effects (2006)
Working Paper: WATER MARKETS AND THIRD PARTY EFFECTS (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:90:y:2008:i:4:p:902-917

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