Table of Contents

Handbook of Water Economics

Handbook of Water Economics

Edited by Ariel Dinar and Kurt Schwabe

Water scarcity, whether in the quality or quantity dimension, afflicts most countries. Decisions on water management and allocation over time, space, and among uses and users involve economic considerations. This Handbook assembles research that represents recent thinking and applications in water economics. The book chapters are written by leading scholars in the field who address issues related to its use, management, and value. The topics cover analytical methods, sectoral and intersectoral water issues, and issues associated with different sources of water.

Chapter 12: The economic sustainability paradigm and freshwater and marine fisheries governance

R. Quentin Grafton and Dale Squires

Subjects: economics and finance, environmental economics, environment, water


Water and fisheries, both common-pool resources, face similar economic resource allocation and extraction challenges: how to maximize society’s discounted net benefits from these resources while ensuring their viability? Both freshwater use and marine capture fisheries are rivalrous in the sense that one person’s extra water extracted or fish caught reduces the amount or quality available to others. Such resources face the added problem that the cost of excluding others from harvesting or extracting the resource is high. Consequently, lower-value uses of common-pool resources may continue, despite the fact that higher-value alternatives are available. As with common-pool resources, the use of private goods is rivalrous, but with private goods the ability to exclude others is straightforward and, typically, undertaken at minimal cost. Thus, with private goods, competitive markets can allocate who gets what and when, such that if someone values a private good more than someone else, she or he can purchase and consume it. In other words, with private goods, competitive markets ensure that goods are allocated on the basis of marginal willingness to pay, and all gains from trade are exhausted. The key difference for common-pool resources relative to private goods is that the cost of excluding others from harvesting or extracting is frequently substantial, such that low-value uses for a resource can continue even when higher-value alternatives exist.

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