Price Determination and Efficiency in the Market for South Platte Basin Ditch Company Shares
Matthew T. Payne
Mark Griffin Smith
Colorado College - Department of Economics and Business
affiliation not provided to SSRN
September 5, 2011
Water scarcity presents an obstacle to economic development in the western United States. Water right markets promote efficient allocation, helping states to derive the highest possible economic benefit from available resources, and allowing western water supplies to support new development and population growth. However, uncertainty surrounding water right market values threatens the ability of water markets to efficiently allocate water. To address this problem, we employ econometric analysis techniques to estimate the values market participants place on shares of ditch company water rights in Colorado’s South Platte basin. Our analysis demonstrates that ditch company share buyers value proximity, reliability, and flexibility.
Number of Pages in PDF File: 39
Keywords: water markets, water rights, water prices, Colorado
JEL Classification: Q23
Date posted: September 5, 2011
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