A few thoughts on fair, efficient and sustainable management of agricultural water
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A few thoughts on fair, efficient and sustainable management of agricultural water Warsaw – 14 Sep 2011. David Zetland Senior Water Economist Wageningen University. The end of abundance... Agriculture diverts most water High consumption (plus spillovers)

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A few thoughts on fair efficient and sustainable management of agricultural water warsaw 14 sep 2011

A few thoughts on fair, efficient and sustainable management of agricultural waterWarsaw – 14 Sep 2011

David Zetland

Senior Water Economist

Wageningen University


A few thoughts on fair efficient and sustainable management of agricultural water warsaw 14 sep 2011

  • The end of abundance...

  • Agriculture diverts most water

  • High consumption (plus spillovers)

  • Increasing ag/urban/enviro demand

  • Fixed/falling supply (quality & quantity)

  • Efficiency requires reallocation

  • Fairness recognizes existing use rights

  • Sustainability means no shortages


All in auctions can help

All-in-auctions can help

  • AiAs reallocate water according to value.

  • AiAs balance supply & demand.

  • AiAs establish a local price for water.

  • AiAs recognize existing property rights.

  • AiAs can be used within a community.

  • AiAs can include new demands.


How aias work

How AiAs work

  • Water rights must be quantified and assigned to individuals. Permanent rights produce “income” (annual flows) – cf. Australia.

  • The known quantity of flows are put into an auction (“all in”).

  • Those flows are allocated to high bidders; the price they pay depends on everyone’s bids.

  • Revenue goes to owners of rights.

  • Conveyance matters!


For example

For example

  • Farmers A, B and C each own 2 units of water.

  • Six units are put into the AiA. A, B and C bid.

  • €Bids: A (4, 5, 8), B (10, 10, 3) & C (1, 2, 6)

  • Bids are ordered: 10, 10, 8, 6, 5, 4, 3, 2 & 1

  • Six highest are accepted; price set to 7th bid.

  • A gets 3 units; B gets 2 units; C gets 1 unit.

  • A pays €3; B pays nothing (€ 6- € 6); C gets € 3.


A few thoughts on fair efficient and sustainable management of agricultural water warsaw 14 sep 2011

Thank you!

AiA paper: http://tinyurl.com/3yjj8u3

Water markets in Europe: http://tinyurl.com/64t4b7e

My book: The End of Abundance: Economic solutions to water scarcity

http://endofabundance.com

This research project has received funding from the European Community’s Seventh Framework Programme (FP7/2007-2013) / grant agreement n° 265213 –Project EPI-WATER “Evaluating Economic Policy Instrument for Sustainable Water Management in Europe”.


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