A GAME THEORY APPROACH TO DECIDING WHO WILL SUPPLY INSTREAM FLOW WATER1

ABSTRACT: The resource management problem for the Middle Platte ecosystem is the insufficient water available to meet both instream ecological demands and out‐of‐stream economic needs. This problem of multiple interest groups competing for a limited resource is compounded by sharp disagreement in the scientific community over endangered species' needs for instream flows. In this study, game theory was used to address one dimension of this resource management problem. A sequential auction with repeated bidding was used to determine how much instream flow water each of three states — Colorado, Nebraska, and Wyoming — will provide and at what price. The results suggest that the use of auction mechanisms can improve the prospects for reaching a multi‐state agreement on who will supply instream flow water, if the auction is structured to discourage misrepresentation of costs and if political compensation is allowed.     

FROM FLOW TO FISH TO DOLLARS: AN INTEGRATED APPROACH TO WATER ALLOCATION1

This paper details a case study of economic and natural system responses to alternative water management policies in the Cache La Poudre River basin, Colorado, 1980–1994. The case study is presented to highlight the value and application of a conceptual integration of economic, salmonid population, physical habitat, and water allocation models. Five alternative regimes, all intended to increase low winter flows, were investigated. Habitat enhancements created by alternative regimes were translated to population responses and economic benefits. Analysis concluded that instream flows cannot compete on the northern Colorado water rental market; cooperative agreements offer an economically feasible way to enhance instream flows; and establishing an instream flow program on the Cache La Poudre River mainstem is a potentially profitable opportunity. The alliance of models is a dynamic multidisciplinary tool for use in professional settings and offers valuable insight for decision-making processes involved in water management.     

DINOSAUR NATIONAL MONUMENT: THE EVOLUTION OF A FEDERAL RESERVED WATER RIGHT1

ABSTRACT: Dinosaur National Monument, in northwestern Colorado, has become a test case in the establishment of a federal reserved water right to instream flows. For the first time, the Interior Department was forced to rigorously defend its claims in a watershed where the federal government did not control the upstream reaches. Inadequate quantification of minimum flow requirements, court orders, and an apparent Congressional ban on the spending of Water Resources Program funds by the Park Service to quantify its water rights have already placed the Service in a difficult position to protect instream flows for maintaining the ecological integrity of the Monument. As late as 1983, administrators of the Park Service were divided over their legal strategy, many wanting to pursue a policy of claiming “natural, historic” flows rather than “minimum” flows. The conditional right to instream flows panted to the Park Service in 1978 was subject to quantification within five years. That deadline has been extended, but it is not likely that the case will reach final settlement this decade. Until the design and conduct of federal water rights quantifications better integrate public policy and law with science, the principle lesson from Dinosaur may have to be repeated.     

MODELING INSTREAM RECREATIONAL BENEFITS1

ABSTRACT: A basic problem in the management of rivers has been how to balance the tradeoffs between instream and out-of-stream uses. Traditionally, the problem has been addressed by optimizing the economic benefits of flow diversions and regulated releases with instream uses as a flow constraint. An alternative method is to model the effect different river flows have on various recreational uses (e.g., boating, fishing) and then use the results as an additional function or piece of information to determine river project operations and benefits. A methodology that is based on multiobjective decision theory and that relates instream recreational preferences to river flow is proposed. The methodology consists of determining, standardizing, and combining recreational benefit functions, and incorporating potential sources of uncertainty into an estimate of total instream benefits. Thus different types of flow patterns, resulting from reservoir regulation (out-of-stream water uses), can be analyzed to determine their potential instream impact. The methodology is applied to the New River Gorge, West Virginia, which has been designated as a National River.     

ECONOMIC COSTS AND BENEFITS OF INSTREAM FLOW PROTECTION FOR ENDANGERED SPECIES IN AN INTERNATIONAL BASIN1

ABSTRACT: The U.S. Endangered Species Act (ESA) restricts federal agencies from carrying out actions that jeopardize the continued existence of any endangered species. The U.S. Supreme Court has emphasized that the language of the ESA and its amendments permits few exceptions to the requirement to give endangered species the highest priority. This paper estimates economic costs associated with one measure for increasing instream flows to meet critical habitat requirements of the endangered Rio Grande silvery minnow. Impacts are derived from an integrated regional model of the hydrology, economics, and institutions of the upper Rio Grande Basin in Colorado, New Mexico, Texas, and Mexico. One proposal for providing minimum streamflows to protect the silvery minnow from extinction would provide guaranteed year round streamflows of at least 50 cubic feet per second in the San Acacia reach of the upper Rio Grande. These added flows can be accomplished through reduced surface diversions by New Mexico water users in dry years when flows would otherwise be reduced below the critical level required by the minnow. Based on a 44‐year simulation of future inflows to the basin, we find that some agricultural users suffer damages, but New Mexico water users as a whole do not incur damages from a policy that reduces stream depletions sufficiently to provide habitat for the minnow. The same policy actually benefits downstream users, producing average annual benefits of over $200,000 per year for west Texas agriculture, and over $1 million for El Paso municipal and industrial water users, respectively. Economic impacts of instream flow deliveries for the minnow are highest in drought years.     

