Measuring the administrative water allocation mechanism and agricultural amenities

Measuring the administrative water allocation mechanism and agricultural amenities
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Measuring the administrative water allocation mechanism and agricultural amenities
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Yerushalmi, Erez
(Department of Economics, University of Warwick)
Registered:
Erez Yerushalmi
Abstract
Many arid countries use an administrative water allocation mechanism. Quotas, price discrimination, and increasing block tariffs are set and enforced by prohibiting the resale of water. Critics of this mechanism argue that allocation is politicized, subjective and slow to respond, and therefore misallocates water compared to a market mechanism. However, an administrative mechanism also promotes social goals that are not valued economically. In this paper, both positive and negative impacts of the administrative allocation are explored, using a general equilibrium model and with Israel as a case study. The model concludes that from 1995 to 2006, potable water misallocation in Israel was relatively small, on average of 5.5 percent of the potable water supply. The value of agricultural amenities is imputed at approximately 2.3 times agricultural output. At the margin, introducing a water market in Israel is not recommended, i.e., net-social welfare would fall. JEL classification: C68 ; Q15 ; Q25 ; Q28 ; O21
Suggested Citation
Yerushalmi, Erez, 2012.
Measuring the administrative water allocation mechanism and agricultural amenities
,"
The Warwick Economics Research Paper Series (TWERPS)
992, University of Warwick, Department of Economics.
Handle:
RePEc:wrk:warwec:992
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Other versions of this item:
Yerushalmi, Erez, "undated".
Measuring the administrative water allocation mechanism and agricultural amenities
,"
Economic Research Papers
270633, University of Warwick - Department of Economics.
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Keywords
JEL
classification:
C68
- Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
Q15
- Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
Q25
- Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
Q28
- Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
O21
- Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
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(Efficiency and Productivity)
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