Econ325 - Prices, Property and the Problem of the Commons

Course Description
Course Grade
Required Books
Class Email List

Other Readings

Econ References


Lynne Lewis
Pettengill 261
Office Hours during short term: by appointment


Course Objectives:

This course is designed to teach you how to apply economic principles and tools to the analysis of water and fisheries management issues and problems. Both resource quantity (scarcity, allocation and pricing) and environmental quality (pollution control) topics will be covered. The prerequisites for this course are intermediate microeconomics, statistics or econometrics and calculus.


Course Grading:

There will be no exams in this course. Since I left school the only test I’ve had to take was for a new drivers license. When you leave Bates and enter the job market, your performance will be based on how effectively you communicate, how well you write, how you respond to assignments and how you participate in meetings. Consequently, your performance in this course will be evaluated for those attributes and not on how well you can take a test.

In your future jobs, you will be writing memos, reports, giving presentations, using computers and gathering data. For this class we will be doing the same thing.

There will be one group project worth 35%, one individual research project worth 40% and in-class projects, assignments and class participation worth 25%. Included in your class participation grade will be one presentation of one of the class readings. Groups and topics will be assigned for the group project. Individual research papers will be on a water/fisheries economics topic of your choosing (with professor approval). Papers will be due on Wednesday, December 15 at 5:00 p.m.



There are 2 reading packets assigned for this class. Packets 1 and 2 are assigned readings. These packets may be purchased at the book store.

In packet #1:

Water Law and Allocation:

Dales, J. H. (1993) "Land, Water and Ownership." in Economics of the Environment, (Dorfman and Dorfman (Eds.))

Rose, Carol (1990). "Energy and Efficiency in the Realignment of Common Law Water Rights" Journal of Legal Studies 261-296.

Ciriacy-Wantrup, S. V. , R.C. Bishop, (1975) “ ’Common Property’ as a Concept in Natural Resources Policy” Natural Resources Journal v. 75.

General Overview/River Basin Planning/Discounting and
Cost-Benefit Analysis:

Tietenberg, Thomas (1996). Environmental and Natural Resource Economics Harper Colllins. Chapter 10.

Young, R.A. and R.H. Haveman (1985). "Economics of Water Resources: A Survey," in Handbook of Natural Resource and Energy Economics vol. II, Kneese and Sweeney (Eds.) (On Reserve)

Hyman et al. (1998) "Water Rights and Water Trading," Chapter 23 in The Water Business. (On Reserve)

North, Ronald M. (1985). "Economics and Financing" Chapter 5 in Water Managment: Technology and Institutions, Viessman and Welty (Eds.), Harper and Row.

Colby, B. G. (1989). "Estimating the Value of Water in Alternative Uses." Natural Resources Journal 29(2) (Spring 1989)): 511 527.

Howe, C. W. (1986). "Project Benefits and Costs from National and Regional Viewpoints: Methodological Issues and Case Study of the Colorado Big Thompson Project." Natural Resources Journal 26(1 (Winter 1987)): 5 20.

Michelsen, A. (1994). AAdministrative, Institutional, and Structural Characteristics of an Active Water Market@ Water Resources Bulletin 30 (6): 971-982.

Municipal Pricing:

Hanemann, M. (1998) "Price and Rate Structures" Chapter 5 in Urban Water Demand Management and Planning, Baumann, Boland and Hanemann (Eds.), McGraw-Hill.

Howe, C.W. (1998) "Forms and Functions of Water Pricing: An Overview" Chapter 6 in Urban Water Demand Management and Planning, Baumann, Boland and Hanemann (Eds.), McGraw-Hill.

Gibbons, Diana (1986). The Economic Value of Water, Chapter 1, Resources for the Future, Washington, D.C 7-21.

Collinge, R. A. (1992). "Revenue Neutral Water Conservation: Marginal Cost Pricing with Discount Coupons." Water Resources Research 28(3 (March 1992)): 617 622.

Collinge, R. A. (1994). "Transferable Rate Entitlements: The Overlooked Opportunity in Municipal Water Pricing." Public Finance Quarterly 22(1 (January 1994)): 46 64.

Howe, C. W. and M.G. Smith, et al. (1994). "The Value of Water Supply Reliability in Urban Water Systems." Journal of Environmental Economics and Management 26: 19 30.


AREI Water Use and Pricing

Gibbons, Diana (1986). The Economic Value of Water, Chapter-2, Resources for the Future, Washington, D.C 23-44.

Naeser, R. and L. Bennett (1998). AThe Cost of Noncompliance: The Economic Value of Water in the Middle Arkansas River Valley,@ Natural Resources Journal, Summer 445-463.


Loomis, John B. (1998). “Estimating the Public’s Values for Instream Flow: Economic Techniques and Dollar Values,” Journal of the American Water Resources Association 34(5), October. ISSN 1093-474X.

Acharya and Lewis Bennett “Valuing Open Space and Land Use Patterns in Urban Watersheds.” Journal of Real Estate Finance and Economics, vol 22 (2 and 3), ISSN 0895-5638

Loomis John B. (2000), “Environmental Valuation Techniques in Water Resource Decision Making, Journal of Water Resources Planning and Management, November/December.

