Abstract
This chapter outlines the long-run profile of market-based regulations that have been adopted in Israel over the years in attempting to cope with water scarcity, on one hand, and with increasing water demand, on the other. Particular attention is given to the relative efficiency of applying combined quotas and pricing mechanisms for regulating water use within the agricultural sector, the dominant user of water resources. Finally, we discuss the added benefit from trade when coupled with development of water technologies that increases water resources and water quality and indirect third-party effects of market-based regulations.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Early recommendations to create markets for water were suggested by a special committee report on water prices in Israel, submitted to the office of the Israeli Prime Ministry on 2003 (Feinerman et al. 2003).
- 2.
In many circumstances, auctions as trading institutions are found to be superior to bargaining institutions. By using a model of monopoly with random matching heterogeneous buyers and the possibility to resell, Milgrom (1987) pointed out that auctions often lead to an efficient and stable outcome. The intuition that auctions have an inherent advantage over bargaining mechanisms with random matching among the players is straightforward. Auctions have the ability to discriminate among buyers and choose the highest value buyer (McAfee and McMillan 1987; Milgrom 1987). However, in the absence of this advantage (e.g., homogeneous environments in which buyers and sellers are all of one type), it is unclear whether auctions remain superior to bargaining. Lu and McAfee (1996) considered an environment of homogeneous buyers and sellers, which eliminates the advantage auctions possess of matching buyers and sellers, showing that both auctions and bargaining are at equilibrium. Nevertheless, only auctions are evolutionarily stable.
References
Back, K., & Zender, J. F. (1993). Auctions of divisible goods. Review of Financial Studies, 6, 733–764.
Bar Shira, Z., & Finkelshtain, I. (2000). The long run inefficiency of block-rate pricing. Natural Resource Modeling, 13(4), 471–492.
Bar Shira, Z., Finkelshtain, I., & Simhon, A. (2006). Block rate versus uniform water pricing in agriculture: An empirical analysis. American Journal of Agricultural Economics, 88(4), 986–999.
DiSegni, D. M., Feder, A., & Neeman, Z. (2012). Water auction simulations: Conduct and performance in the agricultural sector in Israel. Paper presented at the American Agricultural and Applied Economic Association Annual Meeting, Seattle, WA.
Feinerman, E., Mishaeli, D., & Gadish, Y. (2003). Water prices in the agriculture (Final Report of the Feinerman Committee). Jerusalem: Israeli Prime Ministry Office.
Fischhendler, I., & Feitelson, E. (2005). The formation and viability of a non-basin water management: The US-Canada case. Geoforum, 36(6), 792–804.
Israel Central Bureau of Statistics. (2008). Agricultural Statistics Quarterly. Jerusalem, Israel.
Israel Water Law. (1959). State of Israel. The Water Law, Article 1 (5719–1959).
Kislev, Y. (2001). The water economy of Israel (Research Paper). Rehovot: The Center for Agricultural Economic Research, the Hebrew University of Jerusalem.
Lu, X., & McAfee, R. (1996). The evolutionary stability of auctions over bargaining. Games and Economic Behavior, 15, 228–254.
McAfee, P., & McMillan, J. (1987). Auctions with a stochastic number of bidders. Journal of Economic Theory, 43, 1–9.
Milgrom, P. (1987). Auction theory. In T. Bewley (Ed.), Advances in economic theory. Cambridge, UK: Cambridge University Press.
Rofe, T. (2012). Water transfer in the agricultural sector. Internal Report. Bet Dagan: Research, Economy and Strategy Division. Israel Ministry of Agriculture and Rural Development.
Tsur, Y. (2004). Pricing irrigation water: Principals and cases from developing countries. Washington, DC: Resources for the Future Press.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer Science+Business Media Dordrecht
About this chapter
Cite this chapter
DiSegni, D.M. (2013). Market-Based Regulations on Water Users. In: Becker, N. (eds) Water Policy in Israel. Global Issues in Water Policy, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-5911-4_9
Download citation
DOI: https://doi.org/10.1007/978-94-007-5911-4_9
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-007-5910-7
Online ISBN: 978-94-007-5911-4
eBook Packages: Earth and Environmental ScienceEarth and Environmental Science (R0)