nep-res New Economics Papers
on Resource Economics
Issue of 2011‒04‒23
two papers chosen by
Maximo Rossi
Universidad de la Republica

  1. An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA By R. Quentin Grafton; Clay Landry; Gary D. Libecap; Sam McGlennon; Bob O’Brien
  2. Optimal Pollution Trading without Pollution Reductions: A Note By Jorge H. García; Matthew T. Heberling; Hale W. Thurston

  1. By: R. Quentin Grafton; Clay Landry; Gary D. Libecap; Sam McGlennon; Bob O’Brien
    Abstract: The paper provides an integrated framework to assess water markets in terms of their institutional underpinnings and the three ‘pillars’ of integrated water resource management: economic efficiency, equity and environmental sustainability. This framework can be used: (1) to benchmark different water markets; (2) to track performance over time; and (3) to identify ways in which water markets might be adjusted by informed policy makers to achieve desired goals. The framework is used to identify strengths and limitations of water markets in: (1) Australia’s Murray-Darling Basin; (2) Chile (in particular the Limarí Valley); (3) China (in particular, the North); (4) South Africa; and (5) the western United States. It identifies what water markets are currently able to contribute to integrated water resource management, what criteria underpin these markets, and which components of their performance may require further development.
    Date: 2010–12
  2. By: Jorge H. García; Matthew T. Heberling; Hale W. Thurston
    Abstract: Many kinds of water pollution occur in pulses, e.g., agricultural and urban runoff. Ecosystems, such as wetlands, can serve to regulate these pulses and smooth pollution distributions over time. This smoothing reduces total environmental damages when the “instantaneous” damage function is convex. This paper introduces a water quality trading model between a farm (a pulse-pollution source) and a firm (a more steady pollution source) where the object of exchange is the ‘temporary’ retention of runoff as opposed to total runoff reductions. The optimal trading ratio requires firm emissions to be offset by more than a proportional retention of the initial agricultural runoff pulse. The reason is twofold: a) emissions are steady over time and -in this sense- have relatively larger environmental impact, and b) certain kinds of runoff management cause otherwise inexistent delayed environmental damages.
    Date: 2010–05–02

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