The Intergovernmental Panel on Climate Change (IPCC) Technical Paper Climate Change and Water draws together and evaluates the information in IPCC Assessment and Special Reports concerning the impacts of climate change on hydrological processes and regimes, and on freshwater resources – their availability, quality, use and management. It takes into account current and projected regional key vulnerabilities, prospects for adaptation, and the relationships between climate change mitigation and water. Its objectives are:

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Climate change and water.

This paper studies the optimal timing of investment in an irreversible project where the benefits from the project and the investment cost follow continuous-time stochastic processes The optimal time to invest and an explicit formula for the value of the option to invest are derived The rule "invest if benefits exceed costs" does not properly account for the option value of waitingSimulations show that this option value can be significant, and that for surprisingly reasonable parameter values it may be optimal to wait until benefits are twice the investment cost Finally, we perform comparative static analysis on the valuation formula and on the rule for when to invest

The Value of Waiting to Invest

Contemporary research on the outcomes of diverse institutional arrangements for governing common-pool resources (CPRs ) and public goods at multiple scales builds on classical economic theory while developing new theory to explain phenomena that do not fit in a dichotomous world of “the market” and “the state.” Scholars are slowly shifting from positing simple systems to using more complex frameworks, theories, and models to understand the diversity of puzzles and problems facing humans interacting in contemporary societies. The humans we study have complex motivational structures and establish diverse private-for-profit, governmental, and com munity institutional arrangements that operate at multiple scales to generate productive and inno vative as well as destructive and perverse outcomes ( Douglass C. North 1990, 2005 ). In this article, I will describe the intellectual journey that I have taken the last half century from when I began graduate studies in the late 1950s. The early efforts to understand the poly centric water industry in California were formative for me. In addition to working with Vincent Ostrom and Charles M. Tiebout as they formulated the concept of polycentric systems for gov erning metropolitan areas, I studied the efforts of a large group of private and public water producers facing the problem of an overdrafted groundwater basin on the coast and watching saltwater intrusion threaten the possibility of long term use. Then, in the 1970s, I participated with colleagues in the study of polycentric police industries serving US metropolitan areas to find that the dominant theory underlying massive reform proposals was incorrect. Metropolitan areas served by a combination of large and small producers could achieve economies of scale in the production of some police services and avoid diseconomies of scale in the production of others. These early empirical studies led over time to the development of the Institutional Analysis and Development (IAD) framework. A common framework consistent with game theory enabled us to undertake a variety of empirical studies including a meta-analysis of a large number of existing case studies on common-pool resource systems around the world. Carefully designed experimental studies in the lab have enabled us to test precise combinations of structural vari ables to find that isolated, anonymous individuals overharvest from common-pool resources. Simply allowing communication, or “cheap talk,” enables participants to reduce overharvest ing and increase joint payoffs contrary to game theoretical predictions. Large studies of irrigation systems in Nepal and forests around the world challenge the presumption that governments always do a better job than users in organizing and protecting important resources.

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Beyond Markets and States: Polycentric Governance of Complex Economic Systems

