Many water development activities for both the urban and rural sectors have involved large government subsidies. Agricultural pollution is usually of the non-point source type, as is runoff of automotive wastes from streets and highways and, frequently, urban domestic waste such as discarded motor oil. Although transaction costs are critical in determining the water system that best suits a given metropolitan area, other factors are also important, such as production costs and economies of scale. As new sources of water become increasingly expensive and difficult to finance, the transaction costs involved in demand management strategies will not appear to be so high. Many cities convey water over long distances and make extensive use of high-cost pumping. Management alternatives depend on a country's hydrologie stage of development and the age of its metropolitan water systems as well as the stage of its economic development.

In order to reduce economic and national security risks, U.S. energy policy, in 2005 and 2007, mandated production of renewable biofuels. By 2010, the renewable biofuel industry was consuming approximately one-third of domestic corn and soybean production. To meet this growing demand, conservation and pastureland has been cultivated with corn and soybean, resulting in a reduction in ecosystem services. Perennial bioenergy crops (e.g., switchgrass) offer a more sustainable alternative. However, unlike annual crops, farmers and landowners have little experience with perennial bioenergy crop production. Uncertainty in production and prices may impact the supply of these novel crops into an emerging market. Using a contingent supply method, we show that agricultural landowners are willing to produce perennial bioenergy crops, given competitive returns, but only on a portion of their land.

The editors divide their book into four sections with the first section focusing on water scarcity and management. Chapter 1, Rosegrant’s global outlook for water, food and hydropower serves as a g...

In this chapter, a number of critical institutions are identified that improve the financial sustainability of irrigation and water projects over time. The framework for analysis is based on Williamson's four levels of institutions (Williamson, O.E. 2000. The new institutional economics: taking stock, looking ahead. Journal of Economic Literature, 38(September): 595-613). The four levels are used to highlight the problems that arise in designing institutions and implementing institutional change. Examples are provided of institutional reforms and changes that have helped different countries raise both cost recovery rates and rates of collection. A key objective in designing water instruments is to provide water users and managers assurance regarding the actions of others within the irrigation project. Without the appropriate institutional setting, it will be difficult to effectively use different economic instruments, such as water prices, taxes, quotas, or markets, to improve the financial sustainability of water projects.

We examine the development of irrigation management in northern China using data from village and household panels. During the past decade, reform-oriented institutions, such as water user associations and contracting, have largely replaced the traditional institution of collective management in village-level irrigation systems. A feature unique to China is that water user associations and contractors are provided with monetary incentives to save water. Water user associations have not yet achieved the broad-based participation of farmers that some advocates consider as a primary goal for forming the associations. Many village leaders serve also as the leaders of water user associations, thus possibly reducing opportunities for receiving operational input and policy direction from farmers. However, we observe improved performance of irrigation systems managed by water user associations, relative to collective management, in terms of maintenance expenditures, the timeliness of water deliveries, and the rates of fee collection. Performance has improved also in systems managed by contractors, although not as substantially as in the case of water user associations. (C) 2010 Elsevier B.V. All rights reserved.

In this paper we identify a number of critical water problems and discuss the key role institutions can play in their resolution. We develop our framework for analysis based on Williamson's (2000) four-levels of institutions (e.g. norms, laws, and policies). Next, we discuss the problems of designing institutions. This is followed by a section arguing that we have, in the past, overinvested in water infrastructure and underinvested in -water institutions. Next, we discuss some of the changes that have occurred in the developing world as it has become integrated into world markets and the implications this has for water. We then list five priority areas where new water institutions need to be developed and old ones modified or discarded. Finally, we conclude with a call for a greater emphasis on the development of new and improved water institutions, particularly water rights.

We evaluate the welfare consequences of the new U.S. arsenic standard for drinking water, using contingent valuation survey and recent cost data for the small rural community water systems in Minnesota that have had arsenic levels above the new standard prior to its implementation. Using variation in actual arsenic levels and an elicitation method that recognizes the dependence of welfare values on both ambient arsenic concentrations and self‐protection levels, the welfare values of the new arsenic rule are estimated at $6–$23 per household per year for communities with less than 10 μg/L of arsenic currently in their water and $31–$78 for communities with more than 10 μg/L of arsenic. Given cost estimates of $230–$2,006 and the fact that a substantial portion of the cost needs to be internally financed, the new rule may have substantially negative welfare consequences for a number of small communities.

