cam a22 2 4500 357888073 CHVBK 20200107115708.0 cr ||||||||||| 160307s2016 xxu||||||---- 00 |eng-d (OCoLC)944080372 (IDSSG)000855624 SzZuIDS HSG ger rda Edwards Eric C. Verfasser aut An Illiquid Market in the Desert The Role of Interest Groups in Shaping Environmental Regulation Eric C. Edwards, Oscar Cristi, Gonzalo Edwards, Gary D. Libecap Cambridge, MA National Bureau of Economic Research 2016 1 Online-Ressource Text txt rdacontent/ger Computermedien c rdamedia/ger Online-Ressource cr rdacarrier/ger NBER working paper series 21869 21869 (IDSSG)000043070 523018967 We present a lobby model to explain the adoption and persistence of seemingly costly environmental policies relative to the likely benefits generated. The arguments of the model are illustrated by water trade restrictions for mining firms in the Atacama Desert of northern Chile. The area is one of the driest in the world but also the world's top copper producer. Due to regulation of access to local water in the region, firms have begun using desalinated water at a cost of up to $19,542 per m3/day while agricultural water trades at median price of $343 per m3/day. We explore how governmental maintenance of environmental and indigenous water supplies through restrictions on water trades causes these large price differentials. We provide a simple framework that explains how this type of policy can be supported under reasonable assumptions about lobbying. Interest group lobbying, limited information to unorganized general citizens about policy costs and benefits, and their associated distribution can lead to strong regulation, even when the protected environmental areas and agricultural populations are small and isolated. Difference- in-difference modeling of sector prices indicates that after an abrupt increase in regulatory denials, prices diverged in a manner consistent with the lobbying model. Using market price and desalination cost data, policy costs are estimated at $6.15 billion dollars or approximately $350 per citizen, which may or may not equate to perceived general benefits. Cristi Oscar Verfasser aut Edwards Gonzalo Verfasser aut Libecap Gary D. Verfasser aut http://www.nber.org/papers/w21869 Full text for the University of St. Gallen Metadata Rights Reserved ids I noalma ids I IDSSG 100 1- Edwards Eric C. Verfasser aut IDSSG 490 0- NBER working paper series 21869 21869 (IDSSG)000043070 523018967 IDSSG 700 1- Cristi Oscar Verfasser aut IDSSG 700 1- Edwards Gonzalo Verfasser aut IDSSG 700 1- Libecap Gary D. Verfasser aut IDSSG 856 -- http://www.nber.org/papers/w21869 Full text for the University of St. Gallen Metadata rights reserved idssg BK020053 XK020053 XK020000 IDSSG HSG HSG ONL HONL000855624