Dam Removal:

National Research Council (1999) New Directions in Water Resources, Planning for the U.S. Army Corp of Engineers, Chapter 5, pp.65-78.ISBN 0-309-06097-4.

Freeman, Myrick, “Review and Critique of FERC’s Benefit-Cost Analysis for the Edwards Dam Project,” a Report to the Federal Energy Regulatory Commissiion, March 1996.

Freeman, Myrick, “The Economic Benefits of Removing Edwards Dam,” Unpublished paper, Bowdoin College, May 1995.


In packet #2:


Gardner, R., M. R. Moore, et al. (1992). Groundwater Property Rights: Laboratory Evidence on the Performance of Entry Restrictions and Stock Quotas, Working Paper.
(On Reserve)

Miller, K. A., L. J. MacDonnell, et al. (1992). "Groundwater Rights in an Uncertain Environment: Theoretical Perspectives on the San Luis Valley" Natural Resources Journal, 33, (summer) 727-58.


Hartwick J. and Olewiler, N.(1998) The Economics of Natural Resource Use,, Addison-Wesley, Chapter 5.pp. 90-176. ISBN 0-321-01428-6. (On Reserve)

National Academy Press. (1999). Sharing the Fish. Washington, D.C. Chapters 1-2 and appendix G. ISBN # 0-309-06330-2.

Sutinen, J. and Peder Anderson, “The Economics of Fisheries Law Enforcement” Land Economics vol. 61, No. 4, November 1985

Water Quality, The Clean Water Act And Damage Valuation :

Freeman, A. Myrick, "Water Pollution Policy" in Public Policies for Environmental Protection, Paul Portney (Ed.), Resources for the Future, Washington, D.C.

Howe (1994). "Clean Water Legislation: An Economist's Perspective" in Water Resources Update

Water Quality and Tradeable Pollution Rights:

Hahn, Robert (1989). "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives.

Hockenstein, J.B., R.N. Stavins and B.W. Whitehead (1997). "Crafting the Next Generation of Market-Based Environmental Tools." Environment, May.

Bennett, L., S. Thorpe and A.J.Guse, ACost Effective Control of Nitrogen Loads in Long Island Sound.”Water Resources Research 36(12), 3711-3720, December 2000, ISSN 0043-1397.

Lyon, Randolph (1982). "Auctions and Alternative Procedures for Allocating Pollution Rights" Land Economics, Vol. 58 (1), February, 16-32.

Water Quality and Nonpoint Source Pollution:

Feather, Peter and Joseph Cooper (1995). "Voluntary Incentives for Reducing Agricultural Nonpoint Source Water Pollution", United States Department of Agriculture, Economic Research Services, Agriculture Information Bulletin Number 716, May.

Malik et al. (1993). "Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio" Amer J. Agr. Econ.


General Topics And Working Schedule:

This schedule is a working schedule only. We will try to stick to it, but student interest and the speed at which we work will determine the topics covered and the time devoted to each topic. Please be flexible and let me know your particular interests!

Schedule Topic
Week 1:  
9/9 Introduction
  Water Law
  Overview of Natural Resource and Environmental Economics
Week 2:  
9/14, 9/16 Cost-Benefit Analysis Related to Water Projects - Successes and Failures
Week 3:  
  No Class This Week
Week 4:  
9/28 Cost-Benefit Analysis and Valuation
9/30 Municipal Water Supply – Pricing
Week 5:  
10/5, 10/7 Pricing Alternatives
  Individual Paper - Research Questions Due This Week
Week 6:  
10/12 Supply Planning - Simulation
10/14 Agriculture and Irrigation
Week 7:  
10/19 Valuation
10/21 Fall Recess
  Individual Paper – Literature Review And Preliminary Proposal Due
Week 8:  
10/26 Valuation and Dam Removal
10/28 Dam Removal
Week 9:  
11/2 Common Property Problems
11/4 Groundwater and Fisheries
Week 10:  
11/9 Fisheries and Quotas
11/11 Fisheries
Week 11:  
11/16 Fisheries Enforcement
11/18 ITO's
  Thanksgiving Recess
Week 12:  
11/30 Group Projects
12/1 Make Up Class - Group Projects 7:00-9:00 p.m.
12/2 Group Projects
Week 13:  
12/7 International Issues
12/9 Integrated Management and Wrap Up


Other Suggested Reading:

Water Quantity/Quality Management and Conflict Resolution (Dinar and Loehman (Eds.))

Cadillac Desert (Reisner)

Overtapped Oasis (Reisner and Bates)

Crossing the Next Meridian (Wilkinson)

Water Law in a Nutshell (Getches)

Water in Crisis (Gleick)

Last Oasis (Postel)

Silenced Rivers (McCully)


Useful Websites:


Useful Economics References:

Clark, Colin Mathematical Bioeconomics

Gibbons, Diana The Economic Value of Water

Kennedy, Peter A Guide to Econometrics

Kmenta, Jan Elements of Econometrics

Spulber and Sabbaghi Economics of Water Resources: From Regulation to Privatization

Tietenberg, Tom Environmental and Natural Resource Economics

World Resources