Estimating Water Rights Demand and Supply: Are Non-market Factors Important?

G. Donoso, O. Melo, C. Jordán
  • Water Resources Management, July 2014, Springer Science + Business Media
  • DOI: 10.1007/s11269-014-0739-3

Water Rights Demand and Supply

What is it about?

The estimated supply and demand system shows that demand and supply forces indeed drive market water right prices. Demand is inelastic to price while supply is highly elastic. Furthermore, supplied and demanded water rights quantities are functions of the price as well as the type of buyer and seller, agents' profits, and geographic location of the water right. Additionally, the expected water rights price and the agent's previous water rights market-experience are important determinants of water rights demands and supply and, thus, buyer and seller characteristics are important determints of water rights demand and supply.

Why is it important?

This paper analyzes the variables that determine water use rights demand and supply of the first section of the Maipo river basin, Metropolitan Region of Chile, for the time period between July 1998 and June 2003. Water rights price model captures the importance of non-productivity factors such as an agent's water rights market experience and expected price.

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The following have contributed to this page: Guillermo Donoso