| Abstract: | ABSTRACT: Current policies for correcting the problem of irrigation return flow pollution tend to attack the symptoms of the problem, rather than its cause. The present institutional arrangement for allocating irrigation water is seen as the source of the problem. This paper examines the water quality benefits of altering the institutional arrangement to allow for irrigation water transfers through a rental market. It is conceptualized that by creating a water rental market an opportunity cost would be associated with the use of irrigation water such that profit maximizing farmers would be induced to use his water supply more efficiently and rent the surplus to other irrigators, thus reducing return flow pollution. It is shown that a water rental market could increase water quality in the Yakima River in southcentral Washington by 31 percent as well as increase farm incomes and crop production. |
