Growing scarcity of freshwater worldwide brings to light the need for sound water resource modeling and policy analysis. While a solid foundation has been established for many specific water management problems, combining those methods and principles in a unified framework remains an ongoing challenge. This Handbook aims to expand the scope of efficient water use to include allocation of sources and quantities across uses and time, as well as integrating demand-management with supply-side substitutes.
Socially efficient water use does not generally coincide with private decisions in the real world, however. Examples of mechanisms designed to incentivize efficient behavior are drawn from agricultural water use, municipal water regulation, and externalities linked to water resources. Water management is further complicated when information is costly and/or imperfect. Standard optimization frameworks are extended to allow for coordination costs, games and cooperation, and risk allocation. When operating efficiently, water markets are often viewed as a desirable means of allocation because a market price incentivizes users to move resources from low to high value activities. However, early attempts at water trading have run into many obstacles. Case studies from the United States, Australia, Europe, and Canada highlight the successes and remaining challenges of establishing efficient water markets.
Table of Contents
Part 1: Principles and Overview
1. Global Outlook for Water Scarcity, Food Security, and Hydropower
Mark W. Rosegrant
2. Water Scarcity and the Demand for Water Markets
3. Ordering Extraction from Multiple Aquifers
James Roumasset and Christopher A. Wada
4. Integrating Demand-Management with Development of Supply-Side Substitutes
James Roumasset and Christopher A. Wada
5. Optimal Conjunctive Water Use over Space and Time
Sittidaj Pongkijvorasin and James Roumasset
Part 2: Private Behavior and Regulatory Design
6. Strategic Behavior and Regulation over Time and Space
C.-Y. Cynthia Lin and Lisa Pfeiffer
7. Water Allocation under Distribution Losses: A Perspective
Ujayant Chakravorty and Yazhen Gong
8. The Good, Bad, and Ugly of Watershed Management
Kimberly Burnett, James Roumasset and Christopher A. Wada
9. Externalities and Water Quality
Renan Goetz and Angels Xabadia
10. Groundwater Use and Irrigated Agriculture in California: Dynamics, Uncertainty, and Conjunctive Use
Keith Knapp and Kurt Schwabe
Part 3: Institutions and Information
11. Institutions for Managing Ground and Surface Water and the Theory of the Second-Best
Karl Jandoc, Richard Howitt, James Roumasset and Christopher A. Wada
12. Towards an Economics of Irrigation Networks
Karl Jandoc, Ruben Juarez and James Roumasset
13. Real-Time Information and Consumption: What Can Water Demand Programs Learn from Electricity Demand Programs?
John Lynham and Nori Tarui
14. Water Scarcity and Water Institutions
Ariel Dinar and Yacov Tsur
15. Managing Climate Risks through Water Trading
Bonnie Colby, George Frisvold and Matthew Mealy
Part 4: Water Markets and Institutions around the World
16. A California Postcard: Lessons for a Maturing Water Market
17. Water Trading Opportunities and Challenges in Europe
Gonzalo Delacámara, Carlos Mario Gómez and Josefina Maestu
18. Water Trading in Australia: Understanding the Role of Policy and Serendipity
Lin Crase, Sue O’Keefe, Sarah Wheeler and Yukio Kinoshita
19. Tradeoffs: Fish, Farmers, and Energy on the Columbia
20. Water Sales, Pecuniary Externalities and Local Development: Chinatown Revisited
Gary D. Libecap
21. Agricultural Water Management at the Village Level in Northern China
Qiuqiong Huang, Jinxia Wang, Siwa Msangi, Scott Rozelle and Jikun Huang
22. Implementing the European Water Framework Directive in Greece: An Integrated Socio-Economic Approach and Remaining Obstacles
Phoebe Koundouri and Osiel González Dávila
23. Water Conservation and Trading – Policy Challenges in Alberta Canada
Henning Bjornlund and K.K. Klein
Kimberly Burnett is an Associate Specialist with the University of Hawaii Economic Research Organization. She has an extensive interdisciplinary background with extramural projects focusing on invasive species management; ecosystem service valuation; and system approaches to terrestrial, water, and marine ecosystems. She has authored numerous book chapters and peer-reviewed journal articles.
Richard Howitt is currently Professor Emeritus in Agricultural and Resource Economics at the University of California at Davis. He has been a faculty member at UC Davis since 1975. His teaching covered courses in resource economics. Current research interests are in disaggregated economic modeling, market mechanisms, and dynamic stochastic methods applied to water resources.
James Roumasset is a Professor in the Department of Economics at the University of Hawaii, Manoa. His research spans a variety of topics, including water and watershed management, energy economics, the new institutional economics, development microeconomics, and sustainable development. He has published over 50 peer-reviewed journal articles, three books, and numerous book chapters.
Christopher A. Wada is a Research Economist with the University of Hawaii Economic Research Organization. His work focuses primarily on various aspects of water management including groundwater pricing, watershed conservation, and assessment of supply-side alternatives. His research has been published in peer-reviewed journals, encyclopedias, and handbooks.
"The handbook presents essays on a variety of key water resources problems from integrated surface water-groundwater management to the design of water markets, emphasizing analytical techniques for finding solutions. The handbook would be excellent for graduate level water management courses and for top level water managers who value the ability to conceptualize problems and solution techniques. Excellent case studies of integrated water management and water markets are presented." – Charles (Chuck) Howe, Professor Emeritus of Economics, University of Colorado-Boulder, USA.
"This book brings many of the world's most eminent water economists together to provide insights on the modern and future management of water locally, and globally. Readers will find the diverse perspectives and approaches illuminating on one of the world's greatest challenges - managing water for growing populations and a changing climate." – Jay R. Lund, Director, Center for Watershed Sciences, Professor of Civil and Environmental Engineering, University of California – Davis, USA.
"This volume offers an extensive treatment of 'frontier' issues in water resource economics and policy, with contributions from the field’s eminent scholars. On topics from agriculture to urban use, and from pollution to water scarcity, it will become a go-to reference for students and researchers alike." – Sheila Olmstead, Associate Professor, LBJ School of Public Affairs, The University of Texas at Austin, USA.