Nir Becker

Reallocating Water Resources in the Middle East through Market Mechanisms

The growing demand for water by countries in the eastern Mediterranean raises the need to explore ways and means to ameliorate water scarcity. Economists have for some time proposed methods of more efficient exploitation of existing water supplies. Specifically, by employing m arket incentive mechanisms to encou rage voluntary water sharing among countries and regions is likely to lead to greater efficiency in water utilization. This paper explores the efficiency gains associated with re-allocating fresh water resources in the eastern Mediterranean through water rights markets. The results suggest that all parties involved might benefit to a greater or lesser degree from trading in water rights.

Estimating the economic value of viewing griffon vultures Gyps fulvus: a Travel Cost Model study at Gamla Nature Reserve, Israel

The proper valuation of non-market environ- mental commodities such as wildlife viewing has signifi- cant policy implications. We implemented the Travel Cost Method (TCM) to estimate the value of viewing threatened Eurasian griffon vulture Gyps fulvus by the public at Gamla Nature Reserve, northern Israel. We used the zonal TCM, where concentric zones were defined around the site such that the cost of travel from all points in a given zone was approximately constant. We generated a visit-distance function and used it, based on 143 questionnaires, to derive the demand function for the site from which a monetary value could be estimated. The potential annual benefit of Gamla was estimated to be NIS 5.5-6.0 million (USD 1.1-1.2 million). The annual

Models of water market mechanisms and an illustrative application to the Middle East

Abstract The growing demand by countries in the eastern Mediterranean over the waters of the Jordan and Yarmuk Rivers, and the highly depleted coastal and mountain groundwater reservoirs, raise the need to explore ways and means to ameliorate existing and expected water scarcity. Economists have for some time proposed ways towards more efficient exploitation of existing water supplies, specifically by employing market incentive mechanisms in order to encourage voluntary water sharing among countries and regions. Such trading schemes may involve two or more countries. It can be shown that such schemes — given any initial assignment of property claims to water resources — can often lead to increases in the welfare of the countries concerned. The paper proposes two specific mechanisms for international markets in water claims in the eastern Mediterranean region, in which parties voluntarily engage in such trades, as they would expect to gain real benefits from these transactions. Simulation exercises with real data show that — as is true for any opening of markets to international trade — that all parties in the region might benefit to a greater or lesser degree from auctions of water.

The Benefits and Costs of Noise Reduction

This paper attempts to measure, in a cost-benefit analysis, a stricter noise abatement programme for noise originating from roads in Israel. Using the hedonic price method for three large cities and rural area transactions, a benefit from noise reduction was found. In order to perform a social cost-benefit analysis, a measure of benefit has been derived for 1 km of road and has been compared with the cost of noise reduction under different types of road structure. The results indicate that even though benefits have largely increased when compared to past decades (e.g. 1.2% of an average urban property value per 1 decibel reduction), the decision to insulate a given road is dependent on location and road structure. This raises the normative question of a national vs. regional standard that decision makers should be aware of and such studies could be of help in this respect.

Stream restoration as a basis for Israeli–Palestinian cooperation: a comparative analysis of two transboundary streams

Transboundary environmental degradation often poses serious health and security threats to regional residents. The Israeli–Palestinian conflict further aggravates an environment already characterized by water scarcity, environmental distress and polluted waterways. Yet, common ground appears to emerge from a recent contingent valuation study in which both Israelis and Palestinians reveal common water use and riparian restoration preferences, as well as comparable willingness to pay for proposed restoration efforts. These surprising results – especially that despite vast economic hindrances, Palestinians have revealed similar willingness to contribute financially to stream restoration – indicate the seriousness of regional health issues and demonstrate a foundation for future cooperative restoration efforts. A simple cost–benefit analysis is conducted, which sheds light on future policy formation, especially with regard to water treatment and allocation decisions for both societies.

The Effect and Reform of Water Pricing: The Israeli Experience

Water pricing in Israel led the water situation to become almost disastrous. This was true for both quantity and quality issues. This paper deals with a proposed price reform and its implication for two issues. The first is the optimal timing to switch to a backstop technology--desalinating water in this case. Economic analysis shows that combining both demand and supply management can postpone desalinization projects by more than 20 years. The second issue deals with changing the price block schedule in order to compensate farmers for a given price change. Increasing the marginal price of water to its real value damages the marginal users. The paper tries to calculate and proposes a new price block schedule that will leave the farmers as well off as they were before the change.

Water diversions in the great lakes basin analyzed in a game theory framework

Water diversions from the great lakes is a complex problem because the five lakes are a common property resource, since hydropower production and commercial navigation are a function oflakes level.Game theory is used to analyze the dependency among eight states and two provinces. The decisions concerning water diversion affect the state of the system in future periods and several scenarios with different restrictions on the lakes where diversions can be carried. This was done with respect to a one player (Social planner), two players (U.S.versus Canada) and independent actions taken by states and provinces which can sum up to ten players.The results suggests that states do not divert water necessarily because they stand to gain but because they may lose more if they do not. This is a situation not unlike the prisoners dilemma case.

A comparative analysis of the pricing systems of nature reserves

The pricing of nature reserves increases in relevance as budgetary constraints become a limiting factor in their proper operation. The author considers and compares different pricing alternatives for managing nature reserves (NRs) and applies them to two NRs in Israel. He compares four pricing strategies: free entrance, maximum revenue pricing, cost recovery pricing and differential pricing. These strategies were implemented both to the existing situation and to a development scenario in which an upgrade in the NR was considered. The two NRs analysed are the Darga Nature Reserve, an open reserve where no entrance fee is charged, and the Gamla Nature Reserve, a closed reserve where an entrance fee is charged. Benefits were derived using the travel cost method (TCM). The results show that differential pricing is the most cost-effective policy. It recovers costs in both policy scenarios with the least dead-weight loss (DWL). The consequence of the differential pricing, however, is that there is a cross-subsidy of the Gamla reserve of 45–80%, depending on the scenario analysed. It is shown that there are conditions in which only a cross-subsidy can make a development plan sustainable. Usually, policymakers differentiate pricing according to visitor characteristics. Differential pricing among reserves provides another tool that can be consistent with cost recovery while minimizing DWL. Another advantage is that site differentiating causes less social tension, because pricing is tailored not to a person but to a site.

A Market Solution for the Israeli-Palestinian Water Dispute

Abstract The perceived shortage of water within Israel and the Palestinian authority raises the need to explore the ways and means to ameliorate existing and expected water scarcity. This study stresses the need for demand management and market allocation that will shift water from agriculture to other uses. Since the real price of water in this region is too high, water should not serve as input for many of the crops that are currently grown by the local population. The hidden and visible subsidies that are currently supporting the prices of water would be better used to create substituting employment to shift more farmers away from agricultural occupations. Such policy will ease the shortage of water that is created by policies and behavior that were aimed indirectly, to increase the use of water.

Cost-benefit analysis of an accelerated vehicle-retirement programme

High taxes on new cars in Israel provide an incentive for car owners to defer the purchase of new vehicles. The result is a vehicle fleet of older, more polluting vehicles, with air pollution costs estimated at up to