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Water Subsidies, Water Transfers, And Economic Efficiency

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  • MARK T. KANAZAWA

Abstract

Water pricing subsidies and restrictions on water transfers are integral features of federal water supply policies in the western United States. Critics claim that these features discourage efficient use of water. However, current analyses ignore an important feature of federal water supply contracts: entitlement ceilings. This paper analyzes the implications of entitlement ceilings for federal water policies and several proposals for policy reform, including eliminating transfer restrictions, reducing pricing subsidies, and imposing groundwater pump taxes. Analysts may overstate both the efficiency losses resulting from Bureau policies and the amount of water that would be freed up from agriculture if the proposed policy reforms were instituted.

Suggested Citation

  • Mark T. Kanazawa, 1994. "Water Subsidies, Water Transfers, And Economic Efficiency," Contemporary Economic Policy, Western Economic Association International, vol. 12(2), pages 112-122, April.
    • Handle: RePEc:bla:coecpo:v:12:y:1994:i:2:p:112-122
    DOI: 10.1111/j.1465-7287.1994.tb00427.x
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    References listed on IDEAS

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    1. Kanazawa, Mark, 1993. "Pricing Subsidies and Economic Efficiency: The U.S. Bureau of Reclamation," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 205-234, April.
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    Cited by:

    1. Mark T. Kanazawa, 2019. "Transaction Costs in Water Transfers: The issue of local control," Working Papers 2019-01, Carleton College, Department of Economics.
    2. Gandhi, Ved P & Gray, Dale & McMorran, Ronald, 1997. "A comprehensive approach to domestic resource mobilization for sustainable development," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34311, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Steven Buck & Mehdi Nemati & David Sunding, 2023. "Consumer welfare consequences of the California drought conservation mandate," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(1), pages 510-533, March.

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