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| Title: | ASYMMETRIC INFORMATION AND THE PRICING OF NATURAL RESOURCES: THE CASE OF UNMETERED WATER; Proceedings of the Fifth Joint Conference on Agriculture, Food, and the Environment, June 17-18, 1996, Padova, Italy |
| Authors: | Smith, Rodney B.W.
Tsur, Yacov |
| Authors (Email): | Smith, Rodney B.W. (smith142@umn.edu) |
| Issue Date: | 1996 |
| Series/Report no.: | Working Paper WP96-04, Session VI, Paper 2 |
| Abstract: | This paper uses mechanism design theory to (i) propose a mechanism to price irrigation water when farmers are heterogeneous in their production technologies (adverse selection) and their individual water uses are unobserved (moral hazard) and (ii) discusses briefly when such a mechanism might be economically unreasonable. Unmetered irrigation water is often priced by imposing per-acre fees on cultivated acreage or by charging per-unit fees on observable inputs or outputs. The offered pricing procedure is based on the observed output and achieves a first-best outcome when implementation is free of transaction costs. |
| URI: | http://purl.umn.edu/14368 |
| Institution/Association: | University of Minnesota>Center for International Food and Agricultural Policy>Working Papers |
| Total Pages: | 16 |
| Language: | English |
| Collections: | Working Papers
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