Water Markets and Water Quality
In addition to improving the allocative efficiency of water use, water markets may reduce irrigation-related water quality problems. This potential benefit is examined with a nonlinear programming model developed to simulate agricultural decision-making in a drainage problem area in California's San Joaquin Valley. Results indicate that a 30% drainage goal is achievable through improvements in irrigation practices and changes in cropping patterns induced by a water market. Although water markets will not generally achieve a least-cost solution, they may be a practical alternative to economically efficient, but informationally intensive, environmental policies such as Pigouvian taxes.
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|Date of creation:||01 Jan 1993|
|Date of revision:|
|Publication status:||Published in American Journal of Agricultural Economics, January 1993, vol. 75 no. 2, pp. 278-91|
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