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Capturing benefits from water entitlement trade in salinity affected areas: A role for trading houses?


  • Bell, Rosalyn


While there is potential for substantial benefits from water entitlement trade, external effects such as salinity may mean that traders cannot capture these benefits. This paper demonstrates that by creating a trading house as a single seller of water entitlements, with trade profits distributed to buyers, it is possible to achieve an allocation of entitlements which gives a social outcome higher than that possible from atomistic competition for entitlements. Such an outcome may be comparable to an optimally set uniform charge for water entitlements, but the trading house mechanism has the advantage that it makes use of trade to generate information on the optimal level of charging in the presence of salinity.

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  • Bell, Rosalyn, 2002. "Capturing benefits from water entitlement trade in salinity affected areas: A role for trading houses?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), September.
  • Handle: RePEc:ags:aareaj:118619

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    References listed on IDEAS

    1. Mason, Robin, 2000. "Network externalities and the Coase conjecture," European Economic Review, Elsevier, vol. 44(10), pages 1981-1992, December.
    2. Adolfo Lopez Paredes & Cesáreo Hernández Iglesias, 1999. "Beyond Experimental Economics: Trading Institutions and Multiagent Systems," Computing in Economics and Finance 1999 1351, Society for Computational Economics.
    3. Mike Young & Darla Hatton MacDonald, 2000. "Interstate Water Trading: a 2-year Review," Natural Resource Management Economics 00_001, Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, Australia.
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    Cited by:

    1. Iftekhar, M.S. & Tisdell, J.G. & Connor, J.D., 2013. "Effects of competition on environmental water buyback auctions," Agricultural Water Management, Elsevier, vol. 127(C), pages 59-73.
    2. Qureshi, Muhammad Ejaz & Connor, Jeffery D. & Kirby, Mac & Mainuddin, Mohammed, 2005. "Integrated assessment and management of stochastic water resources in the Murray Darling Basin," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137944, Australian Agricultural and Resource Economics Society.
    3. Robert Brooks & Edwyna Harris, 2005. "An Analysis of Watermove Water Markets," Monash Econometrics and Business Statistics Working Papers 10/05, Monash University, Department of Econometrics and Business Statistics.

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