A Transactions Cost Approach to the Theoretical Foundations of Water Markets1

Abstract: Water marketing is often cited as a means of alleviating the stresses attached to allocation of water use. Frequently, marketing is suggested in a context that implies substitution of competitive markets for the allocation based on the prior appropriation doctrine. This study examines water marketing from the perspective of a transactions cost approach to the private and broad social agreements (contracts) that support water allocation. It examines the major behavioral challenges faced by any contract, and the alternative approaches to those challenges, with respect to water allocation. It also examines the impact of market design on the existence of externalities, costs imposed by transactions on society and individuals not party to the transaction. It finds that the most robust water market designs will be found in systems with sufficient property rights protection to support investment, sufficient hydrologic information to provide accurate analysis of third party effects, conjunctive management of surface and groundwater, and a governance structure capable of administering the rules while not determining outcomes.     

External cost internalisation of urban transport: a case study of Dublin

Transport users do not currently pay all costs associated with their transport activities and in particular do not pay the costs they impose on the environment. Case studies on Dublin, Amsterdam, Brussels and London have been conducted to evaluate how best to meet the requirement of the European Commission in its fair and efficient pricing aims in the transport sector, i.e. where transport users are made to pay all costs they impose. The paper presents the results of Do Nothing (DN) and Do Something (DS) scenarios for 2005 where in the latter case each transport user pays for all costs they impose including pollution, noise, accidents etc. The Dublin results, from an economics model used in the study, are examined in detail; the findings are compared with those of parallel studies conducted in the other cities to demonstrate the international relevance of this work. The comparison between the DN and DS scenarios indicates that taxes on all transport modes should be increased substantially, particularly in the morning and evening peak periods. As a result of the price increases, travel demand is reduced. A practical example where transport users could be made to pay for all their costs is road use pricing, i.e. charging individuals for the use of road space. The taxation levels suggested in the DS scenario have been used in a road use pricing trial in Dublin, the results of which were published in O'Mahony, Geraghty and Humphreys (Transportation 27, 269-283, 2000), to see if the reductions in the travel requirements of individuals proposed by the economics model are in fact true. The principles of the work presented in this paper are not only relevant to environmental impact management in the transport sector but can also be applied to other sectors.     

FROM FLOW TO FISH TO DOLLARS: AN INTEGRATED APPROACH TO WATER ALLOCATION1

This paper details a case study of economic and natural system responses to alternative water management policies in the Cache La Poudre River basin, Colorado, 1980–1994. The case study is presented to highlight the value and application of a conceptual integration of economic, salmonid population, physical habitat, and water allocation models. Five alternative regimes, all intended to increase low winter flows, were investigated. Habitat enhancements created by alternative regimes were translated to population responses and economic benefits. Analysis concluded that instream flows cannot compete on the northern Colorado water rental market; cooperative agreements offer an economically feasible way to enhance instream flows; and establishing an instream flow program on the Cache La Poudre River mainstem is a potentially profitable opportunity. The alliance of models is a dynamic multidisciplinary tool for use in professional settings and offers valuable insight for decision-making processes involved in water management.     

Transaction Costs Economics of Irreplaceability: <Emphasis Type="Italic">ex ante</Emphasis> and <Emphasis Type="Italic">ex post</Emphasis> Evaluation of Conservation Networks’ Vulnerability to Environmental Shocks

The theoretical concept, “asset specificity,” is applied to real data in the context of Danish nature conservation network planning in order to produce illustrative examples of an economic measure of the network’s vulnerability to exogenous shocks to the species composition. Three different measures of asset specificity are quantified from the shadow value of eliminating a key species from the individual grid cells. This represents a novel approach and a different interpretation of the term, as it is conventionally used as a qualitative indicator in the transaction cost economics literature. Apart from supplementing existing cost measures with an indicator of risk associated with investments in protected areas, this study demonstrates how the estimation and interpretation of various asset specificity measures for geographical areas may qualify policy makers’ choice of policy instrument in conservation planning. This differs from the more intuitive approach of basing policy instrument choice solely on the rarity of the species in a given area.     

