Water Markets and Rural Development

Jean-Marc Bourgeon, K. Easter and Rodney Smith
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Rodney Smith: Department of Applied Economics - UMN - University of Minnesota [Twin Cities] - UMN - University of Minnesota System

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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.

Keywords: job; market; frictions; •; regional; economics; •; resource; economics; •; third-party; effects; •; water; markets (search for similar items in EconPapers)
Date: 2008-11
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Published in American Journal of Agricultural Economics, 2008, 90 (4), pp.902-917. ⟨10.1111/j.1467-8276.2008.01146.x⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00363191

DOI: 10.1111/j.1467-8276.2008.01146.x

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