Freshwater resources and their management

Part 1 Contingent valuation-based estimates of non-use value - an overview and outlook: on contingent valuation measurement of non-use values, P.A. Diamond and J.A. Hausman. Part 2 Empirical studies - examining the properties of contingent valuation-based measures of non-use value: does contingent valuation measure preferences? experimental evidence, P.A. Diamond et al measuring natural resource damages with contingent valuation - tests of validity and reliability, W. Desvousges et al issues in the contingent valuation of environmental goods - methodologies for data collection and analysis, D.L. McFadden and G.K. Leonard exploring a budget context for contingent valuation estimates, M.A. Kemp and C. Maxwell where do the numbers come from? how people respond to contingent valuation questions, D.A. Schkade and J.W. Payne review and analysis of recent state-of-the-art contingent valuation studies, W.J. Mead. Part 3 User damages in the case of an oil spill - a reference for total damages: assessing use value losses caused by natural resource injury, J.A. Hausman et al. Part 4 Theoretical issues - economic and legal problems using contingent valuation-based measures of non-use value: contingent valuation of the nonuse value of natural resources - implications for public policy and the liability system, S. Shavell some legal and regulatory aspects of contingent valuation, J.F. Daum is sympathy an economic value? philosophy, economics and the contingent valuation method, P.R. Milgrom. Part 5 Discussion of papers presented at the outlook symposium - an assessment and outlook for contingent valuation: panel discussion, A. Randall et al. Part 6 Perspectives - issues raised at the symposium: contingent valuation - a view of the conference and associated research, C.R. Plott and K.J. Arrow contingent valuation of non-use values - observations and questions, K.J. Arrow.

Contingent valuation : a critical assessment

Part 1: Economic Value of Water: Theory and Concepts 1. Water, Economics, and the Nature of Water Policy Issues 2. Conceptual Framework and Special Problems in Valuing Water Part 2: Methods for Valuing Producers' and Consumers' Values of Water 3. Methods for Valuing Producers' Uses of Water 4. Applied Methods of Valuation of Water Related Ecosystem Services Part 3: Applications of Valuation Methods 5. Valuation of Water Used in Irrigated Crop Production 6. Valuing Water Used by Industry 7. Valuing Water in Municipal Uses 8. Measuring Benefits of Flood Risk and Damage Reduction 9. Valuation of Selected Water-Related Ecosystem Services 10. Conclusions

Determining the Economic Value of Water: Concepts and Methods

A procedure for measuring option value and other preservation values of water quality is developed and applied to a case study area in the South Platte River Basin, Colorado. Benefits from water-based recreation activities are the focus of the study. The results provide an empirical test and confirmation of Weisbrod's proposal that option value and other preservation values represent important social benefits, and should be added to the aggregate consumer surplus of recreation activities to determine the total benefit of environmental amenities to society. In the absence of such an estimate, insufficient resources would be allocated by society to preservation of unique environments such as pristine mountain streams where mineral and energy development may irreversibly degrade water quality.

Option Value: Empirical Evidence from a Case Study of Recreation and Water Quality

Modeling Intrastate and Interstate Markets for Colorado River Water Resources

[1] Metaregression models are estimated to investigate sources of variation in empirical estimates of the price elasticity of irrigation water demand. Elasticity estimates are drawn from 24 studies reported in the United States since 1963, including mathematical programming, field experiments, and econometric studies. The mean price elasticity is 0.48. Long-run elasticities, those that are most useful for policy purposes, are likely larger than the mean estimate. Empirical results suggest that estimates may be more elastic if they are derived from mathematical programming or econometric studies and calculated at a higher irrigation water price. Less elastic estimates are found to be derived from models based on field experiments and in the presence of high-valued crops.

https://agupubs.onlinelibrary.wiley.com/doi/pdf/10.1029/2005WR004009

Irrigation water demand: A meta‐analysis of price elasticities

Water to supply growing demands from agriculture, households, and industries in the arid West traditionally has been secured through water storage and conveyance projects. Economists have been warning for years that increasing scarcity and costs of unappropriated water supplies (e.g., Wollman) together with limited public budgets and the environmental costs of new projects would shift attention to nonstructural approaches, particularly to the market mechanism, to meet emerging needs. Change, however, appears to be slow. To some observers, for example Anderson, the number of recorded instances where water supply problems are solved by market-like transactions remains far too limited.

Robert A. Young

Papers

Determining the Economic Value of Water: Concepts and Methods

Option Value: Empirical Evidence from a Case Study of Recreation and Water Quality

Modeling Intrastate and Interstate Markets for Colorado River Water Resources

Irrigation water demand: A meta‐analysis of price elasticities

Why Are There So Few Transactions among Water Users