Special issue of Ecological Economics examines water allocation policy and transaction costs
Dr. Dustin Garrick (School of Geography and the Environment, Oxford Martin School), co-edited a special issue of Ecological Economics on transaction costs and environmental policy, featuring papers on water, carbon, biodiversity and land use issues. Three papers examine water allocation reforms and deliver insights about institutional responses to water allocation tradeoffs.
Transaction costs are comparably high for water allocation challenges because property rights are complex and contested. By clarifying conceptual issues and taking stock of empirical evidence and methodological innovations, this collection of papers stimulates more attention to transaction costs in environmental policy design and evaluation and provides recommendations to improve policy choices.
In a comparative study of water markets in the US and Australia, Garrick and colleagues highlight the need for flexibility to adjust water rights and diversion limits in response to policy learning. The study illustrates how the measurement and evaluation of transaction costs can encourage policy choices that improve water market performance and build capacity to adapt to climatic variability and competition.