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Economy-wide benefits from establishing water user-right markets in a spatially heterogeneous agricultural economy

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  • Diao, Xinshen
  • Roe, Terry
  • Doukkali, Rachid

Abstract

This paper analyzes the economy-wide gains obtainable from the allocation of surface irrigation water to its most productive use, and evaluates a decentralized mechanism for achieving this result in a spatially heterogeneous environment. The focus country for the analysis is Morocco. The analysis is based on a general equilibrium model that, in addition to the rest of the economy, captures 82 agricultural production activities, 66 of which are in seven separately identified water districts that span the entire country. The results suggest that a decentralized water trading mechanism could increase agricultural output by 8.3 percent, affect the rental rates of other agricultural inputs at the national level, including labor, and have economy-wide effects that entail modest declines in the cost of living, an increase in aggregate consumption, and expansion of international trade.

Suggested Citation

  • Diao, Xinshen & Roe, Terry & Doukkali, Rachid, 2002. "Economy-wide benefits from establishing water user-right markets in a spatially heterogeneous agricultural economy," TMD discussion papers 103, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:tmddps:103
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    References listed on IDEAS

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    1. 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 161-179, August.
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    Cited by:

    1. G. R. Soltani & M. Bakhshoodeh & M. Zibaei, 2009. "Optimization of Agricultural Water Use and Trade Patterns: The Case of Iran," Working Papers 508, Economic Research Forum, revised Dec 2009.

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