Abstract and Keywords
Water resources provide services of economic value to different sectors through consumptive uses, non-consumptive uses, nonuse, and as a waste receptor. The diverse array of goods and services provided by water create a challenge for efficiently allocating the resource. Furthermore, water resources are often subject to market failures because they lack the conditions of excludability and rivalry. These market failures result in depleted water supplies and degraded water quality. This chapter discusses various policy approaches that have attempted to address these market failures, many of which have created additional economic inefficiencies. It also discusses some of the scale and jurisdiction issues in water management—such as local self-governing institutions and transboundary policy formation—from an economics perspective. It primarily analyzes policies affecting agricultural water use and the impacts of agriculture on water quality because agriculture is the largest user of water and is a major contributor to water quality problems.
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