The Optimal Allocation of Water Along a System of Rivers: A Continuous Model with Sequential Bidding

14 Pages Posted: 7 Sep 2006

See all articles by Alex Coram

Alex Coram

Robert Gordon University - Political Economy; University of Tasmania; University of Western Australia - Political Science

Abstract

This paper uses a control theory approach to analyse the collectively optimal rate of extraction along a river system and constructs a bidding mechanism that would produce the required prices at each point. It also analyses some characteristics of this mechanism. This approach brings some new perspective to existing work on externalities. It also helps bring to light some aspects of the system as a whole that may be less obvious in a more piecemeal analysis, including the fact that there may not be an optimal solution to the allocation problem. Although the bidding mechanism may be difficult to implement, it may be possible to design various forms of hybrid schemes that have practical value.

Suggested Citation

Coram, Alex, The Optimal Allocation of Water Along a System of Rivers: A Continuous Model with Sequential Bidding. Australian Journal of Agricultural and Resource Economics, Vol. 50, No. 3, pp. 313-326, September 2006. Available at SSRN: https://ssrn.com/abstract=928724 or http://dx.doi.org/10.1111/j.1467-8489.2006.00357.x

Alex Coram (Contact Author)

Robert Gordon University - Political Economy ( email )

Aberdeen ab10 7qe
United Kingdom

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia
+61 3 6226 2329 (Phone)
+61 3 6226 2329 (Fax)

HOME PAGE: http://fcms.its.utas.edu.au/arts/government/pagedetails.asp?lpersonId=2810

University of Western Australia - Political Science ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

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