IDEAS home Printed from https://ideas.repec.org/a/eee/agecon/v12y1995i1p11-21.html

Value of moving from central planning to a market system: lessons from the Israeli water sector

Author

Listed:
  • Becker, Nir

Abstract

This paper explores the implications of the transformation of the system of water resources allocation to the agricultural sector in Israel from a one in which allotments are allocated to the different users without any permission to trade with water rights. A mathematical planning model is used for the entire Israeli agricultural sector, in which an ‘optimal’ allocation of the water resources is found and compared to the existing one. The results of the model are used in order to gain insight into the shadow price of the different water bodies in Israel (about eight). These prices can then be used to grant property rights to the water users themselves in order to guarantee rational behavior of water use, since now one can sell their rights at the source itself. The implication is clear with regard to any possible movement towards a market system in any other sector. From the dual prices of the primal problem we can forecast the equilibrium prices and their implications for the different users. The central government does not have to interfere with the market mechanism because, as will be shown, every farmer has the option to sell his right or to use it. As participation in the market is voluntary, every farmer makes a decision that is both individually and socially rational. However, in moving from a central planning allocation to a market mechanism, the government has another task, which is to grant the property rights in order for the market to begin to evolve. It is not guaranteed that under any initial allocation a decentralization of the system will benefit all the regions but at least part of the problem is to be resolved between the regions themselves. As the results shows, there is a potential budgetary benefit of 28 million dollars when capital cost is not included and 64 million dollars when they are included.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Becker, Nir, 1995. "Value of moving from central planning to a market system: lessons from the Israeli water sector," Agricultural Economics, Blackwell, vol. 12(1), pages 11-21, April.
    • Handle: RePEc:eee:agecon:v:12:y:1995:i:1:p:11-21
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/0169-5150(94)00030-6
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Seckler & Robert A. Young, 1978. "Economic and Policy Implications of the 160-Acre Limitation in Federal Reclamation Law," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(4), pages 575-588.
    2. Randall, Alan, 1981. "Property Entitlements And Pricing Policies For A Maturing Water Economy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 25(3), pages 1-26, December.
    3. Alan Randall, 1981. "Property Entitlements And Pricing Policies For A Maturing Water Economy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 25(3), pages 195-220, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Calatrava-Requena, Javier & Garrido, Alberto, 2003. "The Effects Of Spot Water Markets On The Economic Risk Derived From Variable Water Supply," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25885, International Association of Agricultural Economists.
    2. M. Babel & A. Gupta & D. Nayak, 2005. "A Model for Optimal Allocation of Water to Competing Demands," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 19(6), pages 693-712, December.
    3. Reto Foellmi & Urs Meister, 2012. "Enhancing the Efficiency of Water Supply—Product Market Competition Versus Trade," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 299-324, September.
    4. N. Becker, 1999. "A comparative analysis of water price support versus drought compensation scheme," Agricultural Economics, International Association of Agricultural Economists, vol. 21(1), pages 81-92, August.
    5. Yerushalmi, Erez, "undated". "Measuring the administrative water allocation mechanism and agricultural amenities," Economic Research Papers 270633, University of Warwick - Department of Economics.
    6. Yerushalmi, Erez, 2018. "Using Water Allocation in Israel as a Proxy for Imputing the Value of Agricultural Amenities," Ecological Economics, Elsevier, vol. 149(C), pages 12-20.
    7. Qiuping Chen & Bo Ning & Yue Pan & Jinli Xiao, 2022. "Green finance and outward foreign direct investment: evidence from a quasi-natural experiment of green insurance in China," Asia Pacific Journal of Management, Springer, vol. 39(3), pages 899-924, September.
    8. John F. Raffensperger & Mark W. Milke & E. Grant Read, 2009. "A Deterministic Smart Market Model for Groundwater," Operations Research, INFORMS, vol. 57(6), pages 1333-1346, December.
    9. Mehmet Kucukmehmetoglu & Jean-Michel Guldmann, 2004. "International Water Resources Allocation and Conflicts: The Case of the Euphrates and Tigris," Environment and Planning A, , vol. 36(5), pages 783-801, May.
    10. Alan Murray & Patricia Gober & Luc Anselin & Sergio Rey & David Sampson & Paul Padegimas & Yin Liu, 2012. "Spatial Optimization Models for Water Supply Allocation," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(8), pages 2243-2257, June.
    11. Chengcheng Zhai & Kurt Bretthauer & Jorge Mejia & Alfonso Pedraza‐Martinez, 2023. "Improving drinking water access and equity in rural Sub‐Saharan Africa," Production and Operations Management, Production and Operations Management Society, vol. 32(9), pages 2921-2939, September.
