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Three essays on institutional design for voluntary water conservation




Sharp, Misti, author
Hoag, Dana, advisor
Manning, Dale, committee member
Suter, Jordan, committee member
Arabi, Mazdak, committee member

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This dissertation is a compilation of three essays on institutional issues inherent in water conservation decision making by agricultural producers. Chapter 1 includes summaries of the three papers I intend to defend and introduces some ideas and concepts visited throughout the dissertation. Chapter 2 presents the results of a multidisciplinary study on managing selenium pollution in the Lower Arkansas River Basin in Southeastern Colorado titled, "Institutional Constraints on Cost-Effective Water Management: Selenium Contamination in Colorado's Lower Arkansas River Valley." The study presents the cost-effectiveness of various management practices to mitigate selenium pollution flows simulated over twenty years using regional scale groundwater and reactive solute transport models. Social institutions, such as rules on water conservation, serve to influence decision making and alter the economic feasibility of conservation efforts. The third chapter, "Uncertainty and Technology Adoption: Lessons from the Arkansas River Valley," extends the property rights institutional concerns introduced in chapter 2 and looks specifically to how use-based property rights influence decision making for conservation irrigation technology. When an irreversible investment is made under uncertainty, there is often a delay in investment that would not be seen under the traditional Marshallian framework for investment. This study advances the literature by exploring how property rights further exacerbate this option value hurdle which serves to further delay investment under uncertain water supplies. An empirical section explores how property rights are being applied in the Arkansas River Basin and discusses the implications for future conservation efforts. Finally, the last chapter, "An Experimental Approach to Resolving Uncertainty in Water Quality Trading Markets," uses experimental economics to explore the impacts of resolving uncertainty in water quality trading market design. This paper looks at whether non-point sources would take an opportunity to resolve environmental uncertainty if there is a water quality trading market in place. Additionally, it explores the interactions between a pollution market and voluntary abatement with and without a voluntary-threat regulation.


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option value
property rights


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