Pricing subsidies and economic efficiency: The U. S. Bureau of Reclamation

Journal Article · Thu Apr 01 00:00:00 EST 1993 · Journal of Law and Economics; (United States)

DOI:https://doi.org/10.1086/467271· OSTI ID:6985067

Kanazawa, M

Throughout this century, farmers in the western United States have purchased irrigation water from the Bureau of Reclamation (BOR) at heavily subsidized prices. The bureau's pricing policies have been highly controversial. A pervasive criticism centers on the efficiency effects of pricing policies that shield farmers from the true social cost of the water. Critics argue that the BOR's pricing below social cost encourages overuse of water by western farmers for at least three regions. First, it may distort the farmer's decision regarding the mix of factor inputs used in crop production, leading to overly water-intensive production techniques. Second, it may encourage too much entry into (or too little exit from) agriculture. Finally, it may enhance the attractiveness of receiving irrigation water from the bureau, thereby encouraging farmers to apply political pressure for additional projects. These arguments have led to increasing demands for reform of bureau pricing policies. This article examines the amount of water use in conjunction with bureau pricing policies and ceilings for delivery. The results lead to the conclusion that welfare losses resulting from the bureau's pricing policies are probably smaller than generally perceived.

• OSTI ID: 6985067
• Journal Information: Journal of Law and Economics; (United States), Vol. 36:1; ISSN 0022-2186
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
SUBSIDIES
ECONOMIC ANALYSIS
US BUREAU OF RECLAMATION
WATER POLICY
WATER USE
ECONOMICS
ENVIRONMENTAL POLICY
FINANCIAL INCENTIVES
GOVERNMENT POLICIES
NATIONAL ORGANIZATIONS
US DOI
US ORGANIZATIONS
293000* - Energy Planning & Policy- Policy
Legislation
& Regulation
290200 - Energy Planning & Policy- Economics & Sociology