Teaching and Educational Methods
Simulating a Water Market: An In-Class Activity to Compare Market Efficiency under Various Institutions and Relative Advantages of Agents
Kyle D. Wilson(a)
(a)Pacific Northwest National Laboratory
JEL Codes: A22, Q25, D47
Keywords: Active learning, classroom game, economics education, water economics, water markets
Publish Date: August 6, 2023
Water markets are a public policy tool that can help to allocate water to its highest value uses, creating more efficient outcomes. This paper presents a classroom simulation that exposes students to some of the practical ramifications of establishing a water market and the outcomes that result. The activity has students role-playing as various businesses that require water for operation and assigns initial water endowments to some of the agents. Students must buy and sell water on a market and attempt to maximize their individual welfare. The students gain a deeper understanding of the welfare gains from water markets and learn how a lack of information and negotiating power can create inefficiency.
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Solving Optimal Groundwater Problems with Excel
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