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The Interstate River Compact as a Water Allocation Mechanism: Efficiency Aspects

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  • Lynne Lewis Bennett
  • Charles W. Howe
  • James Shope

Abstract

Interstate river compacts are widely used to allocate water among riparian states. Twenty-one compacts are currently in force in the western United States, and these compacts are mostly of two types: those that allocate a fixed amount or flow of water to individual states; and those that allocate percentages of available water to the riparian states. This study compares the performance of the two resulting allocations with that resulting from basin-wide optimization without compact constraints. While widely varying hydrologic and economic characteristics of river basins create a large set of possible outcomes, a range of stylized case studies indicates that percentage compacts are likely to generate greater net benefits and to result in more equitable risk-sharing than fixed compacts under many circumstances. In light of recent compact negotiations in the southeastern United States, it is recommended that efficiency analyses under present and future conditions be made a part of all compact negotiations. Copyright 2000, Oxford University Press.

Suggested Citation

  • Lynne Lewis Bennett & Charles W. Howe & James Shope, 2000. "The Interstate River Compact as a Water Allocation Mechanism: Efficiency Aspects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1006-1015.
    • Handle: RePEc:oup:ajagec:v:82:y:2000:i:4:p:1006-1015
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    File URL: http://hdl.handle.net/10.1111/0002-9092.00098
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    Cited by:

    1. Margaret Insley & Yichun Huang, 2020. "The economics of water conservation regulations under uncertainty: An application to Alberta's Lower Athabasca River Region," Working Papers 2003, University of Waterloo, Department of Economics, revised Jul 2020.
    2. Holland, Stephen P. & Moore, Michael R., 2003. "Cadillac Desert revisited: property rights, public policy, and water-resource depletion," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 131-155, July.
    3. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    4. Erik Ansink & Arjan Ruijs, 2008. "Climate Change and the Stability of Water Allocation Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 249-266, October.
    5. Lee, Gi-Eu & Rollins, Kimberly S. & Singletary, Loretta, 2018. "Risk Management Potential and Water Misallocation under Prevalent Water Rights Institutions in the Western United States: A Generalized Model," 2018 Annual Meeting, August 5-7, Washington, D.C. 274286, Agricultural and Applied Economics Association.
    6. Ambec, Stefan & Dinar, Ariel & McKinney, Daene, 2013. "Water sharing agreements sustainable to reduced flows," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 639-655.
    7. Bennett, Lynne Lewis, 2000. "The integration of water quality into transboundary allocation agreements: Lessons from the southwestern United States," Agricultural Economics, Blackwell, vol. 24(1), pages 113-125, December.
    8. Ansink, Erik & Houba, Harold, 2016. "Sustainable agreements on stochastic river flow," Resource and Energy Economics, Elsevier, vol. 44(C), pages 92-117.
    9. Lee, Gi-Eu & Rollins, Kimberly S. & Singletary, Loretta, 2017. "An Empirical Analysis of Water Allocation Efficiency through the Prior Appropriation Doctrine: A Case Study in the Carson River Valley, Nevada," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258225, Agricultural and Applied Economics Association.
    10. Benjamin Ouvrard & Stefan Ambec & Arnaud Reynaud & Stéphane Cezera & Murudaiah Shivamurthy, 2022. "Sharing rules for a common-pool resource in a lab experiment," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(3), pages 605-635, October.
    11. Erik Ansink, 2009. "Self-enforcing Agreements on Water allocation," Working Papers 2009.73, Fondazione Eni Enrico Mattei.
    12. Blumberg, Joey, 2024. "A Comparative Analysis of Water Allocation Institutions and Economic Efficiency," 2024 Annual Meeting, July 28-30, New Orleans, LA 343557, Agricultural and Applied Economics Association.
    13. Ambec, Stefan & Dinar, Ariel & McKinney, Daene, 2011. "Fixed Water Sharing Agreements Sustainable to Drought," TSE Working Papers 11-270, Toulouse School of Economics (TSE).
    14. Ambec, Stefan & Dinar, Ariel, 2010. "Hot Stuff: Would Climate Change Alter Transboundary Water Sharing Treaties?," LERNA Working Papers 10.15.321, LERNA, University of Toulouse.
    15. Rupayan Pal & Dipti Ranjan Pati, 2020. "Corruption vs. Efficiency in water allocation under uncertainty: Is There a trade-off?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-029, Indira Gandhi Institute of Development Research, Mumbai, India.
    16. Erik Ansink & Harold Houba, 2014. "The Economics of Transboundary River Management," Tinbergen Institute Discussion Papers 14-132/VIII, Tinbergen Institute.

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