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The Park Place Economist

Abstract

This research extends the analysis of De Mouche et al. (2011) and Colby et al. (1993) relating price differentials in per acre-foot terms to the priority date of water rights and hydrologic conditions using experimental economic data. This study investigates the effect that priority date, or the year the right was established, can have on the price of leases in the market for water rights and will expand on the existing literature by using an experimental data set to test the relationship. It is hypothesized that senior water rights, those with an older priority date, will have higher prices, while junior water rights, those that have been more recently established, will have lower prices. A cross-sectional analysis using an Ordinary Least Squares (OLS) model will be conducted to test this hypothesis. If the expected relationship is observed and found to be significant, this study may have policy implications that could impact decisions to regulate the market for temporary water rights transfers more strictly in the Western United States. Ultimately, since water scarcity and water rights are a growing economic and environmental concern in regions around the globe, extensions of this work may lead to new policies and regulations on a global level.

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