SIMULATION AND DECISIONMAKING: THE PLATTE RIVER BASIN IN NEBRASKA1

Substantial conflict exists over water management and allocation in the Platte River Basin of Nebraska. An interdisciplinary computer simulation model, representing the water quantity, water quality, environmental, and economic dimensions of the conflict, was developed in order to analyze the tradeoffs among allocation scenarios. Most importantly, decisionmakers and interest groups were involved in model development. Simulation results for a base case and two scenarios are presented. One scenario favors protection of instream flow for wildlife; the other favors water diversions for agriculture. Impacts of the instream flow scenario, as measured by the amount of land irrigated, groundwater levels, the amount of wildlife habitat for cranes and catfish, and net agricultural benefits did not differ greatly from those of the base case. However, impacts of the diversion scenario were substantial. On the negative side, instream flows and wildlife habitat declined an average of 39 percent; while, on the positive side, groundwater levels and net agricultural benefits each increased 6 percent. The modeling process was successful insofar as it promoted an understanding among the highly diverse interest groups of the systems nature of the Basin. One agreement on a water diversion schedule among three of the parties has been reached, partly as a result of this process. More comprehensive compromises have not yet been forged. Our experience, however, indicates that modeling success at the policymaking level depends more on the extent to which the policymakers understand the model than it does on model sophistication.     

Irrigation-Dependent Wetlands Versus Instream Flow Enhancement: Economics of Water Transfers from Agriculture to Wildlife Uses

Irrigated agriculture throughout western North America faces increasing pressure to transfer water to nonagricultural uses, including instream flows for fish and wildlife management. In an important case, increased instream flows are needed in Nebraskas Platte River for recovery of threatened and endangered fish and wildlife species. Irrigated agriculture in the Laramie Basin of southeast Wyoming is a potential water source for the effort to enhance instream flow. However, flood irrigation of hayfields in the Laramie Basin has created many wetlands, both ephemeral and permanent, over the last century. Attempting to increase Platte River instream flows by purchasing water rights or improving irrigation efficiency in the Laramie Basin would transform irrigated agriculture, causing a substantial fraction of the Laramie Basins wetlands to be lost. A creative solution is needed to prevent the sacrifice of one ecosystem on behalf of another. A rotating short-term water-leasing program is proposed. The program allows Laramie Basin producers to contribute to instream flows while continuing to support local wetlands. Permanent wetland desiccation is prevented and regional environmental water needs are met without impairing local ecological resources. Budget analysis is used to provide an initial cost estimate for acquiring water from agriculture through the short-term leasing program. The proposed approach is more expensive than traditional programs but allows contribution to instream flows without major wetland loss. Short-term leasing is a more efficient approach if benefits from wetlands exceed the difference in cost between the short-term lease program and programs that do not conserve wetlands.     

SOCIOECONOMIC IMPACTS OF CLIMATE CHANGE ON U.S. WATER SUPPLIES1

ABSTRACT: A greenhouse warming would have major effects on water supplies and demands. A framework for examining the socioeconomic impacts associated with changes in the long-term availability of water is developed and applied to the hydrologic implications of the Canadian and British Hadley2 general circulation models (GCMs) for the 18 water resource regions in the conterminous United States. The climate projections of these two GCMs have very different implications for future water supplies and costs. The Canadian model suggests most of the nation would be much drier in the year 2030. Under the least-cost management scenario the drier climate could add nearly $105 billion to the estimated costs of balancing supplies and demands relative to the costs without climate change. Measures to protect instream flows and irrigation could result in significantly higher costs. In contrast, projections based on the Hadley model suggest water supplies would increase throughout much of the nation, reducing the costs of balancing water supplies with demands relative to the no-climate-change case.     

