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Water markets an alternative for central water allocation?

Author

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  • Louw, D.B.
  • van Schalkwyk, Herman D.

Abstract

South Africa is entering a whole new era in water management. In the face of efforts to curtail runaway government spending and protect the environment, water institutions must foster the conservation and efficient allocation of existing supplies. They must also take water's growing recreational and environmental value into account. The crucial question is, can the current water institutions meet today's requirements? Despite the resulting inefficiency and waste, traditional resource economists continue to identify taxes, regulations, subsidies, and governmental allocation as solutions to today's water problems. Internationally, there is enough evidence to prove that central allocation with almost any resource gave rise to gross inefficiency. The main reason is the distortions on the value placed on resources within such a centralised planning environment. Resources are either valued to high or to low. What is the value of freshwater and how can water be allocated in such a way as to reflect the scarcity value of water? A non-linear spatial equilibrium model was developed to simulate the impact of a potential water market in the Upper-Berg River: Western Cape. This paper explores water markets as an alternative to central water allocation decisions

Suggested Citation

  • Louw, D.B. & van Schalkwyk, Herman D., 2000. "Water markets an alternative for central water allocation?," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 39(4), pages 1-11, December.
    • Handle: RePEc:ags:agreko:54210
    DOI: 10.22004/ag.econ.54210
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    References listed on IDEAS

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    1. Eigenraam, Mark & Stoneham, Gary, 1997. "Water Policy Development: An Application to Inter-State Trade," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 135752, Australian Agricultural and Resource Economics Society.
    2. Norman K. Whittlesey & Ray G. Huffaker, 1995. "Water Policy Issues for the Twenty-first Century," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(5), pages 1199-1203.
    3. Batterham, Robert L. & MacAulay, T. Gordon, 1994. "Price-Linked Farm And Spatial Equilibrium Models," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 38(2), pages 1-28, August.
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    Cited by:

    1. Yokwe, Stanley, 2009. "Water productivity in smallholder irrigation schemes in South Africa," Agricultural Water Management, Elsevier, vol. 96(8), pages 1223-1228, August.

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