Interruptible Water Markets in the Pacific Northwest

Hamilton, Joel R.; Whittlesey, Norman K.; Halverson, P.B.

doi:10.2307/1241775

Cited by 63 publications

(35 citation statements)

References 4 publications

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“…Irrigation could still use the water in most years, but in dry periods, irrigation users would give up some water to maintain stream/river flows and power supplies. Hamilton and others believe interruptible water markets would require long-term contractual commitments, 20 to 25 years, to produce the most hydropower benefits (Hamilton, et al 1989). Hamilton and others explain that these are long-term contracts because water supplies can range from normal to only half of normal consumptive use; for farmers, market participation would be an added source of uncertainty.…”

Section: Improve Agricultural Efficiency Through Changes In Agricultumentioning

confidence: 99%

Energy and water sector policy strategies for drought mitigation.

Kelic¹,

Vugrin²,

Loose³

et al. 2009

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Tensions between the energy and water sectors occur when demand for electric power is high and water supply levels are low. There are several regions of the country, such as the western and southwestern states, where the confluence of energy and water is always strained due to population growth. However, for much of the country, this tension occurs at particular times of year (e.g., summer) or when a region is suffering from drought conditions. This report discusses prior work on the interdependencies between energy and water. It identifies the types of power plants that are most likely to be susceptible to water shortages, the regions of the country where this is most likely to occur, and policy options that can be applied in both the energy and water sectors to address the issue. The policy options are designed to be applied in the near term, applicable to all areas of the country, and to ease the tension between the energy and water sectors by addressing peak power demand or decreased water supply.3 ACKNOWLEDGEMENTS

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Section: Improve Agricultural Efficiency Through Changes In Agricultumentioning

confidence: 99%

Energy and water sector policy strategies for drought mitigation.

Kelic¹,

Vugrin²,

Loose³

et al. 2009

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“…Option contracts are one of many ways to facilitate risk-sharing among different parties. In a key precedent to our study, Hamilton et al [1989] analyzed long-term option contracts between irrigators and hydropower companies. In this case, the option price was evaluated from the viewpoint of the irrigators, that is, the selling party.…”

Section: à3mentioning

confidence: 99%

Formal risk‐transfer mechanisms for allocating uncertain water resources: The case of option contracts

Ramos

Garrido

2004

Water Resources Research

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[1] Water allocation in Mediterranean basins is characterized by increasingly uncertain availability. Mechanisms that facilitate water transfers and efficient risk sharing are critical for dealing with cyclical water shortages. An option contract can be an appropriate instrument for aiding such exchanges based on specific water rights attributes. Access to certain amounts of water under preestablished conditions could provide the basis for the option contract. The main objective of this paper is to test the hypothesis according to which an option contract may be a viable instrument for achieving efficient sharing of hydrological risks. A dynamic, stochastic, and discrete time model is developed to characterize the contract from the viewpoint of the selling party. The application of this methodology can find the compensating premium, which is computed as a risk premium. The premium ensures adequate compensation for the seller as well as for the additional risk imposed by the contract. The hypothesis is empirically tested by simulating the contract as a partial solution to the problems faced by the urban supply system of Seville (Spain). The other party is an irrigation district. Results show that the option contract would be a viable solution for both parties. For Seville's urban water supply system the option contract provides a more cost-effective alternative water supply than those presently considered by the city's water company. We find that mixed strategies including company's drought plans and option contracts are the most efficient, leading to less severe and less likely water shortages within the city supply system.

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“…Hamilton, Wittelsey, and Halvorsen (1989) provide an example where selling dry-period water increases the present value of water by a factor of nine. 5Alternatives must be found to compensate farmers for lost income.…”

Section: Proposed Reforms Of the Water Regime In Israel The West Banmentioning

confidence: 99%

Real and ideal water rights: The prospects for water-rights reform in Israel, Gaza, and the West Bank

Berck

Lipow

1994

Resource and Energy Economics

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The ideal water contract for a heterogeneous population of users is a prioritized right that is fully vested and fully tradable. A set of tradable, prioritized rights contracts will span the same space as the Debreu contingent commodities. Therefore, they lead to a competitive equilibrium that is Pareto optimal. Equal sharing of water shortfalls does not have this property_ Existing water policies in Israel and the Disputed Territories are not characterized by an efficient set of water contracts. The system misallocates water over both time a.nd space.Current policies are driven by strategic and ideological objectives. With peace, reform of water policies will become politically feasible. The paper concludes with a proposal for a new water-allocation system.

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Interruptible Water Markets in the Pacific Northwest

Cited by 63 publications

References 4 publications

Energy and water sector policy strategies for drought mitigation.

Energy and water sector policy strategies for drought mitigation.

Formal risk‐transfer mechanisms for allocating uncertain water resources: The case of option contracts

Real and ideal water rights: The prospects for water-rights reform in Israel, Gaza, and the West Bank

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