Benefit‐Cost Analysis of Integrated Water Resource Management: Accounting for Interdependence in the Yakima Basin Integrated Plan

Integrated water resource management (IWRM) requires accounting for many interrelated facets of water systems, water uses and stakeholders, and water management activities. The consequence is that project analysis must account for the nonseparability among the component parts of IWRM plans. This article presents a benefit‐cost (B‐C) analysis of a set of projects included in the Yakima Basin Integrated Plan proposed for the Yakima Basin in south‐central Washington State. The analysis accounts for interdependence among proposed water storage projects and between water storage and water market development in the context of historical and more adverse projected future climate scenarios. Focusing on irrigation benefits from storage, we show that the value of a given proposed storage project is lower when other proposed storage projects in the basin are implemented, and when water markets are functioning effectively. We find that none of the water storage projects satisfy a B‐C criterion, and that assuring proposed instream flow augmentation is less expensive by purchasing senior diversion rights than relying on new storage to provide it.     

COMPETING WATER USES IN THE SOUTHWESTERN UNITED STATES: VALUING DROUGHT DAMAGES1

ABSTRACT: Economic benefit functions of water resource use are estimated for all major offstream and instream uses of Colorado River water. Specific benefit estimates are developed for numerous agricultural regions, for municipal uses, and for cooling water in thermal energy generation. Economic benefits of hydropower generation are given, as are those for recreation on Colorado River reservoirs and on one free-flowing reach. Marginal and total benefit estimates for Colorado River water use are provided. The estimates presented here represent a synthesis of previous work, providing in total a comprehensive set of economic demand functions for competing uses of Colorado River water. Non-use values (e.g., benefits of preserving endangered species) are not estimated.     

HYDROLOGIC AND ECONOMIC IMPACTS OF DROUGHT UNDER ALTERNATWE POLICY RESPONSES1

ABSTRACT: A severe sustained drought in the Colorado River Basin would cause economic damages throughout the Basin. An integrated hydrologic-economic-institutional model introduced here shows that consumptive water users in headwaters states are particularly vulnerable to very large shortfalls and hence large damages because their rights are effectively junior to downstream users. Chronic shortfalls to consumptive users relying on diversions in excess of rights under the Colorado River Compact are also possible. Nonconsumptive water uses (for hydropower and recreation) are severely affected during the worst drought years as instream flows are reduced and reservoirs are depleted. Damages to these uses exceeds those to consumptive uses, with the value of lost hydropower production the single largest economic impact of a severe sustained drought. Modeling of alternative policy responses to drought suggests three general policy approaches with particular promise for reducing damages. Consumptive use damages can be reduced by over 90 percent through reallocation from low to high valued uses and through reservoir storage strategies which minimize evaporation losses. Reservoir management to preserve minimum power pool levels for hydropower production (and to maintain reservoir recreation) may reduce damages to these nonconsumptive uses by over 30 percent, but it may increase consumptive use shortfalls.     

Buy Me a River: Purchasing Water Rights to Restore River Flows in the Western USA

In recent decades, public and private environmental entities have been purchasing or leasing water rights across the Western United States (U.S.) in efforts to restore river flows and aquatic ecosystems. The need to pay for flow restoration arises from the fact that state governments did not begin to reserve water for instream purposes until the 1970s, long after water rights had become over‐appropriated and flows were substantially depleted in most rivers. As a consequence, flow depletion has become the leading cause of fish endangerment in the U.S., including the imperilment of two‐thirds of all native fish species in the Colorado River system. This paper takes stock of the progress made in buying water for the environment, specifically by reviewing and analyzing more than 50 transactions executed by public and private entities and the sources of funding underpinning these transactions. We conclude that nongovernmental actors — such as environmental organizations and state water trusts — are integral to regional efforts to restore river flows; these nongovernmental actors executed more than two‐thirds of the transactions we documented. However, we also conclude that the long‐term success of these nongovernmental actors depends upon the availability of sustained public funding that enables them to build capacity and engage in the large number of transactions needed to restore flows across each state.     

Developing a Standardized Water Quality Index for Evaluating Surface Water Quality1

Abstract: There is a significant need for a science‐based approach to interpret water‐monitoring data and to facilitate the rapid transfer of information to water resource managers and the general public. The water quality Index (WQI) is defined as a single numeric score that describes the surface water quality condition at a particular time and location. The objective of this paper is to describe the WQI concept and the approach for developing an ecoregion‐specific standardized WQI that meets the needs described above. The premise of the proposed WQI is based on categorizing scientifically documented aquatic life responses to changes in instream water chemistry. The method uses an aggregated procedure that matches the entire range of standardized probable biological responses to standardized narrative water quality evaluation categories and standardized rank score categories. The calculation of WQI and decision‐making process are performed within an Excel spreadsheet software program. The article includes examples of the proposed WQI applications that could enhance effective water resource management and facilitate timely communication of water quality conditions to water resource managers and the general public.     

