ENVECON 162 Lecture Notes - Lecture 7: Prior-Appropriation Water Rights, Externality, Production Function
4 May 2018
School
Department
Course
Professor
Economics of Water Resources
Spring 2018
Lecture 7: Transition from Queuing to Markets
There are often barriers to trade in a prior appropriation system. These barriers are caused
by constant changes in the economy and demand for water.
As a consequence, without competitive markets, this results in an inefficient allocation of
water resources.
Regulation of Water Transfers
water resources. Some of their responsibilities include setting:
❖ Place of diversion
❖ Place of use
❖ Type of use
❖ Priority date
prioritizes impacts on other users and
impacts on the environment.
Examples of Potential Regulatory Problems
❖ Place of Diversion
▪ How does the SWRCB transfer water resources to an upstream user?
❖ Hydrologic Basin Transfers
▪ How should the SWRCB maintain and manage return flows?
❖ Environmental Externalities
▪ How will the SWRCB protect species that live along irrigation canals?
All of these factors complicate transfers, resulting in an inefficient allocation of water
resources.
Simple Model for Queuing and Markets
❖ Definitions
▪
is the total land
▪ is the total water
▪ is the crop output per acre
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
There are often barriers to trade in a prior appropriation system. These barriers are caused by constant changes in the economy and demand for water. As a consequence, without competitive markets, this results in an inefficient allocation of water resources. The state water resources control board (cid:4666)swrcb(cid:4667) oversees the regulation of california"s water resources. Within each of these dimensions, the swrcb"s prioritizes impacts on other users and impacts on the environment. All of these factors complicate transfers, resulting in an inefficient allocation of water resources. Definitions: is the total land, is the total water, is the crop output per acre is always decreasing. Assumptions: all land is of equal quality, implying irrigation efficiency is no longer a function. Given these conditions, senior users will fully irrigate all of their cultivated land: Comparative statics: the marginal product of water is zero on cultivated land and strictly positive on uncultivated land. Assumptions: land and water markets are competitive.
