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How Well Do U.S. Western Water Markets Convey Economic Information?

Author

Listed:
  • Renata Rimsaite
  • Karen Fisher-Vanden
  • Sheila Olmstead
  • Danielle S. Grogan

Abstract

An efficient market implies that potential gains from trade are fully captured. Achieving this requires a well-functioning market where prices reflect all available information. In the case of water rights markets, this implies that the permanent water rights transfer price reflects the sum of discounted returns to this asset (i.e., the lease price), the market interest rate, and a risk premium that reflects potential future water scarcity. The purpose of this study is to assess the efficiency of western U.S. water markets by using the asset pricing model to measure how well prices reflect long-run returns to permanent water rights.

Suggested Citation

  • Renata Rimsaite & Karen Fisher-Vanden & Sheila Olmstead & Danielle S. Grogan, 2021. "How Well Do U.S. Western Water Markets Convey Economic Information?," Land Economics, University of Wisconsin Press, vol. 97(1), pages 1-16.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:1:p:1-16
    Note: DOI: 10.3368/wple.97.1.050719-0061R
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    More about this item

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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