WaterSelling and buying water rights
Trying to sell or buy water rights can be a complicated exercise. First, it takes time and effort for buyers and sellers to find each other, a process that often relies on word-of-mouth, local bulletin boards, even calling friends and neighbors to get the word out. Then they must deal with the maze of rules and regulations involved. Finally, they must reach a fair price. It would be much easier if a computer could do it. Now, one can. Scientists have developed an algorithm that can match potential buyers and sellers, sift through the complexity of local physical and regulatory systems, and reach a fair deal designed especially for them.
Trying to sell or buy water rights can be a complicated exercise. First, it takes time and effort for buyers and sellers to find each other, a process that often relies on word-of-mouth, local bulletin boards, even calling friends and neighbors to get the word out. Then they must deal with the maze of rules and regulations involved. Finally, they must reach a fair price.
It would be much easier if a computer could do it. Now, one can.
Scientists at the University of Nebraska and the University of Illinois at Urbana-Champaign have developed an algorithm that can match potential buyers and sellers, sift through the complexity of local physical and regulatory systems, and reach a fair deal designed especially for them. It also allows the negotiating parties to provide information confidentially during the process.
“It’s a different way of matching buyers and sellers in places where there aren’t established markets,” says Nicholas Brozovic, director of policy at the Robert B. Daugherty Water for Food Institute and associate professor of agricultural economics at the University of Nebraska. “It’s a different way of building a market for potential buyers and sellers of natural resources. It maintains confidentiality and it is structured in a way that is neutral and fair.”
An NSF release reports that the National Science Foundation (NSF)-funded Brozovic’s research focuses on using economic analysis to understand natural resource systems, with a special emphasis on water resources. He designs and evaluates management policies that can maintain or improve the condition of natural resources. Much involves collaborations with engineers, urban planners and others.
Mammoth Trading, a new company that grew out of his research, hopes to provide a neutral centralized place for both buyers and sellers interesting in trading water rights and other resource use rights. The goal is to craft each transaction by taking local community needs into account, as well as factors unique to the individuals involved.
There is a transaction fee associated with the market and any benefits from trading are split between buyer and seller, “which is not typically how brokerage works,” Brozovic says. But “we view ours as a fairer system.”
The company currently is developing a certified irrigated acreage market for groundwater rights in the Twin Platte Natural Resources District in Nebraska, as well as working on developing other systems, mostly in water quantity and quality, as well as other natural resources.
