AN IMPLICIT APPROACH TO PRICING AGRICULTURAL WATER TRANSFERS TO URBAN USES1

ABSTRACT: The increased agricultural efficiency of the American farmer has been a substantial impetus to this nation's rapid urbanization. In many western regions where total water supplies are limited, urbanization has required the transfer of heretofore agricultural water rights to the urban use. A major problem in such transfers has been the value or price of the water. A management level model of a typical urban water system was developed to optimize water supply, distribution, and wastewater treatment alternatives. The values of agricultural transfers were determined as the cost advantages of increasing allowable reuse levels of urban effluents which imply the use of a downstream right. This procedure is justified by the economic theory of alternative cost. Results for a test application to the Denver, Colorado area indicate values on the order of $1,000 per acre-foot of transferable water depending on effluent water quality restrictions and operational policies.     

Economic and equity implications of land-use zoning in suburban agriculture

A cash-flow viability model is used to evaluate the impacts of land-use zoning on farm households in New Jersey. Findings suggest that zoning results in increased production expenses, lower efficiency and profitability, and the devaluation of land assets. Cash flow and economic viability are, thus, reduced. Impacts of zoning on farm incomes, off-farm incomes, revenues from land sales, indebtedness, and farm sizes were not statistically significant. The results suggest that the use of land-use zoning statutes to guarantee the existence of agriculture may not be equitable unless transferable development rights or other methods of compensating farmers for their losses are simultaneously implemented.     

AN APPLICATION OF INVESTMENT TIMING ANALYSIS: DUAL WATER SYSTEMS1

ABSTRACT: A general methodology to study the economics of dual water systems (defined here as a separate distribution system for untreated low quality local surface Water for outdoor municipal water supply) is summarized and the application of the method to a rapidly growing city is presented. In the first step, a cost-benefit criterion for evaluating dual systems is developed. The criterion is then extended to a dynamic case where the population to be served increases with time and where the dual system is allowed to expand. The optimal investment time to introduce the dual water supply project is obtained by maximizing social welfare. The model is applied to the city of West Jordan, Utah, where a dual system is currently being proposed. Model results indicate that for the city as a whole dual supply is not economically feasible. However, when the model is applied to a part of the city, it is found feasible and the optimal time to initiate the project would be in the year 1989.     

Water Use Efficiency and Storage Capacity in South Asia by 2050

More than one billion South Asians are affected by water scarcity. Pressure on water resources is likely to grow as a result of population growth, urban expansion, and climate change. This paper assesses the impacts of these effects on the historical hydrological baseline, with particular focus on irrigation. A geospatial water balance model was developed for this purpose based on geo‐referenced information available in scientific public domain databases. Annual water supply and demand for a baseline period 1950–2000 were calculated and projected to 2050 using (1) outputs from 19 Global Circulation Models from the Coupled Model Intercomparison Project Phase 5 for a Representative Concentration Pathway 4.5; (2) population projections to 2050; and (3) historical land‐use patterns at the country level. Improvements in water use efficiency and storage capacity were analyzed using the Modified Water Scarcity Index of the baseline and the projected water balance in 2050 at the watershed scale.     

RURAL RESIDENTIAL WATER DEMAND: AN ECONOMETRIC AND SIMULATION ANALYSIS1

ABSTRACT: This study proposes that demand management through pricing policies can be used in conjunction with supply management to solve water supply problems. Economic principles are shown to apply to rural residential water use. A demand function for water was developed based on cross-sectional water use data collected in Kentucky. Price was found to be a significant determinant of the quantity of water demanded. A constant price elasticity of -0.92 was found. The demand function was used in a simulation analysis to determine reservoir capacity needed to supply water needs of a rural community. The simulation revealed that price can significantly affect required reservoir storage.     

CONSUMPTIVE USE OF STREAMFLOW INCREASES IN THE COLORADO RIVER BASIN1

ABSTRACT: This study examined the disposition of streamflow increases that could be created by vegetation management on forest land along the upper reaches of the Colorado River. A network optimization model was used to simulate water flow, storage, consumptive use, and loss within the entire Colorado River Basin with and without the flow increases, according to various scenarios incorporating both current and future consumptive use levels as well as existing and potential institutional constraints. Results indicate that very little of the flow increases would be consumptively used at current use levels, or even at future use levels, if water allocation institutions remain unchanged. Given future use levels and economically based water allocation institutions, up to one-half of the flow increases could be consumptively used. The timing of streamflow increases, and the institutional constraints on water allocation, often limit the potential for consumptive use of flow increases.     

