small urban water utility (U) and an adjacent agricultural water district (A) participate in a water market. The marginal net benefit of water for the urban user is MNB,(Xu) = 1,000 - 0.05xu, where Xy is measured in acre-feet of water per year and benefit of water use is measured in dollars. The marginal net benefit of water use by the agricultural district is MNBA(x) = 500 - 0.025%., with x, measured in acre-feet per year