Planning & Management
393096 - Water-coloring inside the lines: Developing demand-based inter-growers’ cooperative water market interaction rulesets to promote market-scale economic efficiency within existing water law
Tuesday, June 5
10:30 AM - 12:00 PM
Location: Greenway GH
Paul Block, University of Wisconsin-Madison – Civil Engineering
In basins where water is allocated through system of water rights, and corresponding water markets are founded on neo-liberal economic principles, frictionless movement of water resources between economic agents is expected, such that water is allocated to its best potential economic use through permanent and temporary water rights transactions. At the water market-scale, economic efficiency is possible, regardless of the initial distribution of water rights, when water rights holders can clearly define the opportunity cost of water, even when the allocation value assigned to water rights is subject to interannual variability, and set based on existing reservoir storage and anticipated hydroclimate conditions. Such is the case in the Elqui Valley, Chile where an active temporary water market exists which allows for transfers to occur between water rights holders, predominantly engaged in irrigated agriculture, with limited institutional barriers. The temporary market is informal, and as such lacks a price revealing mechanism. Here an agro-economic framework is developed to model optimal economic decision-making by two, profit maximizing farmer groups treated as growers’ cooperatives, and reveals the potential for water market-scale economic efficiency. By comparing the demand schedule of each growers’ cooperative, a set of demand based water allocation decision rules are obtained which guide inter-cooperative transactions. A retrospective analysis, which employs the rule-set produces results that validate the framework’s structure, and provide a price revealing mechanism for a temporary water market where it was previously unknown, within the constraints of existing water law.