Conservation Opportunities for Securing In-Stream Flows in the Platte River Basin: A Case Study Drawing on Casper,Wyoming’s MunicipalWater Strategy

The Platte River Basin consists of tributaries largely in Wyoming, Colorado and Western Nebraska, with the main stem in Central Nebraska. Critical wildlife habitat on the main stem requires additional in-stream flows. The watershed is one hosting multiple resources, a variety of users, and managed by an array of state and federal agencies. This study proposes a basis for securing in-stream flows for the Platte River. Candidate water supply mechanisms are suggested based on the way in which Casper, Wyoming secured water for its municipal needs. Canal lining is compared to a dam project, increasing reservoir storage, and purchasing water rights, with consideration also made for water pricing to reduce municipal use. Comparisons are based on economic efficiency, potential water conservation, and property rights criteria. Canal lining, coupled with demand management, is shown to conserve water best, given the set of efficiency and cost criteria for in-stream flow enhancement. The approach offers an opportunity to organize the water supply choice context in a transboundary watershed when quantitative information is limited.     

Impacts of Alternative Manure Application Rates on Texas Animal Feeding Operations: A Macro Level Analysis1

Abstract: An integrated economic and environmental modeling system was developed for evaluating agro‐environmental policies and practices implemented on large scales. The modeling system, the Comprehensive Economic and Environmental Optimization Tool‐Macro Modeling System (CEEOT‐MMS), integrates the Farm‐level Economic Model (FEM) and the Agricultural Policy Environmental eXtender (APEX) model, as well as national databases and clustering and aggregation algorithms. Using micro simulations of statistically derived representative farms and subsequent aggregation of farm‐level results, a wide range of agricultural best management practices can be investigated within CEEOT‐MMS. In the present study, CEEOT‐MMS was used to evaluate the economic and water quality impacts of nitrogen (N) and phosphorus (P) based manure application rates when implemented on all animal feeding operations in the State of Texas. Results of the study indicate that edge‐of‐field total P losses can be reduced by about 0.8 kg/ha/year or 14% when manure applications are calibrated to supply all of the recommended crop P requirements from manure total P sources only, when compared to manure applications at the recommended crop N agronomic rate. Corresponding economic impacts are projected to average a US$4,800 annual cost increase per farm. Results are also presented by ecological subregion, farm type, and farm size categories.     

SURFACE WATER WITHDRAWAL ALLOCATION AND TRADING SYSTEMS FOR TRADITIONALLY RIPARLAN AREAS1

ABSTRACT: There is a growing need for water regulations in states traditionally managed by the riparian doctrine. Several states have passed water laws to control withdrawals from streams. Few, if any, however, have set up consistent and defensible methods for allocating water to users. This paper explores several methods for such allocations, examining each in detail and offering numerical examples that compare each on the basis of economic efficiency and effectiveness for maintaining critical stream‐flow standards. This work is part of a study to assess the vulnerability of Midwestern streams to climate change and, especially, surface supplied irrigation spawned by such climate change. The results suggest that it is possible to implement regulations that at once (1) are consistent with the riparian doctrine; (2) control the hydrological and ecological impacts of off stream withdrawals effectively; and (3) preserve the primary economic functions of those withdrawals, including minimizing economic risk. The results further suggest that trading of water permits improves the latter two objectives, but only if both the regulatory system and permit are well‐designed. On the other hand, in the absence of regulations, or under poorly designed regulations, streamflows, and therefore aquatic ecosystems, could be quite vulnerable.     

RECOVERY OF “LOST” STORM WATER FROM LOCAL WASH BEDS1

ABSTRACT: Most of the precipitation that falls is unused because it never reaches a stream or recharges an underground supply. This storm water evaporates and is transpired and consumed by plants. Described below are pertinent legal principles and the concept for a small-scale system to capture and store some of this “lost” storm water from the subflow of small gravelly washes that are not part of or connected with a stream system. The subsurface flow is interrupted by an elastomer faced earthen barrier (dam) and stored in a gravel bed. Both the barrier and the gravel storage bed are situated below the surface of the wash bed. If the gravel bed is not underlain by a natural substratum that is relatively impervious, it is either placed on a liner of suitable compacted clay or is underlain with an elastomeric membrane to limit the downward infiltration and loss of the stored water. A system may be used to capture and store sub-flow after surface flow has ceased and during periods of drought; to supply household and irrigation water; to exercise Winters Doctrine rights; and to replace small dams and surface impoundments by underground storage of the captured water to ensure a more reliable and sanitary supply for livestock and wildlife. A system is most effective in desert regions where (or when) both stream and ground water are unavailable; where rainfall is infrequent, but in storms resulting in rapid runoff; and where land surface topography and morphology coincide to form sites that permit the productive use of a system. A system should not be installed without sound legal and hydrological advice. Careful engineering is essential to the safe and proper design of a system, especially its subsurface barrier.     