EFFECTS OF INCREASED DELTA EXPORTS ON SACRAMENTO VALLEY'S ECONOMY AND WATER MANAGEMENT1

ABSTRACT: Exports from the Sacramento‐San Joaquin Delta are an important source of water for Central Valley and Southern California users. The purpose of this paper is to estimate and analyze the effects increased exports to south of Delta users would have on the Sacramento Valley economy and water management if water were managed and reallocated for purely economic benefits, as if there were an ideal Sacramento Valley water market. Current Delta exports of 6,190 thousand acre‐feet per year were increased incrementally to maximum export pumping plant capacities. Initial increases in Delta exports did not increase regional water scarcity, but decreased surplus Delta flows. Further export increases raised agricultural scarcity. Urban users suffer increased scarcity only for exports exceeding 10,393 taf/yr. Expanding exports raises the economic value of expanding key facilities (such as Engle bright Lake and South Folsom Canal) and the opportunity costs of environmental requirements. The study illustrates the physical and economic capacity of the Sacramento Valley to further increase exports of water to drier parts of the state, even within significant environmental flow restrictions. More generally, the results illustrate the physical capacity for greater economic benefits and flexibility in water management within environmental constraints, given institutional capability to reoperate or reallocate water resources, as implied by water markets.     

IMPACTS OF CLIMATE CHANGE ON AQUATIC ECOSYSTEM FUNCTIONING AND HEALTH1

ABSTRACT: We review published analyses of the effects of climate change on goods and services provided by freshwater ecosystems in the United States. Climate-induced changes must be assessed in the context of massive anthropogenic changes in water quantity and quality resulting from altered patterns of land use, water withdrawal, and species invasions; these may dwarf or exacerbate climate-induced changes. Water to meet instream needs is competing with other uses of water, and that competition is likely to be increased by climate change. We review recent predictions of the impacts of climate change on aquatic ecosystems in eight regions of North America. Impacts include warmer temperatures that alter lake mixing regimes and availability of fish habitat; changed magnitude and seasonality of runoff regimes that alter nutrient loading and limit habitat availability at low flow; and loss of prairie pothole wetlands that reduces waterfowl populations. Many of the predicted changes in aquatic ecosystems are a consequence of climatic effects on terrestrial ecosystems; shifts in riparian vegetation and hydrology are particularly critical. We review models that could be used to explore potential effects of climate change on freshwater ecosystems; these include models of instream flow, bioenergetics models, nutrient spiraling models, and models relating riverine food webs to hydrologic regime. We discuss potential ecological risks, benefits, and costs of climate change and identify information needs and model improvements that are required to improve our ability to predict and identify climate change impacts and to evaluate management options.     

Economic Value of Instream Flow for Non-Commercial Whitewater Boating Using Recreation Demand and Contingent Valuation Methods

Whitewater river kayaking and river rafting require adequate instream flows that are often adversely affected by upstream water diversions. However, there are very few studies in the USA of the economic value of instream flow to inform environmental managers. This study estimates the economic value of instream flow to non-commercial kayakers derived using a Travel Cost Method recreation demand model and Contingent Valuation Method (CVM), a type of Contingent Behavior Method (CBM). Data were obtained from a visitor survey administered along the Poudre River in Colorado. In the dichotomous choice CVM willingness to pay (WTP) question, visitors were asked if they would still visit the river if the cost of their trip was $Y higher, and the level of $Y was varied across the sample. The CVM yielded an estimate of WTP that was sensitive to flows ranging from $55 per person per day at 300 Cubic Feet per Second (CFS) to a maximum $97 per person per day at flows of 1900 CFS. The recreation demand model estimated a boater’s number of trips per season. We found the number of trips taken was also sensitive to flow, ranging from as little as 1.63 trips at 300 CFS to a maximum number of 14 trips over the season at 1900 CFS. Thus, there is consistency between peak benefits per trip and number of trips, respectively. With an average of about 100 non-commercial boaters per day, the maximum marginal values per acre foot averages about $220. This value exceeds irrigation water values in this area of Colorado.     