Relaxation algorithms to find Nash equilibria with economic applications

Recent theoretical studies have shown that a relaxation algorithm can be used to find noncooperative equilibria of synchronous infinite games with nonlinear payoff functions and coupled constraints. In this study, we introduce an improvement to the algorithm, such as the steepest-descent step-size control, for which the convergence of the algorithm is proved. The algorithm is then tested on several economic applications. In particular, a River Basin Pollution problem is considered where coupled environmental constraints are crucial for the relevant model definition. Numerical runs demonstrate fast convergence of the algorithm for a wide range of parameters. This revised version was published online in July 2006 with corrections to the Cover Date.     

世纪之交我国人口,资源,环境的趋势分析与对策

本文全面分析了我国人口、资源、环境的现状;及其在“九五”和2010年的发展趋势;并提出了促进我国经济建设与人口、资源、环境协调发展的对策和建议。     

水土保持生态补偿定量计算探究 ——以潘家口库区东北沟流域为例

水土保持生态补偿对于我国的水土流失治理意义重大,水土保持补偿标准的确定是建立生态补偿机制的核心问题。基于潘家口水库上游东北沟流域1990年和2009年土地利用数据和气候、 土壤、 植被、 DEM及农户调查等数据,应用通用土壤侵蚀方程模型(RUSLE)计算该流域采取预防水土流失措施后的土壤侵蚀减少量,在此基础上采用环境经济学的方法核算水土保持生态功能的提供方和受益方两个主体的成本和收益,并构建了水土保持生态补偿标准计算模型,实现了水土保持生态补偿标准定量计算。结果显示:流域生态系统的年土壤保持量为6.49×10⁴ t·a^-1;水土保持服务提供方损失为24.48×10⁴元,所得收益来自减少土地损失和肥力损失的价值共计44.21×10⁴元;水土保持服务受益方主要指下游潘家口水库所得收益来自减少泥沙淤积和减少富营养化共计84.88×10⁴元;流域所得的补偿介于24.48×10⁴元(222.55元/人)到46.90×10⁴元(426.36元/人)之间。     

Trade and the environment: An application of the WIOD database

The new WIOD database allows for improved empirical analysis on a wide range of important environmental research questions.In this paper we demonstrate the scientific power of the WIOD database and analyze very urgent policy questions on the impacts of international trade and structural change on the environment.We apply recent econometric approaches to show the impact of international trade on the environment via its different channels as for instance to increase welfare and potentially affect environmental regulation as well as countries’sector.This approach has become known as the econometric structural decomposition method.In addition to these guidelines by the literature,an econometric panel data approach is offered to shed some light on the impact of structural change and international trade on environmental pressure,where we especially address and solve several endogeneity issues that add further complexity to the analysis.     

On equilibrium in resource markets with scale economies and stochastic prices

In this paper, I show the existence and the characteristics of equilibrium in a non-renewable resource market where extraction costs are non-convex and market price is subject to stochastic shocks, an empirically relevant setting. In my model firms may be motivated to hold inventories to facilitate production smoothing, which allows them to continue producing at a smooth pace at any instant when extraction ceases, e.g. when reserves are exhausted. This aspect of the model then supports a competitive equilibrium in the presence of non-convex costs. Casual empirical evidence is provided that supports the central features of my model for a variety of non-renewable resources, lending credence to the explanation for equilibrium I propose.     

Towards a complex model of disaster behaviour

This paper outlines why a move towards a complex adaptive systems model of behaviour is required if the goal is to generate better understanding of how individuals and groups interact with their environment in a disaster setting. To accomplish this objective, a bridge must be built between the broader social sciences and behavioural economics to incorporate discipline‐specific insights that are needed to move towards complexity. This is only possible through a deeper understanding of behaviour and how the environment in which they occur can influence actions. It is then that one can counteract the poor behavioural predictions, flawed policies based on myth, inefficient design, and suboptimal outcomes that have flourished in the absence of a complex adaptive systems model. This paper provides a conceptual framework that draws on concepts from across the natural and social sciences, such as behavioural economics, endocrinology, psychology, sociobiology, and sociology in order to build an interactive theory of disaster behaviour.