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A Coasian Approach to Efficient Water Allocation of a Transboundary River

Published online by Cambridge University Press:  26 January 2015

David B. Willis  and
Justin S. Baker
David B. Willis
Affiliation:
Department of Applied Economics and Statistics, Clemson University, College Station, TX
Justin S. Baker
Affiliation:
Department of Agricultural Economics, Texas A&M University, College Station, TX
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Abstract

The United States and Mexico recently resolved a decade-old water dispute that required Mexico to repay the accumulated water debt within one year. A Coasian analysis estimates the social welfare gains attainable to each country under an alternative debt repayment scheme that allows repayment over a longer time horizon and in a combination of dollars and water, instead of solely in water. Assuming average water supply conditions, under the agreed 1-year repayment contract, U.S. compensation value is 534% greater and Mexico's compensation cost is 60% less relative to when compensation is paid exclusively in water.

Keywords

coasewater allocationwater compensationwater marketsQ1Q2
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 40 , Issue 2 , August 2008 , pp. 473 - 484
Copyright
Copyright © Southern Agricultural Economics Association 2008

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