Risk and reliability dominate water supply discussions in the arid western United States. In the past, water managers built additional storage to mitigate supply risk. The optimal, least expensive storage sites have now been taken, and there are strong, environmental objections to new facilities. Reliability of existing supplies is further diminished due to concerns about endangered species and global climate change. Thus water agencies increasingly turn to contractual mechanisms such as dry-year options to manage supply risk in advance of need. However, although a few water agencies across the West have implemented dry-year options, sufficient data for conventional econometric analysis do not yet exist. We thus utilize experimental economics to analyze the effect of annual dry-year options on water markets. How do market structure (competitive versus market power) and option contract availability affect water price and allocation within a market? Experiment participants trade stochastic realizations of water in a non-uniform double auction parameterized to resemble the California water market. We find that realized gains from trade are on average higher when options can be traded, by 11% in competitive markets and by 21% in dominant buyer markets. Findings in this analysis may assist policymakers in preparing for the next multi-year drought in California.

在干旱的美国西部，关于供水问题的讨论主要围绕着风险和可靠性。在过去，水资源管理者建立了额外的蓄水设施来降低供应风险。现在已经采用了最优、最便宜的储存地点，而且新设施遭到了强烈的环保反对。由于对濒危物种和全球气候变化的担忧，现有供应的可靠性进一步降低。因此，供水机构越来越多地求助于合同机制，例如旱年选择办法，以便在需要之前管理供应风险。但是，虽然西部有几个供水机构已经实施了干年选择办法，但是还没有足够的数据进行传统的计量经济分析。因此，我们利用实验经济学来分析每年干旱年选项对水市场的影响。市场结构(竞争与市场力量)和期权合约的可得性如何影响市场内的水价和分配?实验参与者在一个参数化的非均匀双拍卖中交易水的随机实现，以类似于加州水市场。我们发现，当期权可以交易时，从交易中获得的实际收益平均较高，在竞争性市场中为11%，在主要买方市场中为21%。这项分析的结果可能有助于决策者为加州未来多年的干旱做准备。