Working Paper

Economic studies of water markets as a tool for short- and long-run reallocation of water resources commonly estimate price and demand without considering that water is supplied by different institutions with different water rights and rules. Here, I show that this omission significantly skews price and demand estimations, studying water transactions from overlapping water supply institutions with distinct, active water markets in northeastern Colorado. Estimating water market demand differentiated by water supplier, I find higher price elasticities (-0.85 to -1.3) than previous literature (-0.2 and -0.5) for permanent transactions. I also find a price premium for water rights with lower transaction costs and that water demand varies significantly across water suppliers. This work has important policy implications, highlighting potential welfare gains from transitioning to more flexible water rights.

Work in Progress

  • Who Buys and Who Sells Water?: Evidence Using Colorado-Big Thompson Data (joint with C. Hilgeman, M. Hanemann, and P. Womble)

Using data from Northern Colorado Water Conservancy District, the local administrator of the Colorado-Big Thompson project, we construct a panel data of the full set of allottees and their corresponding transactions over the period between 2008 to 2020. The novelty of the data is that we are able not only to observe the agents involved in transactions, but also those C-BT unit holders that do not transact. This allows us to do analysis of market participation beyond the classical demand and supply estimation. First, we do a network analysis of buyers and sellers to understand the trading network in the C-BT project. Second, we do a discrete-continuous estimation of the decision to sell water, to shed light regarding the determinants of the decision to sell or not water.

  • Environmental Reputation with Observable Actions

I develop a model in which a firm builds environmental reputation, and can do so through unobservable and observable actions. The motivating example is an industry in which a firm can be a green firm or a non-green firm, and in every period it can invest to affect a transition from type to type. At the same time, the firm can engage in publicly observable actions (signals) like revealing abatements, doing environmentally conscious campaings, etc. Unlike previous models of reputation, the ability to take observable actions results in an equilibrium where firms reveals their true type every period. This drives two main results: in equilibrium, the signaling game dominates the reputation process, and firms cannot use type investments to take advantage of their environmental reputation.