Salanié, François and Zaporozhets, Vera (2022) Water allocation, crop choice, and priority services. Journal of Public Economic Theory, vol. 24 (n° 1). pp. 140-158.

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Identification Number : 10.1111/jpet.12538


We analyze the problem of allocating irrigation water among heterogeneous farmers when water supply is stochastic. If farmers are risk-neutral, a spot market for water is efficient; while the oft-used uniform rationing system is inefficient, both ex ante and ex post. Indeed, we show that it leads farmers to overexpose to risk, thus making shortages more severe and more frequent in case of drought. We propose instead a regulation by priority classes extending Wilson, and we derive an efficiency result. We characterize the set of farmers that would win or lose 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: Article
Language: English
Date: February 2022
Refereed: Yes
Place of Publication: Oxford.
Uncontrolled Keywords: Water, Irrigation, Priority Classes, Rationing
JEL Classification: Q15 - Land Ownership and Tenure; Land Reform; Land Use; Irrigation
Q25 - Water
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 14 Apr 2022 13:19
Last Modified: 14 Apr 2022 13:19
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