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A Coasian Approach to Efficient Water Allocation of a Transboundary River

Abstract

The United States and Mexico recently resolved a decade-old water dispute that required Mexico to repay the accumulated water debt within one year. A Coasian analysis estimates the social welfare gains attainable to each country under an alternative debt repayment scheme that allows repayment over a longer time horizon and in a combination of dollars and water, instead of solely in water. Assuming average water supply conditions, under the agreed 1-year repayment contract, U.S. compensation value is 534% greater and Mexico’s compensation cost is 60% less relative to when compensation is paid exclusively in water.coase, water allocation, water compensation, water markets, Agribusiness, Consumer/Household Economics, Environmental Economics and Policy, Q1, Q2,

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