The political-economy of water…all in auctions

From David Zetland comes this re-posting from  Aguanomics on addressing issues in the political economy for  water.

The political-economy of water…all in auctions

I’ve been working on this idea for 5-6 years, and I think it has great potential for reallocating water while respecting the rights of existing users. It just came out in the Journal of Environmental Management.

Abstract: This paper proposes a novel mechanism for reallocating temporary water flows or permanent water rights. The All-in-Auction (AiA) increases efficiency and social welfare by reallocating water without harming water rights holders. AiAs can be used to allocate variable or diminished flows among traditional or new uses. AiAs are appropriate for use within larger organizations that distribute water among members, e.g., irrigation districts or wholesale water agencies. Members would decide when and how to use AiAs, i.e., when transaction costs are high, environmental constraints are binding, or allocation to outsiders is desired. Experimental sessions show that an AiA reallocates more units with no less efficiency that traditional two-sided auctions.

Those of you with an academic subscription can download it here. Those of you without can download my author’s copy [pdf]

Here’s an earlier post that links to other presentations of the AiA.

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