IDEAS home Printed from https://ideas.repec.org/p/mcd/mcddps/2013_04.html
   My bibliography  Save this paper

Using tradable water permits in irrigated agriculture

Author

Abstract

One of the most important challenges facing agricultural water policy is the design of mechanisms enabling the transition from the current myopic exploitation to an efficient and sustainable use of groundwater resources. Tradable water permits systems can be very effective and efficient instruments, especially under conditions of limited water availability. The present paper examines both theoretically and empirically the efficiency potential of implementing a tradable permit system in irrigated agriculture taking into account the heterogeneity of crop agro-economic profiles within a single aquifer. We first confirm that in the absence of any water management system individual farmers deplete the available water resources very fast and that both a tradable and a non tradeable water permit management system provide the basic mechanism for sustainable water use. Âoth systems impose significant costs on farmers which can be counterbalanced if water depletion is associated with lower productivity as a result of water quality changes (i.e. water salinization). However, when trade of water is allowed the benefits of implementing a permit management system are maximized. The more diverse, in technology and market prices, are the crops sharing the same aquifer and the stricter is the water constrain, the higher are the benefits from using a tradable water permit system.

Suggested Citation

  • Dionisios Latinopoulos & Eftichios Sartzetakis, 2013. "Using tradable water permits in irrigated agriculture," Discussion Paper Series 2013_04, Department of Economics, University of Macedonia, revised Dec 2013.
  • Handle: RePEc:mcd:mcddps:2013_04
    as

    Download full text from publisher

    File URL: http://aphrodite.uom.gr/econwp/pdf/dp042013.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marita Laukkanen & Phoebe Koundouri, "undated". "Competition versus coopertion in groundwater extraction: A stochastic framework with heteregoneous agents," DEOS Working Papers 0605, Athens University of Economics and Business.
    2. 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.
    3. Mitchell, David M. & Willett, Keith, 2012. "Modeling Transactions Costs in a Regional Transferable Discharge Permit System for Phosphorus Runoff," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 0(Issue 2), pages 1-13.
    4. Tom Tietenberg, 2003. "The Tradable-Permits Approach to Protecting the Commons: Lessons for Climate Change," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 400-419.
    5. Phoebe Koundouri, 2004. "Current Issues in the Economics of Groundwater Resource Management," Journal of Economic Surveys, Wiley Blackwell, vol. 18(5), pages 703-740, December.
    6. Ereney Hadjigeorgalis, 2009. "A Place for Water Markets: Performance and Challenges," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(1), pages 50-67.
    7. Burness, H. Stuart & Brill, Thomas C., 2001. "The role for policy in common pool groundwater use," Resource and Energy Economics, Elsevier, vol. 23(1), pages 19-40, January.
    8. Koundouri, Phoebe & Karousakis, Katia, 2006. "Water Management in Arid and Semi-Arid Regions:Interdisciplinary Perspectives," MPRA Paper 38231, University Library of Munich, Germany.
    9. Dustin Garrick & Bruce Aylward, 2012. "Transaction Costs and Institutional Performance in Market-Based Environmental Water Allocation," Land Economics, University of Wisconsin Press, vol. 88(3), pages 536-560.
    10. Basharat A. Pitafi & James A. Roumasset, 2009. "Pareto-Improving Water Management over Space and Time: The Honolulu Case," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 138-153.
    11. Ronald C. Griffin, 2006. "Water Resource Economics: The Analysis of Scarcity, Policies, and Projects," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207267x, November.
    12. Garcia, Serge & Reynaud, Arnaud, 2004. "Estimating the benefits of efficient water pricing in France," Resource and Energy Economics, Elsevier, vol. 26(1), pages 1-25, March.
    13. Bill Provencher, 1993. "A Private Property Rights Regime to Replenish a Groundwater Aquifer," Land Economics, University of Wisconsin Press, vol. 69(4), pages 325-340.
    14. Eli Feinerman & Keith C. Knapp, 1983. "Benefits from Groundwater Management: Magnitude, Sensitivity, and Distribution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 703-710.
    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. Khasanov, Shavkat & Djanibekov, Nodir, 2015. "Improving Cotton Production and Crop Diversification in Uzbekistan: Tradable Cotton Production Targets," 2015 Conference, August 9-14, 2015, Milan, Italy 211841, International Association of Agricultural Economists.

    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:mcd:mcddps:2013_04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Theodore Panagiotidis). General contact details of provider: http://www.uom.gr/index.php?tmima=3 .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.