AGRICULTURAL WATER MARKETING, ALLOCATIVE EFFICIENCY, AND DRAINAGE REDUCTION

Water marketing is proposed to facilitate water exchange between agriculture and the urban sector. Water market effects on water conservation, economic efficiency, and drainage and environmental pollution reduction are investigated using a micro-level production model. The model is applied to conditions prevailing in the San Joaquin Valley of California, which is currently suffering agricultural drainage problems and environmental degradation. Results suggest that under a variety of conditions, a water market enables the farmer to both invest in an improved irrigation technology and pay for the safe disposal of drainage produced on his fields. Other societal benefits include the reduction in environmental pollution and benefits to the urban sector from additional water for its consumption. © 1991.