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Water Institutions And Economic Incentives To Ameliorate Market And Government Failures


  • Easter, K. William
  • Feder, Gershon


At the macro level, the way water resources are managed results in major misallocations as well as quality deterioration. It has become apparent in many cases that current practices and policies are not sustainable, and that reforms are needed. The present paper focuses on some of these reforms. It starts by reviewing and analyzing the sources of the market failures as well as government failures in water resources management. Recognizing the inevitability and desirability of some form of public action in many circumstances, it seeks to identify forms of interventions that utilize, to the extent possible, individual or private incentives by providing the institutional and legal framework in which these incentives can best complement the interventions. Examples from various countries are provided to illustrate the feasibility and merits of the proposed reforms.

Suggested Citation

  • Easter, K. William & Feder, Gershon, 1996. "Water Institutions And Economic Incentives To Ameliorate Market And Government Failures," Staff Papers 14217, University of Minnesota, Department of Applied Economics.
  • Handle: RePEc:ags:umaesp:14217

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    References listed on IDEAS

    1. Meinzen-Dick, Ruth Suseela & Sullins, Martha, 1994. "Water markets in Pakistan: participation and productivity," EPTD discussion papers 4, International Food Policy Research Institute (IFPRI).
    2. Dinar, Ariel & Letey, J., 1991. "Agricultural water marketing, allocative efficiency, and drainage reduction," Journal of Environmental Economics and Management, Elsevier, vol. 20(3), pages 210-223, May.
    3. Marca Weinberg & Catherine L. Kling & James E. Wilen, 1993. "Water Markets and Water Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 278-291.
    4. Easter, K. William & Martin, Lee R., 1977. "Water Resources Problems in Developing Countries," Bulletins 8436, University of Minnesota, Economic Development Center.
    5. Rodney T. Smith, 1989. "Water transfers, irrigation districts, and the compensation problem," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(3), pages 446-465.
    6. Hearne, R.R. & Easter, K.W., 1995. "Water Allocation and Water Markets. An Analysis of Gains-from-Trade in Chile," Papers 315, World Bank - Technical Papers.
    7. R. Maria Saleth & John B. Braden & J. Wayland Eheart, 1991. "Bargaining Rules for a Thin Spot Water Market," Land Economics, University of Wisconsin Press, vol. 67(3), pages 326-339.
    8. Easter, K. William, 1990. "Economic Failure Plagues Developing Countries' Irrigation: An Assurance Problem," Staff Papers 13337, University of Minnesota, Department of Applied Economics.
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    Cited by:

    1. Lee, Terence R. & Jouravlev, Andrei, 1998. "Prices, property and markets in water allocation," Medio Ambiente y Desarrollo 6, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Nagaraj, N., 1999. "Institutional management regimes for pricing of irrigation water: the French model -- lessons for India," Agricultural Systems, Elsevier, vol. 61(3), pages 191-205, September.

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    Resource /Energy Economics and Policy;


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