1. A northern Georgian resident wishes to use water to maintain a lush lawn. This resident places a value of VN on lush lawns. A southern Georgian resident wishes to use water to maintain instream habitat for fish. This resident places a value of Vs on fish habitat. These two uses of water are incompatible, i.e., due to the current drought, there is not enough water to main both a lush lawn and fish habitat. Demonstrate that the Coase Theorem holds in this context: "The ultimate allocation of property rights is independent of the initial allocation of property rights and is efficient. Hint: identify the two initial allocations of water and then explore impact of bargaining between the two parties, while recognizing that a party could offer a payment commensurate with the value of water. 1. A northern Georgian resident wishes to use water to maintain a lush lawn. This resident places a value of VN on lush lawns. A southern Georgian resident wishes to use water to maintain instream habitat for fish. This resident places a value of Vs on fish habitat. These two uses of water are incompatible, i.e., due to the current drought, there is not enough water to main both a lush lawn and fish habitat. Demonstrate that the Coase Theorem holds in this context: "The ultimate allocation of property rights is independent of the initial allocation of property rights and is efficient. Hint: identify the two initial allocations of water and then explore impact of bargaining between the two parties, while recognizing that a party could offer a payment commensurate with the value of water