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No Easy Exit: Property Rights, Markets, and Negotiations over Water

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  • Alan Richards

    (University of California, Santa Cruz)

  • Nirvikar Singh

    (University of California, Santa Cruz)

Abstract

The role of water has featured prominently in the Israeli-Palestinian negotiation process, and in Arab-Israeli disputes in general. The allocation or reallocation of water rights is a particularly thorny problem. Recent work (Fisher, 1995) seeks to sidestep the issue of rights allocation by appealing to the Coase theorem, which provides conditions under which the efficient use of a good does not depend on the allocation of property rights. It instead emphasizes the small use value of the water in dispute, and concludes that a trade of “water for peace” should be eminently possible. Here, we provide a critique of this conclusion, based on two central ideas. First, the conditions of the Coase theorem are not satisfied, even approximately, and therefore the valuation of the use of water cannot be analytically separated from the allocation of property rights. Second, the existence of subnational interests, and the need to have an agreement acceptable to important actors at this level, creates a further difficulty for negotiating a resolution of any dispute. Even if a trade at the national level can be agreed upon, domestic losers must be compensated enough to make it politically feasible for the national government.

Suggested Citation

  • Alan Richards & Nirvikar Singh, 2004. "No Easy Exit: Property Rights, Markets, and Negotiations over Water," Development and Comp Systems 0412011, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0412011
    Note: Type of Document - pdf; pages: 38
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    References listed on IDEAS

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    Cited by:

    1. Julia Hiscock & David E. Hojman, 2004. "Where Have All the Flowers Gone? Coase Theorem Failures in English Summer Cultural Events: The Case of Sidmouth International Festival," Research Papers 200406, University of Liverpool Management School.

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    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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