Pricing Options on Water in Texas

Simple item page
dc.contributor.authorMcColly, Quinn
dc.contributor.authorMace, Robert
dc.contributor.authorTissot, Philippe
dc.contributor.authorYoskowitz, David
dc.date.accessioned2022-09-21T15:09:38Z
dc.date.available2022-09-21T15:09:38Z
dc.date.issued2021-08-10
dc.description.abstractFreshwater scarcity is a growing concern in Texas and the issues that surround it are expected to grow in the coming years. As climate change impacts the variability of precipitation patterns, some of the most useful tools to help allocate this precious, limited resource may be the tools that are most adaptable in the face of growing uncertainty. While market mechanisms are budding in the state, another market-based tool can create opportunities for efficient water allocation among stakeholders: the water option. An option is a financial product that provides a vehicle to interested parties (buyers and sellers) to create a contract that formalizes the terms of the possible future delivery of water. In cash markets for resources, the exchange of cash and the resource happens when the trade is made; in options markets, the flexibility of delivery is amplified considerably, making them useful for mitigating risk. The buyer of the contract is securing the right—not the obligation—to buy a specific amount of a resource, by a specific time, for a defined price and has the ability to decide if and when the contract gets exercised over the term of the contract. This work discusses the utility of these contracts and outlines a method to price them.en_US
dc.identifier.citationMcColly, Q., Mace, R., Tissot, P., & Yoskowitz, D. (2021). Pricing Options on Water in Texas. Texas Water Journal, 12(1), 91–108. https://doi.org/10.21423/twj.v12i1.7121en_US
dc.identifier.doihttps://doi.org/10.21423/twj.v12i1.7121
dc.identifier.urihttps://hdl.handle.net/1969.6/94051
dc.publisherTexas Water Journalen_US
dc.subjectWater Optionsen_US
dc.subjectWater Marketsen_US
dc.subjectEnvironmental Flowsen_US
dc.subjectWater Allocationen_US
dc.subjectIn-stream Flowsen_US
dc.titlePricing Options on Water in Texasen_US
dc.typeArticleen_US

Files

Original bundle

Now showing 1 - 1 of 1
Thumbnail Image
Name:
Pricing Options on Water in Texas.pdf
Size:
3.59 MB
Format:
Adobe Portable Document Format
Description:
Full Text
Download

License bundle

Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.72 KB
Format:
Item-specific license agreed upon to submission
Description:
Download

Collections

publications