A socially optimum pricing policy for a public water agency

Abstract

A simple model is developed for determining the socially optimum price to charge locationally differentiated irrigation districts for both surface and groundwater supplies. Steady-state conditions are assumed for groundwater conditions and water demand functions. A divergence between social and private optimums arises from the existence of unadjudicated rights to groundwater supplies. The social optimum can be achieved by an appropriately conceived taxing policy. Water prices, tax rates, and optimum lift levels are estimated for seven irrigation districts, members of a master water agency. (

Groundwater management: Efficiency and equity considerations

“…The calculated parameter values are summarized in Table 1. To the best of my knowledge, there is no actual detailed water demand study in Kern County which enables one to accurately differentiate the KC member farmers according to their derived demand for irrigation water. However, Brown and McGuire (1967) presented rough estimates of linear water demand curves for several districts in KC. Based on their data (which were adjusted for inflation) and for illustrative purposes, four groups of pumpers, each consisting of identical farms, are distinguished in the present paper (from now on, the index i stands for group i).…”

Groundwater Storage Control Under Institutional Restrictions

“…The notion of rationing a scarce factor of production under conditions of commonality by a pricing scheme is nearly as old as welfare economics and has been proposed specifically for groundwater many times [Milliman, 1956;Burr, 1964a;Brown and McGuire, 1967]. If a legal entity can be formed with the vested power to control basin-wide withdrawals of groundwater, that control exercised through a price mechanism appears very favorable from an economic viewpoint.…”

WAS-guided cooperation in water: the grand coalition and sub-coalitions

“…We do not take a position on whether such goals are in some way inappropriate, a principal contribution of our work being that the use of our model permits the decision-maker to impose his or her own values, however derived. 3 For examples that go beyond mere cost minimization, see Brown and McGuire (1967); Dandy et al (1984);and McCarl (1999). The model that appears most similar to WAS is the CALVIN model, an optimizing water model for California developed at the University of California, Davis (see for example Newlin et al (2002); Jenkins et al (2003); and Jenkins et al (2004)).…”