The Allocation and Pricing of Water in a River Basin

Abstract

Abstract A spatio‐temporal equilibrium model that incorporates intraseasonal demands for irrigation water is developed for the situation with a (constrained) competitive market for water. An application of the quadratic programming model, which utilizes demand and supply estimates relating to an intensive irrigation area in southeastern Australia, is used to derive optimal short‐run allocation and pricing patterns for the resource. Extensions of the model to cover multiple dam river basins and additional water uses seem conceptually straightforward, but the limitations imposed by its deterministic partial equilibrium character should be recognized.