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A Market for Water Transfers in the Upper Colorado River Basin and the Role of Transaction Costs
Meller, Genevieve
Meller, Genevieve
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Abstract
Allocation of water in the Upper Colorado River Basin is currently determined by the system of prior appropriation; a legal structure that has led to an inefficient allocation of water in the basin. A market for tradable water rights is proposed that would allow for a more optimal allocation to be achieved. An analytical framework for the analysis of water allocation systems is presented and its application to a hypothetical Upper Basin market is discussed. A quantitative model is designed that simulates a market for tradable water rights permits in the Upper Basin, with an emphasis on transaction costs. The simulated market is found to provide a more socially and economically efficient allocation of water for the Upper Basin than currently exists.
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Date
2016-01-01