Price elasticity of water allocations demand in the Goulburn–Murray Irrigation District* |
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| Authors: | Sarah Wheeler Henning Bjornlund Martin Shanahan Alec Zuo |
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| Affiliation: | 1. Centre for Regulation and Market Analysis, School of Commerce, University of South Australia;2. Sarah Wheeler (email: ), Henning Bjornlund, Martin Shanahan and Alec Zuo are from the Centre for Regulation and Market Analysis, School of Commerce, University of South Australia, Adelaide. Henning Bjornlund also holds a Canadian Research Chair at the University of Lethbridge, Canada. |
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| Abstract: | Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn–Murray Irrigation District are analysed to estimate price elasticities. Based on bid prices, the price elasticity of demand for water allocations appears highly elastic, with elasticities strongly influenced by the season and drought. The price elasticity of supply for water allocations is also elastic, albeit less elastic than demand. Using actual prices paid, water demand is negatively related to price and is inelastic, and appears to be most influenced by demand the previous month, drought and seasonality factors. |
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| Keywords: | water allocations demand water allocations supply price elasticity water markets |
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