How Well Do U.S. Western Water Markets Convey Economic Information? | LBJ School of Public Affairs | The University of Texas at Austin
Article, Refereed Journal

How Well Do U.S. Western Water Markets Convey Economic Information?

Land Economics

Land Economics

An efficient market implies that potential gains from trade are fully captured. Achieving this requires a well-functioning market where prices reflect all available information. In the case of water rights markets, this implies that the permanent water rights transfer price reflects the sum of discounted returns to this asset (i.e., the lease price), the market interest rate, and a risk premium that reflects potential future water scarcity. The purpose of this study is to assess the efficiency of western U.S. water markets by using the asset pricing model to measure how well prices reflect long-run returns to permanent water rights.

Research Topic: 
Energy and Environmental Economics
Natural Resources and Conservation