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Water-depletion and single-state municipal bond fund risk

Marta Álvarez (Institute of Statistics and Information Systems, University of Puerto Rico – Río Piedras, San Juan, Puerto Rico)
Javier Rodriguez (Graduate School of Business, University of Puerto Rico – Río Piedras, San Juan, Puerto Rico)

Studies in Economics and Finance

ISSN: 1086-7376

Article publication date: 5 June 2017




The purpose of this paper is to investigate the relationship between single-state municipal bond fund risk and water scarcity in the USA.


The authors compare the risk profiles of funds from states with limited water resources with those from states without this issue.


The authors find that, as expected, funds from southern and western states, which suffer from water scarcity, are riskier than funds from other regions within the mainland USA. Although this study is concerned with which funds are riskier, it is noted that funds from the northeast are significantly less risky than funds from other regions.


Due to limited water resources, crumbling water infrastructure and continuous water-rights legal battles, water resources in the USA have become a highly sought-after commodity. In this study, we contribute to the discussion on the many repercussions of water scarcity on financial assets.



The authors appreciate the comments of Niklas Wagner (the editor) and acknowledge the support provided by the Business Administration faculty of the University of Puerto Rico – Río Piedras campus through the 2014 Summer Research Initiative Program. The research assistance of Ricardo Marrero and José Davis-Pellot is greatly appreciated.


Álvarez, M. and Rodriguez, J. (2017), "Water-depletion and single-state municipal bond fund risk", Studies in Economics and Finance, Vol. 34 No. 2, pp. 228-237.



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