QUANTIFICATION OF INSTREAM FLOW NEEDS OF A WILD AND SCENIC RIVER FOR WATER RIGHTS LITIGATION1

ABSTRACT: The lower 4 miles of the Red River, a tributary of the Rio Grande in northern New Mexico, was designated as one of the “instant” components of the National Wild and Scenic River System in 1968. The Bureau of Land Management (BLM), as the managing agency of the wild and scenic river, was a participant in a general water rights adjudication of the Red River stream system. The BLM sought a federal reserved water right and asserted a claim to the instream flows necessary to protect and maintain the values of the river. Instream flows are not recognized under New Mexico water law. Instream flow requirements were determined by several methods to quantify the claims made by the United States for a federal reserved water right under the Wild and Scenic Rivers Act. The scenic (aesthetic), recreational, and fish and wildlife values are the purposes for which instream flow requirements were claimed. Since water quality is related to these values, instream flows for waste transport and protection of water quality were also included in the claim. The U.S. Fish and Wildlife Service's Instream Flow Incremental Methodology was used to quantify the relationship between various flow regimes and fish habitat. Experience in this litigation indicates the importance of using state-of-the-art methodologies in quantifying instream flow claims. The incremental methodology held up well under technical and legal scrutiny and is an example of the latest methodology that was applied successfully in an adjudication. On February 23, 1984, the parties involved in the adjudication entered a precedential stipulation recognizing a federal reserved right to instream flows for the Red River component of the National Wild and Scenic River System.     

AESTHETIC PREFERENCE FOR WATER RESOURCE PROJECTS: AN APPLICATION OF Q METHODOLOGY1

ABSTRACT Many of the resources generating aesthetic and visual benefits are publically owned and their optimum use and development depends upon public investment. Traditionally, public investment decisions have been couched in economic terms requiring quantitative measurement of benefits and costs. Since many of the benefits these resources provide are not consumed when they are enjoyed, the total contribution of the resource is imperfectly measured in the usual market sense. Thus, if the provision of these public goods is left to the conventional market mechanism, less than socially optimal investment may occur. This study was designed to investigate whether aesthetic preferences related to water projects could be determined, and whether they differ among different groups of people. A Q sort of 44 photographs of a wide variety of water development projects was conducted with two groups, i.e., photographers (aesthetic man) and town assessors (economic man). The resultant analysis identified two significant factors. Factor 1 provided insight into a hypothesis of nature dominant or man dominant scenes. Factor 2 indicated that the respondents had a negative preference for projects which were in varying stages of completion or appeared to be polluted. Preferences were consistent between the two groups tested. The test revealed that people do not necessarily equate only naturalness with aesthetic appeal, but will accept development as aesthetic, provided that it is designed to complement the natural landscape.     

CONTINUOUS SIMULATION FOR WATER QUALITY PLANNING1

ABSTRACT: This paper describes a methodology for the evaluation of water quality plans analogous to procedures used in flood control planning, where flood damage frequency curves provide the basis for determining flood control benefits. The proposed method uses continuous water quality simulation to develop long term information from which water quality frequency curves can be obtained. This frequency information allows the evaluation of the impact of proposed water quality control plans taking into consideration the variable nature of the water resource. Using treatment costs and other economic indicators of water quality, the frequency information can be used to estimate the cost-effectiveness and economic efficiency of alternative plans. The method is demonstrated in a semi-hypothetical environment; real hydrologic and climatic characteristics are assigned to a hypothetical watershed configuration. Alternative management plans are simulated and analyzed for both physical and economic impacts. The advantages of continuous simulation and its use in water quality planning are explored.     

Prioritizing Stream Barrier Removal to Maximize Connected Aquatic Habitat and Minimize Water Scarcity

Instream barriers, such as dams, culverts, and diversions, alter hydrologic processes and aquatic habitat. Removing uneconomical and aging instream barriers is increasingly used for river restoration. Historically, selection of barrier removal projects used score‐and‐rank techniques, ignoring cumulative change and the spatial structure of stream networks. Likewise, most water supply models prioritize either human water uses or aquatic habitat, failing to incorporate both human and environmental water use benefits. Here, a dual‐objective optimization model identifies barriers to remove that maximize connected aquatic habitat and minimize water scarcity. Aquatic habitat is measured using monthly average streamflow, temperature, channel gradient, and geomorphic condition as indicators of aquatic habitat suitability. Water scarcity costs are minimized using economic penalty functions while a budget constraint specifies the money available to remove barriers. We demonstrate the approach using a case study in Utah's Weber Basin to prioritize removal of instream barriers for Bonneville cutthroat trout, while maintaining human water uses. Removing 54 instream barriers reconnects about 160 km of quality‐weighted habitat and costs approximately US$10 M. After this point, the cost‐effectiveness of removing barriers to connect river habitat decreases. The modeling approach expands barrier removal optimization methods by explicitly including both economic and environmental water uses.