The Illiquidity of Water Markets: The Global Water Forum

Javier Donna and Jose Espin Sanchez

MPRA Paper from University Library of Munich, Germany

Abstract: Water scarcity is accelerating. In regions such as Latin America, India, and the United States, this phenomenon is especially acute. Water markets are emerging as a preferred institution2 in dry regions of the United States and Australia. However, these analyses have largely ignored institutional frictions, primarily liquidity constraints, which calls into question whether markets are the most efficient allocation mechanism for water. The nexus question is the optimal mix of markets and regulations for allocating water in a world with increasingly scarce supply.

Keywords: Market Efficiency; Dynamic Demand; Auctions; Quotas; Vertical Integration; Financial Markets. (search for similar items in EconPapers)
JEL-codes: L10 (search for similar items in EconPapers)
Date: 2014-09
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