Lecture_8 - NR Econ Lecture 8 • Today’s topic Module...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: NR Econ Lecture 8 • Today’s topic Module III: Water Use Model 2: Market Allocation of Water Empirical Application: Colorado River Water Allocation Module III: Water Use • Western United States (arid region of U.S.) • Problems in the Economics of Water Allocation (1) Markets not used to allocate water (2) Underpricing through administered prices (3) (Consequently) Inefficient allocation and use of water • Example – Agriculture: marginal value = $50/acre-foot – Urban: marginal value = $250/acre-foot What are the potential gains from trade ? Model 2: Market Allocation of Water • Framework: Allocative efficiency—what is the efficient allocation of water within a river basin? • Context: 15 million acre-feet of water for use within the Colorado River basin of the southwestern United States. What is the efficient allocation of that water among states and sectors of the basin? Market Allocation of Water (cont.) • Three questions to pose in our analysis (1) What is the efficient allocation among sectors and states (a normative question)? (2) How is water allocated currently within the basin? (3) Will a competitive market in water give water users the incentive to move from the current allocation to the efficient allocation? Current Allocation of the Colorado River Colorado River Compact Upper Basin States Lower Basin States Colorado 3.9 maf Arizona 2.8 maf Utah 1.7 maf California 4.4 maf Wyoming 1.2 maf Nevada 0.3 maf New Mexico 0.7 maf U.S.-Mexico Treaty United States: 15 maf Mexico: 1.5 maf (1) What is the efficient allocation...
View Full Document

{[ snackBarMessage ]}

Page1 / 30

Lecture_8 - NR Econ Lecture 8 • Today’s topic Module...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online