Market-Based Regulations on Water Users

Abstract

This chapter outlines the long-run profile of market-based regulations that have been adopted in Israel over the years in attempting to cope with water scarcity, on one hand, and with increasing water demand, on the other. Particular attention is given to the relative efficiency of applying combined quotas and pricing mechanisms for regulating water use within the agricultural sector, the dominant user of water resources. Finally, we discuss the added benefit from trade when coupled with development of water technologies that increases water resources and water quality and indirect third-party effects of market-based regulations.