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16:00 - 18:00 10 November 2014
Markets, Contracts, and Uncertainty: A Structural Model of a Groundwater Economy
Location
Ricardo Lecture Theatre |
Drayton House
(
Map)
30 Gordon Street |
London |
WC1H 0AN |
United Kingdom
Open to:
Academic |
Student
Ticketing: Open
Speaker information
Xavier Gine, World Bank
Access to groundwater has been a key driver of agricultural productivity growth and rural poverty reduction in south Asia. Yet, markets for groundwater have not developed everywhere. We develop a contract-theoretical model of groundwater transactions under payoff uncertainty, which arises from unpredictable fluctuations in groundwater availability during the agricultural dry season. Our focus is on the tradeoff between the ex-post inefficiency of seasonal contracts and the ex-ante inefficiency of more flexible water-selling arrangements. We structurally estimate the model using micro data on area irrigated under each transaction type combined with subjective probability distributions of end-of-season borewell discharge collected from over 1,600 well-owners across four districts in southern India. We use the estimates to quantify the contracting distortion and its impact on the development of groundwater markets.
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Department of Economics - Reception
020 7679 5888 |
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