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A Microeconomic Perspective on Water Resources Management: Analyzing the Effects on Optimal Land Rents Along a River Basin

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  • Nadine Wittmann

Abstract

Water scarcity is becoming an increasingly relevant issue in many regions of the world as demand for water continues to grow. As a result, the need for finding measures that efficiently allocate increasingly scarce water resources has become a primary topic on the agendas of many water resource management authorities. This paper presents an innovative approach that provides further insight into the connection between hydrological, environmental, and economic aspects along a river basin. In short, it analyzes how land rents along a river basin are affected by managing water pollution along a river basin, given certain hydrological characteristics of the river basin. Results show that, without the implementation of a water management system to control water quality, the negative external effects of upstream water discharges on downstream locations can be internalized through a decrease in downstream land rents. However, the analysis presented in this paper also reveals that it is not only the absence or the presence of a water management system that has a significant impact on the real estate market along the river basin. Moreover, the market outcome also varies with the type of water resources management system implemented. Copyright Springer Science+Business Media Dordrecht 2014

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  • Nadine Wittmann, 2014. "A Microeconomic Perspective on Water Resources Management: Analyzing the Effects on Optimal Land Rents Along a River Basin," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(5), pages 1309-1325, March.
    • Handle: RePEc:spr:waterr:v:28:y:2014:i:5:p:1309-1325
    DOI: 10.1007/s11269-014-0542-1
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