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Formal and Informal Markets for Water: Institutions, Performance, and Constraints

  • Easter, K William
  • Rosegrant, Mark W
  • Dinar, Ariel

Water markets -- either formal or informal -- can be an efficient method for reallocating scarce water supplies. At the same time certain constraints can raise the transaction costs of trading water. This paper reviews the conditions necessary to establish successful water markets, identifies potential problems, and offers mitigating strategies. It also uses examples of several informal and formal water markets already in operation to illustrate these problems and the solutions to them. Copyright 1999 by Oxford University Press.

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File URL: http://www.worldbank.org/research/journals/wbro/obsfeb99/pdf/article5.pdf
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Article provided by World Bank Group in its journal World Bank Research Observer.

Volume (Year): 14 (1999)
Issue (Month): 1 (February)
Pages: 99-116

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Handle: RePEc:oup:wbrobs:v:14:y:1999:i:1:p:99-116
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  1. Hearne, Robert R. & William Easter, K., 1997. "The economic and financial gains from water markets in Chile," Agricultural Economics, Blackwell, vol. 15(3), pages 187-199, January.
  2. Thobani, Mateen, 1997. "Formal Water Markets: Why, When, and How to Introduce Tradable Water Rights," World Bank Research Observer, World Bank Group, vol. 12(2), pages 161-79, August.
  3. Smith, Vernon L, 1985. "Experimental Economics: Reply," American Economic Review, American Economic Association, vol. 75(1), pages 264-72, March.
  4. Kling, Catherine L. & Weinberg, Marca & Wilen, James, 1993. "Water Markets and Water Quality," Staff General Research Papers 1572, Iowa State University, Department of Economics.
  5. Meinzen-Dick, Ruth Suseela, 1996. "Groundwater markets in Pakistan: participation and productivity," Research reports 105, International Food Policy Research Institute (IFPRI).
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