Economic studies have argued that transaction costs and third-party impact of water transfers can reduce the potential of water markets in allocating water efficiently across users. The main objective of this study is to design and empirically simulate a market structure, which can overcome the...

The design of effective market institutions for allocation of water among competing uses remains an economic challenge both at a theoretical and practical level. The public good characteristic of instream flows adds another layer of externality which complicates transfers between consumptive and...