Droughts, Deluges, and (River) Diversions: Valuing Market-Based Water Reallocation
利用监管差异识别灌溉农场生产函数，评估全球最大水市场（澳大利亚东南部）的水权交易价值，发现交易使产出增加4-6%，且在干旱期价值最大。
This paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the market’s reallocation. I apply this framework to the largest water market in human history, located in southeastern Australia. Observed water trading increased output by 4–6 percent from 2007 to 2015, equivalent to avoiding an 8–12 percent uniform decline in water resources. Reallocation and average surplus both increase substantially during drought, implying that water markets can be most valuable when climatic variability is most severe.