A LINEAR ANALYSIS OF AN URBAN WATER SUPPLY SYSTEM1

The use of linear programming as a planning tool for determining the optimal long-range development of an urban water supply system was explored. A stochastic trace of water demand was synthesized and used as an input to the model. This permitted evaluating the feasibility of imposing demand restrictions as an effective cost reduction mechanism. The City of Lincoln, Nebraska, was used as the urban model. The fundamental problem was to allocate limited water supplies from several sources to an urban load center to minimize costs and comply with system constraints. The study period covered twenty years, and findings indicate the planning direction for stage development during this period. Sensitivity analyses were performed on cost coefficients and demands. Thirteen sources were included in the initial computations. Conclusions were that linear programming and generated demand traces are useful tools for both short- and long-term urban water supply planning. Lowering peak demands results in long-range development of fewer sources of supply and more economic and efficient use of the supplies developed.     

The impact of small farm reservoirs on urban water supplies in Botswana

In eastern Botswana there are many small farm reservoirs within the catchments of the major water supply reservoirs, and there is increasing demand for more small reservoirs. The increasing development of farm reservoirs has an impact on the availability of water from the major reservoirs, which supply urban and industrial users, and this creates a conflict between the needs of the rural water users and the urban and industrial users. This paper describes a model which has been developed to allow the effects of the existing small reservoirs and the possible impacts of future proposed ones on the water resources of the major reservoirs to be quantified. The model provides a planning tool, enabling guidelines for future small reservoir development to be determined. The model is a general one which could also be calibrated and applied in other areas with a broadly similar climate. The results of a series of model runs indicate the rate of decline of runoff and yield from the major reservoirs as the total capacity of small reservoirs within the catchment increases. It also shows how this decline is affected by secondary factors such as the relative location of the small reservoirs within the catchment, the typical size of small reservoirs and the type of use to which they are put. The results clearly indicate the adverse effect which uncontrolled development of farm reservoirs would have on the water supplies from the major reservoirs. By quantifying these effects, planners have some of the necessary information to determine the optimum balance between development of small-scale rural water supplies and large-scale urban supplies .     

AGGREGATE MARGINAL RETURNS FROM WESTERN IRRIGATED AGRICULTURE1

ABSTRACT: Pressure is increasing in the western United States to reallocate water from irrigated agriculture to other competitive uses. Since water is normally allocated through water rights and not necessarily by the price system, the question of economic efficiency is a continual concern. Study results show that returns per acre-foot of water used in western irrigation are quite high and are closely tied to the livestock industry. Returns per acre-foot of water used for crops ranged from $60 to $1,500. When water was used to support livestock, returns per acre-foot ranged from $100 to $600. Clearly, losses of water supply that reduced irrigation production could also lower farm income significantly. Estimated returns also show what alternative uses would have to pay for water under competitive market conditions. Production elasticities are also shown for various states.     

NETWORK MODEL FOR DECISIONSUPPORT IN MUNICIPAL RAW WATER SUPPLY1

ABSTRACT: A water supply network optimization model called MODSIM3 is presented as a decision-support tool for aiding city staff in determining how best to utilize and exchange existing and potential water supplies with other users in a river basin. The model is applied to the City of Fort Collins, Colorado, water supply system as a means of determining optimum ways the City can utilize direct flow rights, storage rights, and exchangeable waters from various sources. Results clearly confirm both the benefits of the use of exchanges and the value of MODSIM3 as a water supply planning and management tool.     

AN APPLICATION OF MATHEMATICAL PROGRAMMING TO WATER RESOURCES PLANNING: AN ECONOMIC VIEW1

ABSTRACT: Individuals involved in state water resource planning generally have avoided any development of a comprehensive public water planning investment model that would set the stage for quantitative recommendations of a “what ought to be” tone for future water strategies. Three New Hampshire towns were selected to illustrate the usefulness of a mixed integer multiperiod programming model that utilizes hydrologic and economic data for identifying the discounted least cost of water supply, distribution, and scheduling. Comparisons are made regarding the feasibility of a regional water system approach versus independent “town by town” water supplies that presently prevail. To analyze the sensitivity of optimal water planning solutions to projected water demands, variations in these demands are made.     

WATER ALLOCATION POLICY MODELING FOR THE DONG NAI RIVER BASIN: AN INTEGRATED PERSPECTIVE1

Abstract: Recent water sector reforms and increased scarcity and vulnerability of water resources, combined with declining public funding available for large scale infrastructure investment in the sector, have led to a greater awareness by the Government of Vietnam for the need to analyze water resource allocation and use in an integrated fashion, at the basin scale, and from a perspective of economic efficiency. In this study we focus on the development, application, and selected policy analyses using an integrated economic hydrologic river basin model for the Dong Nai River Basin in southern Vietnam. The model framework depicts the sectoral structure and location of water users (agriculture, industry, hydropower, domestic, and the environment) and the institutions for water allocation in the basin. Water benefit functions are developed for the major water uses subject to physical limitations and to constraints of system control and policy. Based on this modeling framework, we will analyze policies that can affect water allocation and use at the basin level, including both basin-specific and general macroeconomic policies.     

