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Improving Allocative Efficiency of Scarce Water in Southern Alberta

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  • Md Kamar Ali

    (Department of Economics, University of Lethbridge, Lethbridge, AB T1K 3M4, Canada)

Abstract

Using a positive mathematical programming (PMP) model with improved ‘wide-scope’ calibration, this study demonstrates how allocative efficiency of scarce water could be improved in the Bow- and Oldman River Sub Basins (BRSB and ORSB) of Southern Alberta, where 12 irrigation districts, two cities and three major industrial/commercial users withdraw bulk of the surface water for irrigation, municipal, industrial and commercial needs. Earlier studies ironically neglected the larger ORSB even though it is subject to the same water licensing and regulation policies as the BRSB. The inclusion of nine irrigation districts and non-irrigation users of ORSB enables this model to estimate allocative efficiency gains in a more comprehensive manner than before. Results indicate that ORSB has a relatively less elastic water demand curve primarily due to its more reliance on irrigation and less water saving/supply options. It is also less responsive to allocations with alternative policies as reflected in net returns, land use and cropping pattern changes due to its less elastic water demand.

Suggested Citation

  • Md Kamar Ali, 2016. "Improving Allocative Efficiency of Scarce Water in Southern Alberta," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 1-22, June.
    • Handle: RePEc:wsi:wepxxx:v:02:y:2016:i:02:n:s2382624x16500144
    DOI: 10.1142/S2382624X16500144
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    References listed on IDEAS

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    1. Lixia He & Theodore M. Horbulyk, 2010. "Market‐Based Policy Instruments, Irrigation Water Demand, and Crop Diversification in the Bow River Basin of Southern Alberta," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(2), pages 191-213, June.
    2. Blanco, Maria & Cortignani, Raffaele & Severini, Simone, 2008. "Evaluating Changes in Cropping Patterns due to the 2003 CAP Reform. An Ex-post Analysis of Different PMP Approaches Considering New Activities," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6674, European Association of Agricultural Economists.
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    4. Ali, Md Kamar & Klein, K.K., 2014. "Implications of current and alternative water allocation policies in the Bow River Sub Basin of Southern Alberta," Agricultural Water Management, Elsevier, vol. 133(C), pages 1-11.
    5. Richard E. Howitt, 1995. "Positive Mathematical Programming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 329-342.
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    7. He, Lixia & Horbulyk, Theodore M. & Ali, Md. Kamar & Le Roy, Danny G. & Klein, K.K., 2012. "Proportional water sharing vs. seniority-based allocation in the Bow River basin of Southern Alberta," Agricultural Water Management, Elsevier, vol. 104(C), pages 21-31.
    8. Howitt, Richard E., 2005. "PMP Based Production Models-Development and Integration," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24484, European Association of Agricultural Economists.
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