2006 PRESIDENTIAL ADDRESS WATER MARKETS IN THE WEST: PRICES, TRADING, AND CONTRACTUAL FORMS

Rising urban and environmental demand for water has created growing pressure to reallocate water from traditional agricultural uses. The evolution of water markets has been more complicated than those for other resources. In this paper, we first explain these differences by examining water rights and regulatory issues. Second, we place our research in the context of the economics literature on water marketing. Third, we present new, comprehensive data on prices and the extent, nature, and timing of water transfers across 12 western states from 1987 to 2005. We find that prices are higher for agriculture-to-urban trades versus within-agriculture trades, in part, reflecting the differences in marginal values between the two uses. Prices for urban use are also growing relative to agricultural use. Markets are responding in that the number of agriculture-to-urban transactions is rising, whereas the number of agriculture-to-agriculture transfers is not. Further, there is a shift from using short-term leases to using multiyear leases of water and permanent sales of water rights. This pattern underscores the need to consider the amounts of water obligated over time rather than examining only annual flows in assessing the quantities of water traded as is the common practice in the literature. Considering water obligated over time, termed committed water, we find significantly more is transferred and the direction of trading is different than if the focus is on annual flows. Finally, the data reveal considerable variation in water trading across the states. ( JEL Q2, N5, L5, K3)     

The Life and Death of the Care Order (Criminal)

Professor Robert Harris, Department of Social Policy and Professional Studies. The University of Hull. Hull, HU6 7RX. Summary This paper traces the life history of the care order (criminal)from its inception in the 1969 Children and Young Persons Actto its abolition in the 1989 Children Act. It is argued thatthe care order (criminal) is a microcosm of the central ambiguityof the juvenile justice system, and that its history accordinglymirrors that of juvenile justice itself. An empirical studyis then reported which demonstrates that the role of the provisionsince 1983 has been complex, but that it has catered for threedistinct groups of offenders, of whom only one poses a policyproblem. The ‘residence requirement’ solution tothis problem in the 1989 Children Act is welcomed as havinga better chance of sustaining the different tasks of the juvenilejustice system.     

On Developing 'representations from presentations'; Observing the Laws of the Natural and Social Worlds

Abstract This essay examines the use of object lessons as a component of 19th century Ontario educational practice, and demonstrates their development to interactive lessons in moral and cultural observation. It is demonstrated that the laws of nature and society were perceived as parallel systems of order. The essay then demonstrates the use of these pedagogical forms in the management of classroom situations.     

ECONOMIC EFFECTS OF CURRENCY UNIONS

We develop a new instrumental-variable (IV) approach to estimate the effects of different exchange rate regimes on bilateral outcomes. The basic idea is that the characteristics of the exchange rate between two countries are partially related to the independent decisions of these countries to peg—explicitly or de facto—to a third currency, notably that of a main anchor. This component of the exchange rate regime can be used as an IV in regressions of bilateral outcomes. We apply the methodology to study the economic effects of currency unions. The likelihood that two countries independently adopt the currency of the same anchor country is used as an instrument for whether they share a common currency. We find that sharing a common currency enhances trade, increases price comovements, and decreases the comovement of real gross domestic product shocks. ( JEL C3, F3, F4)     

Using a Markov Chain to Construct a Tractable Approximation of an Intractable Probability Distribution

Abstract.  Let π denote an intractable probability distribution that we would like to explore. Suppose that we have a positive recurrent, irreducible Markov chain that satisfies a minorization condition and has π as its invariant measure. We provide a method of using simulations from the Markov chain to construct a statistical estimate of π from which it is straightforward to sample. We show that this estimate is 'strongly consistent' in the sense that the total variation distance between the estimate and π converges to 0 almost surely as the number of simulations grows. Moreover, we use some recently developed asymptotic results to provide guidance as to how much simulation is necessary. Draws from the estimate can be used to approximate features of π or as intelligent starting values for the original Markov chain. We illustrate our methods with two examples.