Problem
This article considers the fact that water is a scarce natural resource and that designing institutions that will maximize its use in a beneficial way is of the utmost importance. The concern of the authors in this article is to understand the ways water is assessed for its economic value. The authors of this article consider what are the most important factors when deriving estimates for water use. They are concerned primarily with establishing common baseline denominators for water values concerning quality, time, location and quantity, as well as identifying the proper point of view from which the values are estimated and distinguishing the appropriate period of adjustment. In most of the western parts of the United States, both surface water and groundwater resources are for the most part fully used up. Human population has been rapidly growing and this has increased the demands for new uses of water such as protecting endangered species and other kinds of environmental values. It is assumed for a host of reasons including economic, legal and hydrologic that the western United Stats will not be developing new water supplies any time in the future. Any new uses for water will require transfers in surface water from other existing uses. Groundwater uses will require surface water rights acquisition. The problems involved with water usually tend to do with the fact of its economic scarcity. In principle, more water is available at a better quality and at a better place if time and money is not a factor. Existing conflicts of water engender conflicts between geographic locations, between current uses and uses wanted for the future and between species that are saved from going extinct and the food production that is moved and displaced from saving the species, as well as water resources that are developed and displace one another. Methodology This paper is a review. It reviews the common methods employed for valuing water as a natural resource and discusses some of the pros and cons involved with each valuation technique. For all of these valuation methods, the authors restrict their analysis to market transactions that are free as well as to consider administered prices. Irrigation benefits are understood as the change product minus production costs. Despite the simplicity of this concept, the researchers have found many practical based problems when attempting to establish values for irrigation water. Data The authors illustrate their computed values of water used for agriculture based on a policy analysis recently published regarding the drought in the Rio Grande River Basin.
Conclusions
Benefits and costs of water should be considered according to the same time period, assumptions and program aims in order to be relevant for sound economic policy analysis. Water information about its value is important because it enables policy makers to have informed judgments about water use and allocation. This is a growing concern as time moves forward as water demands increase while scarcity becomes more of a pressing concern.
References
Bakker, Karen. "The “commons” versus the “commodity”: Alter‐globalization, anti‐privatization and the human right to water in the global south." Antipode39, no. 3 (2007): 430-455.
Hussain, Intizar, Hugh Turral, and David Molden. "Measuring and enhancing the value of agricultural water in irrigated river basins." Irrigation Science 25, no. 3 (2007): 263-282.
Ward, Frank A., and Ari Michelsen. "The economic value of water in agriculture: concepts and policy applications." Water policy 4, no. 5 (2002): 423-446.
Johansson, Robert. "Pricing irrigation water: A literature survey." World Bank Policy Research
Paper 2449 (2000).
Works Cited
Ward, Frank A., and Ari Michelsen. "The economic value of water in agriculture: concepts and policy applications." Water policy 4.5 (2002): 423-446.
