An Application of Spatial Equilibrium Analysis to Water Resource Allocation

An interregional equilibrium model of a type developed by Takayama and Judge is used as a basis to derive the optimal allocation and pricing of regulated supplies of water in a river basin. The model assumes that a river basin authority acts as the sole public utility distributor of water over time and that the capacity to supply water within any time period may be constrained by the physical structure of the system. The potential usefulness of such a model is demonstrated and the results discussed. Models of this type have considerable potential for empirical research in the field of water resources.