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Water markets: Do agricultural sellers only care about the offered price per acre-foot? Joseph Cook1
 

Summary: 1
Water markets: Do agricultural sellers only care about the offered price per acre-foot?
Joseph Cook1
and Sergey Rabotyagov2
1
Assistant Professor, Evans School of Public Affairs, University of Washington
2
Assistant Professor, School of Forest Resources, University of Washington
Abstract
Water markets (leases and sales of water rights between willing buyers and sellers) have largely failed to
develop in the western US. Although there are a number of explanations for this failure, we explore one
potential reason that has received less attention in the economics and policy literature: farmers as sellers
may have preferences for different elements of a water market transaction that are not captured in the
relative comparison of their profits from farming and their profits from agreeing to a deal. We recruited
irrigators with senior water rights in the upper Yakima River Basin in Washington state to participate in a
series of experimental auctions. These auctions asked participants to imagine that they owned and
operated a hypothetical farm with a given level of net revenue (i.e. an induced value design). Participants
then reacted to series of offers for one-year leases from hypothetical buyers where several attributes of the
lease varied across tasks. These attributes were the type of buyer, the management of the water bank, the
lease type (split-season and full-season), and the offer price. Participants were paid in relation to their

  

Source: Anderson, Richard - Department of Computer Science and Engineering, University of Washington at Seattle

 

Collections: Computer Technologies and Information Sciences