    12. Arriaza Balmón, Manuel & Gomez-Limon, Jose A. & Upton, Martin, 1997. "Local water markets for irrigation in southern Spain: A multicriteria approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(01), pages 1-23.
    13. Mehmet Kucukmehmetoglu, 2009. "A Game Theoretic Approach to Assess the Impacts of Major Investments on Transboundary Water Resources: The Case of the Euphrates and Tigris," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(15), pages 3069-3099, December.
    14. Mehmet Kucukmehmetoglu, 2011. "Energy And Agricultural Policies Over The Transboundary Surface Water Resources," ERSA conference papers ersa11p1183, European Regional Science Association.
    15. repec:ags:ubzefd:148054 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bolinches, Antonio & Blanco-Gutiérrez, Irene & Zubelzu, Sergio & Esteve, Paloma & Gómez-Ramos, Almudena, 2022. "A method for the prioritization of water reuse projects in agriculture irrigation," Agricultural Water Management, Elsevier, vol. 263(C).
    2. Ansink, Erik & Weikard, Hans-Peter, 2009. "Contested water rights," European Journal of Political Economy, Elsevier, vol. 25(2), pages 247-260, June.
    3. Palomo-Hierro, Sara & Loch, Adam & Pérez-Blanco, C. Dionisio, 2022. "Improving water markets in Spain: Lesson-drawing from the Murray-Darling Basin in Australia," Agricultural Water Management, Elsevier, vol. 259(C).
    4. Ruth Meinzen-Dick and Claudia Ringler, 2006. "Water Reallocation: Challenges, Threats, and Solutions for the Poor," Human Development Occasional Papers (1992-2007) HDOCPA-2006-41, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    5. Carlos Gómez & C. Pérez-Blanco, 2014. "Simple Myths and Basic Maths About Greening Irrigation," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(12), pages 4035-4044, September.
    6. Pérez-Blanco, C.D. & Gutiérrez-Martín, C., 2017. "Buy me a river: Use of multi-attribute non-linear utility functions to address overcompensation in agricultural water buyback," Agricultural Water Management, Elsevier, vol. 190(C), pages 6-20.
    7. Stephen Bell & John Quiggin, "undated". "The Metagovernance of Markets: The Politics of Water Management in Australia," Murray-Darling Program Working Papers WP6M06, Risk and Sustainable Management Group, University of Queensland.
    8. John Quiggin, 2006. "Repurchase of renewal rights: a policy option for the National Water Initiative ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 425-435, September.
    9. A. Asciuto & V. Borsellino & M. D'Acquisto & C.P. Di Franco & M. Di Gesaro & E. Schimmenti, 2015. "Monumental trees and their existence value: the case study of an Italian natural park," Journal of Forest Science, Czech Academy of Agricultural Sciences, vol. 61(2), pages 55-61.
    10. Lisa Yu-Ting Lee & Tihomir Ancev, 2009. "Two Decades of Murray-Darling Water Management: A River of Funding, a Trickle of Achievement," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 16(1), pages 5-24.
    11. José A. Gómez‐Limón & Manuel Arriaza & Julio Berbel, 2002. "Conflicting Implementation of Agricultural and Water Policies in Irrigated Areas in the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 259-281, July.
    12. Simon de Bonviller & Alec Zuo & Sarah Ann Wheeler, 2019. "Is there evidence of insider trading in Australian water markets?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), pages 307-327, April.
    13. Brennan, Lisa E. & Lisson, Shaun N. & Inman-Bamber, N. Geoff & Linedale, Tony, 1999. "Most Profitable Use of Irrigation Supplies: A Case Study of A Bundaberg Cane Farm," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 123787, Australian Agricultural and Resource Economics Society.
    14. Shi, Tian, 2006. "Simplifying complexity: Rationalising water entitlements in the Southern Connected River Murray System, Australia," Agricultural Water Management, Elsevier, vol. 86(3), pages 229-239, December.
    15. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2009. "Climate change, mitigation and adaptation: the case of the Murray–Darling Basin in Australia," Murray-Darling Program Working Papers WP3M09, Risk and Sustainable Management Group, University of Queensland.
    16. Tiho Ancev, 2015. "The role of the commonwealth environmental water holder in annual water allocation markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), pages 133-153, January.
    17. Carlos Mario Gómez Gómez & C. D. Pérez-Blanco & David Adamson & Adam Loch, 2018. "Managing Water Scarcity at a River Basin Scale with Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-31, January.
    18. repec:bla:canjag:v:58:y:2010:i:s1:p:531-554 is not listed on IDEAS
    19. Gomez-Limon, Jose Antonio & Berbel, Julio & Arriaza Balmón, Manuel, 2005. "MCDM Farm System Analysis for Public Management of Irrigated Agriculture," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24676, European Association of Agricultural Economists.
    20. Freebairn, John W., 2003. "Economic policy for rural and regional Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 1-26, September.
    21. Abdeslam Boudhar & Said Boudhar & Aomar Ibourk, 2017. "An input–output framework for analysing relationships between economic sectors and water use and intersectoral water relationships in Morocco," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-25, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agecon:v:12:y:1995:i:1:p:11-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.blackwell-synergy.com/loi/agec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.