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Unformatted text preview: Section Notes 14 Outline Water Use Institutions Review Pesticides (If time) Discussion: Biotech & Biofuel There is a small error in Chapter 17: the important thing to remember is that generally L is land (Acres) and A is total water (Acre-Feet). I'll try to nd the original and change the errors. Water Use Institutions Some basic assumptions are behind whether there is a market or queuing situation. First of all, with both systems we are implicitly assuming scarcity of water. With queuing, the main assumptions are Water trading is forbidden There is a seniority system in terms of access to water We call those who get water senior users and those who don't junior users Water is free (or a nominal fee in some cases) Our main assumption for markets are: Water can be traded, with price being VMP Transaction costs are not so high as to make trading unpro table If there is a transition from queuing, Sr. users will have water rights to the amount of water the used under queuing All water will be used under each scenario, but usually some land is not used under queuing. With queuing, producers maximize yield and with markets producers maximize pro ts. With markets, the key assumption is that with homogeneous land, crops, producers, etc (everything), water will be evenly divided across land, so you don't actually have to solve for pro t maximization for each farmer to determine water use. Any other questions?...
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- Spring '09