Water allocation for economic production in a semi-arid region

As water demand surpasses water availability, the problem of who will have access to water and who will be rationed is inevitable. This is already the case in arid regions or where the economic uses of water exceed water capability. This work contributes to the understanding and resolution of this decision-making process. Several allocation mechanisms are discussed and an allocation model based on the opportunity cost of water for different users is presented. This model leads to both a water pricing scheme and a method for compensating rationed parties.