When water is plentiful, we tend to take it for granted and overuse it. Once water becomes scarce, our neglect changes to pleas for new supplies. In other words, when water demands exceed the supply at existing low prices, shortages emerge and we appeal for an increase in supply. Yet expanding domestic water supplies has become much more difficult and expensive. This is because we have already developed the low cost sources of supply and face growing environmental constraints due, in part, to our increased awareness of the many instream services undeveloped water resources provide. The cost of developing new sources includes both the explicit financial cost of infrastructure and the opportunity cost of using water consumptively, rather than for instream or nonconsumptive services. Although nonconsumptive uses, by definition, do not involve water consumption, they can change the timing and location of water flows (hydropower), increase water temperature (cooling), or pollute (boating) the water. In addition, these instream (or nonconsumptive services) such as sewage dilution, recreation, and a healthy aquatic habitat may require increased water supplies. Balancing all these demands is a challenge and requires us to recognize that our supplies of clean, fresh water resources are quite limited. Simply increasing the supply is no longer the easy option. We must now emphasize using the water we have more wisely.

We examine potential third-party effects arising from trading water from one region (rural) to another (urban). Using labor, water and heterogeneous land, rural agents produce a traded agricultural good and nontraded service good. Absent job market frictions, increased water trading improves per capita regional welfare, but aggregate service income can increase (decrease) while individual land rents decrease (increase). If labor experiences job market frictions, water trading can trigger socially inefficient land fallowing. and a decrease in per capita regional welfare. Simulation results confirm the no-job-market-friction model predictions.

American Journal of Agricultural EconomicsVolume 90, Issue 3 p. 857-859 Books Reviewed Water Institutions: Policies, Performance and Prospects K. William Easter, K. William Easter University of MinnesotaSearch for more papers by this author K. William Easter, K. William Easter University of MinnesotaSearch for more papers by this author First published: 01 August 2008 https://doi.org/10.1111/j.1467-8276.2008.01177_2.xRead the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Volume90, Issue3August 2008Pages 857-859 RelatedInformation

Our primary concern in this paper is to determine to what extent small communities have difficulty meeting the new stricter 2001 standard for arsenic levels in their drinking water. To do this we survey water users in rural Minnesota communities that had arsenic levels in their water supply exceeding 10 μg/L during 2001-2006. Our survey results show that after obtaining complete information concerning the arsenic levels in their drinking water consumers with relatively low levels of arsenic were willing to pay $8-9 annually, while those with high levels of arsenic are willing to pay $15-17 annually. We also found that consumer’s willingness to pay (WTP) didn’t vary by community size. Thus, we conclude that compared to compliance costs ($58-327 per capita annually) small rural communities were likely to find it difficult to cover the cost of compliance through increased water charges. Since many of the communities have to cover these costs of compliance by raising water charges, we ask the basic question: are there better treatment options for these rural communities that will lower the cost to consumers? One option might be to encourage individual householders to use household water treatment devices for communities serving fewer than 500 people. The devices could be made available by the local entity supplying the community’s water possibly at a subsidized rate along with complete information about the arsenic level in the water supply.

Although the experience with water markets is still limited, this situation is likely to change as more areas are faced with water scarcity problems and must look for better ways to reallocate this scarce resource. Under the appropriate conditions, it seems clear that water markets can be superior mechanisms for reallocating water to meet changing demand. A key reason to use water markets as the reallocation mechanism is because they give both potential buyers and sellers an incentive to conserve water and to participate in bringing about an equitable and efficient water reallocation. Markets also reduce the potential for rent-seeking by government officials. Trades can lead to permanent or temporary (during periods of drought) reallocations. If the reallocation of water rights is permanent, or between sectors, formal markets will need to be developed. In contrast, if the reallocation is only temporary and within the agricultural sector, then informal markets will usually work.