Water Markets and Third Party Effects

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

No 25616, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: We examine the potential effects of water trading on aggregate welfare and income distribution across the agricultural and service sector of a small rural economy. We show that per capita welfare (real income) of agents in the region increase with increased water trading. Not surprisingly, if enough agents leaves the region (income flight), nominal income can fall. If the share of household income spent on services is large (small) relative to the cost share of services in agricultural production, then the service price increases (decreases) with increased water trading. Typically when the service price falls (increases) farmers win (lose), service providers lose (win) and agricultural service providers almost always lose. Thus, a natural conflict emerges between farming and service sector stakeholders.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 16
Date: 2006
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https://ageconsearch.umn.edu/record/25616/files/cp060391.pdf (application/pdf)

Related works:
Journal Article: Water Markets and Third-Party Effects (2008)
Working Paper: WATER MARKETS AND THIRD PARTY EFFECTS (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25616

DOI: 10.22004/ag.econ.25616

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