Determinants of Ditch Company Share Prices in the South Platte River Basin

Ditch companies were formed historically to distribute irrigation water. A portfolio of water rights would be acquired and the resultant water distributed proportionately among the members. Active markets for these shares developed because of their relative homogeneity and ease of transfer. This study identifies the factors that determine share prices, by regressing price on supply‐ and demand‐side variables: characteristics of the underlying water rights, anticipated transfer losses, general factors affecting urban demand, and effects unique to each purchasing city. The major factors are found to be seniority of the underlying water rights, average yields, and transfer losses.