Section12 - Water and Biotech

Section12 - Water and Biotech - Section 101/102 EEP...

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Unformatted text preview: Section 101/102 EEP C101/ECON C125 April 25, 2011 GSI: Anna Spurlock Today: Water and Biotech Water: Ground water vs Surface water: Ground water: * A stock resource * Storage * Rechargeable, but within some constraints of the environment * Depletion increases the marginal cost of use, since it costs more to pump water from farther and farther down. * Externalities:- Potential for externalities because one person depleting an aquifer increases the pumping costs and decreases the water availability for everyone else.- Externalities because of competing uses (human vs environmental) Surface water: * A flow resource * Fluctuation due to rain, snow-melt, and usage patterns * Externalities:- Potential for externalities because upstream users can decrease the water avail- ability for downstream users, and pollution upstream can reduce water quality for downstream users.- Externalities because of competing uses (human vs environmental) 1 Water Institutions (i.e. projects to increase water availability and mechanisms to allocate water) Respond to: * Scarcity: Increased scarcity increases the need for efficient allocation mechanisms. * Political Economy: The governments ability to impose costs on use, and finance water projects. * Policy Objectives: Emphasis on growth and prioritizing human use would result in different policies and mechanisms than an emphasis on environmental quality. Types of Allocation Mechanisms (by default most water resources started out as public goods, when scarcity becomes an issue often more formal allocation mechanisms are needed) * Usage rights - Use it or loose it (i.e. can use the water but cant necessarily store or trade it)- First come first served.- Riparian rights: property owner bordering a surface water source often has a right to use that water.- Rights to use an aquifer over which you own land. * Privatization (Ownership rights) - More formal allocation of rights- Rights or permits to a certain amount of water may be made more formal- Makes charging for water more practical (i.e. purchasing from a municipal utility or water district)- Makes establishing a market in which users can trade between each other more practical.- Makes monitoring and managing externalities more practical. Quality, Quantity, and Transportation costs: Water is interesting because not only is allocation of quantity important, but quality of water can be equally if not more important, and transportation can be one of the main 2 constraints to allocation. Think about ocean water. There is a very large amount of it, so arguably there isnt really a shortage of water in the world. However the quality of ocean water (salty) is not such that it is usable for most purposes. Also, water may be in large quantities in certain areas, but transportation costs make it potentially impossible to transport to users in other areas....
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Section12 - Water and Biotech - Section 101/102 EEP...

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