Journal Article

Allocation and Pricing at the Water District Level

Eyal Brill, Eithan Hochman and David Zilberman

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 3, pages 952-963
Published in print August 1997 | ISSN: 0002-9092
Published online August 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244435
Allocation and Pricing at the Water District Level

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Efficient water pricing schemes are introduced for nonprofit water agencies, where members have property rights based upon historical usage. The existing average cost rate design is compared with the proposed designs, “active trading” and “passive trading.” Both schemes lead to efficiency, but “passive trading” has operational advantages since it generates less transaction costs than “active trading.” Block rate pricing is shown to be suboptimal and inferior to “passive trading.” An example from the Israeli water economy is used as an empirical illustration.

Keywords: block rate pricing; efficient allocation; transferable rights; water agencies; water pricing; Q150

Journal Article.  0 words. 

Subjects: Agricultural Economics

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