Regulating water extraction in a river basin with upstream-downstream communities
Mette Kildegaard Graversen ()
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Mette Kildegaard Graversen: Institute of Food and Resource Economics, University of Copenhagen
No 2011/2, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics
This paper proposes a tax mechanism modelled for water extraction in a river system with upstream and downstream farmers. The tax mechanism is based on the regulator’s own estimation of aggregate extraction and for that reason the tax addresses the problem of asymmetric information. It is demonstrated that the tax mechanism ensures approximately correct marginal extraction incentives for the individual farmer. Consequently, it is concluded that the tax mechanism proposed here has a practical application.
Keywords: Water extraction; River system; Tax mechanism; Upstream-downstream users (search for similar items in EconPapers)
Pages: 15 pages
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Persistent link: https://EconPapers.repec.org/RePEc:foi:wpaper:2011_2
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