RT Journal Article
SR Electronic
T1 How Well Do U.S. Western Water Markets Convey Economic Information?
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 1
OP 16
DO 10.3368/le.97.1.050719-0061R
VO 97
IS 1
A1 Rimsaite, Renata
A1 Fisher-Vanden, Karen
A1 Olmstead, Sheila
A1 Grogan, Danielle S.
YR 2021
UL http://le.uwpress.org/content/97/1/1.abstract
AB An efficient market implies that potential gains from trade are fully captured. Achieving this requires a well-functioning market where prices reflect all available information. In the case of water rights markets, this implies that the permanent water rights transfer price reflects the sum of discounted returns to this asset (i.e., the lease price), the market interest rate, and a risk premium that reflects potential future water scarcity. The purpose of this study is to assess the efficiency of western U.S. water markets by using the asset pricing model to measure how well prices reflect long-run returns to permanent water rights.