Market-based instruments pose widely prescribed but rarely implemented tools to manage scarce water resources. We estimate the price elasticity of demand for agricultural groundwater in a water district with volumetric pricing and monthly well-level extraction data spanning 17 years. Demand is inelastic, with estimates ranging from −0.16 to −0.2. We apply this parameter to calculate the surplus change from the introduction of agricultural water pricing, and the prospective gains from water transfers between urban and agricultural users, with and without water supply curtailments. Relative to a water conservation mandate applied uniformly to all users, trading can substantially mitigate the costs of water scarcity.

以市场为基础的工具构成了规定广泛但很少实施的工具来管理稀缺的水资源。我们通过水价和17年的月度井水抽取数据，估算水域内农业地下水需求的价格弹性。需求是无弹性的，估计范围为-0.16至-0.2。我们使用此参数来计算引入农业用水定价后的剩余变化，以及在有或没有供水限制的情况下，城市和农业用户之间的水转移带来的预期收益。相对于统一适用于所有用户的节水指令，交易可以大大减少水资源短缺的成本。