MULTIOBJECTWE ALLOCATION OF WATER SHORTAGE IN THE SVARTA RIVER,SWEDEN1

ABSTRACT: A model is proposed for allocation of water shortages among competing water uses in the Svarta River basin in Sweden. The three major competing uses in the basin are hydroelectricity generation, irrigation water supply, and urban water supply. Minor uses that impact upon the allocation are minimum river flow requirements for fishlife and for dilution of treated wastewater, and storage level restrictions for recreation purposes in the main storage facility, Lake Sommen. Analysis of the competing demands on the water are modeled through the method-of-weights multiobjective technique using a deterministic mixed-integer optimization formulation. The (0–1) variables in the formulation are required to synthesize the restricted validity of permits for withdrawal of irrigation water from the river and to simulate the complex operating rules of the major regulation facility on the river. Due to the deterministic nature of the formulation, the model is used on a hydrologic scenario basis. Use of the model is demonstrated by application to the Svarta River.     

IMPROVING IRRIGATION RETURN FLOW QUALITY WITH A WATER RENTAL MARKET1

ABSTRACT: Current policies for correcting the problem of irrigation return flow pollution tend to attack the symptoms of the problem, rather than its cause. The present institutional arrangement for allocating irrigation water is seen as the source of the problem. This paper examines the water quality benefits of altering the institutional arrangement to allow for irrigation water transfers through a rental market. It is conceptualized that by creating a water rental market an opportunity cost would be associated with the use of irrigation water such that profit maximizing farmers would be induced to use his water supply more efficiently and rent the surplus to other irrigators, thus reducing return flow pollution. It is shown that a water rental market could increase water quality in the Yakima River in southcentral Washington by 31 percent as well as increase farm incomes and crop production.     

A Sensitivity Analysis of Nitrogen Losses from Dairy Farms

International attention has focused on agricultural production systems as non-point sources of pollution affecting the quality of streams, estuaries and ground water resources. The objective of the current study was to develop a model of nitrogen management on the dairy farm, and to perform sensitivity analyses in order to determine the relative importance of manipulating herd nutrition, manure management and crop selection in reducing nitrogen (N) losses from the farm. The importance of the method of N input to the farm (purchased feed, legume fixation, inorganic fertilizer, imported manure) was investigated, and the potential to reduce N losses from dairy farms was evaluated. Nitrogen balance equations were derived, and related efficiency coefficients were set to reference values representing common management practices. Total farm N efficiency (animal product N per N input), and N losses per product N were determined for different situations by solving the set of simultaneous equations. Improvements in animal diet and management that increase the conversion of feed N to animal product by 50% would increase total farm N efficiency by 48% and reduce N losses per product by 36 to 40%. In contrast, reducing losses from manure collection, storage and application to improve the percentage of manure N that becomes available in soil by 100% would only improve total farm N efficiency by 13% and reduce total N losses by 14%. Selecting crops and management that can use soil nutrients 50% more efficiently would improve total farm efficiency by up to 59% and reduce N losses by up to 41% depending on the predominant nitrogen sources to the farm. Legume production would reduce N losses per product compared with non-legumes. There was more than a five fold difference in N losses per animal product N between the most extreme scenarios suggesting considerable opportunity to reduce N losses from dairy farms.     

REASSEMBLING HETCH HETCHY: WATER SUPPLY WITHOUT O'SHAUGHNESSY DAM1

The Hetch Hetchy System provides San Francisco with most of its water supply. O'Shaughnessy Dam is one component of this system, providing approximately 25 percent of water storage for the Hetch Hetchy System and none of its conveyance. Removing O'Shaughnessy Dam has gained interest for restoring Hetch Hetchy Valley. The water supply feasibility of removing O'Shaughnessy Dam is analyzed by examining alternative water storage and delivery operations for San Francisco using an economic engineering optimization model. This model ignores institutional and political constraints and has perfect hydrologic foresight to explore water supply possibilities through reoperation of other existing reservoirs. The economic benefits of O'Shaughnessy Dam and its alternatives are measured in terms of the quantity of water supplied to San Francisco and agricultural water users, water treatment costs, and hydropower generation. Results suggest there could be little water scarcity if O'Shaughnessy Dam were to be removed, although removal would be costly due to additional water treatment costs and lost hydropower generation.