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Water Allocation, Crop Choice, and Priority Services

Salanié, François and Zaporozhets, Vera (2021) Water Allocation, Crop Choice, and Priority Services. TSE Working Paper, n. 21-1235, Toulouse, France

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Official URL : http://tse-fr.eu/pub/125835

Abstract

We analyze the problem of allocating irrigation water among het- erogenous farmers when water supply is stochastic. If farmers are risk-neutral, a spot market for water is e¢ cient; while the oft-used uniform rationing system is ine¢ cient, both ex-ante and ex-post. In- deed, we show that it leads farmers to overexpose to risk, thus making shortages more severe and more frequent in case of drought. We pro- pose instead a regulation by priority classes extending Wilson (1989), and we derive an e¢ ciency result. We characterize the set of farmers that would win or loose from such a reform. We also argue that a system of priority classes may be preferred to a spot market system, because scarcity is easier to manage ex-ante than ex-post, and because this system facilitates the supply of insurance to risk-averse agents.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2021
Place of Publication: Toulouse, France
Uncontrolled Keywords: Water, Irrigation, Priority Classes, Rationing
JEL Classification: Q15 - Land Ownership and Tenure; Land Reform; Land Use; Irrigation
Q25 - Water
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 28 Jul 2021 07:16
Last Modified: 01 Sep 2021 08:41
OAI Identifier: oai:tse-fr.eu:125835
URI: http://publications.ut-capitole.fr/id/eprint/43709

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