TY - JOUR
T1 - Market prices for water in the semiarid West of the United States
AU - Brookshire, David S.
AU - Colby, Bonnie
AU - Ewers, Mary
AU - Ganderton, Philip T.
PY - 2004/9
Y1 - 2004/9
N2 - Market prices contain information about supply and demand, the institutions that influence both these elements, and the operation of the market. Prices also allocate scarce resources to higher-valued uses. In this paper we analyze the price history of three water markets in the arid Southwest: Arizona's Central Arizona Project, Colorado's Colorado Big Thompson Project, and New Mexico's Middle Rio Grande Conservancy District. Using water transfers over 11 years, we estimate a simultaneous system of market equations, one for price and the other for quantity demanded. Comparison of the institutional characteristics of each market reveals that Colorado's market is well developed, with many trades and rising prices that respond to market conditions, and New Mexico's market is developing well, with lower prices, but showing some response to supply and demand factors. Arizona's market is the least developed, with few trades and very low prices. Our empirical findings support our claim that markets are becoming more efficient in these regions despite the considerable institutional and historical impediments to the evolution of water markets.
AB - Market prices contain information about supply and demand, the institutions that influence both these elements, and the operation of the market. Prices also allocate scarce resources to higher-valued uses. In this paper we analyze the price history of three water markets in the arid Southwest: Arizona's Central Arizona Project, Colorado's Colorado Big Thompson Project, and New Mexico's Middle Rio Grande Conservancy District. Using water transfers over 11 years, we estimate a simultaneous system of market equations, one for price and the other for quantity demanded. Comparison of the institutional characteristics of each market reveals that Colorado's market is well developed, with many trades and rising prices that respond to market conditions, and New Mexico's market is developing well, with lower prices, but showing some response to supply and demand factors. Arizona's market is the least developed, with few trades and very low prices. Our empirical findings support our claim that markets are becoming more efficient in these regions despite the considerable institutional and historical impediments to the evolution of water markets.
KW - Markets
KW - Prices
KW - Semiarid Southwest
KW - Water
KW - Water rights
UR - http://www.scopus.com/inward/record.url?scp=6344240875&partnerID=8YFLogxK
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U2 - 10.1029/2003WR002846
DO - 10.1029/2003WR002846
M3 - Review article
AN - SCOPUS:6344240875
SN - 0043-1397
VL - 40
SP - W09S0401-W09S0408
JO - Water Resources Research
JF - Water Resources Research
IS - 9
ER -