The Economics of Water

This website is intended to help people explore the interaction between people, markets and water. Water is the quintessential natural resource. It is both a renewable and exhaustible resource. Quality is often as large a concern as quantity for water. Every day people use vast amounts of water for everything from drinking to production/agricultural inputs. The use of this water comes as a cost which is all too often overlooked by the public at large.

Control of water pollution is one of the mainstays of environmental protection agencies in industrialized countries and one of the key challenges for developing countries. Delivery of water is a standard utility service. The industrial organization of this sector, including pricing issues, has generated a large literature. Tremendous investment has been made in water infrastructure to store water, tame rivers, and bring water to cities and agriculture. Not all of this investment has been benign from the perspective of its impact on ecosystem services. Much recent effort by economists has gone into trying to value those services ranging from preserving wetlands and mangrove forests to outdoor recreation.

The natural water cycle has long been characterized by substantial variability. The uncertainty this induces plays a large role in how modern water systems are managed. It also influences other phenomenon such as agricultural prices and the number of wildfires. Climate change is expected to result in major alterations of the current hydrological cycle, which in turn will influence a whole range of activities.

The topics links to the left cover what we feel are major issues in understanding the economics of water. Following the links you will find a discussion of each topic followed by some of the major research papers relating to that topic. This website initially grew out of a graduate level economics course at taught at the University of California, San Diego but is intended for a wider audience. We hope that this website becomes a resource for all those interested in the economics water.

The construction of this website has been graciously funded by the UCSD Sustainability Solutions Institute: seeking to bring together intellectual resources to meet the challenges of sustainability.