Water allocation, crop choice, and priority services

We analyze the problem of allocating irrigation water among heterogeneous farmers when supply is stochastic. If are risk-neutral, a spot market for efficient; while oft-used uniform rationing system inefficient, both ex ante and post. Indeed, we show that it leads to overexpose risk, thus making shortages more severe frequent in case drought. propose instead regulation by priority classes extending Wilson, derive an efficiency result. characterize set would win or lose from such reform. also argue may be preferred system, because scarcity easier manage than post, this facilitates insurance risk-averse agents.