Does More Storage Give California More Water?

Increasing reservoir storage is commonly proposed to mitigate increasing water demand and provide drought reserves, especially in semiarid regions such as California. This paper examines the value of expanding surface reservoir capacity in California using hydroeconomic modeling for historical conditions, a future warm‐dry climate, and California's recently adopted policy to end groundwater overdraft. Results show expanding surface storage capacity rarely provides sizable economic value in most of California. On average, expanding facilities north of California's Delta provides some benefit in 92% of 82 years modeled under historical conditions and in 61% of years modeled in a warm‐dry climate. South of California's Delta, expanding storage capacity provides no benefits in 14% of years modeled under historical conditions and 99% of years modeled with a warm‐dry climate. Results vary across facilities between and within regions. The limited benefit of surface storage capacity expansion to statewide water supply should be considered in planning California's water infrastructure.     

PROTECTING BEIJLNG'S MUNICIPAL WATER SUPPLY THROUGH WATERSHED MANAGEMEN AN ECONOMIC ASSESSMENT1

ABSTRACT: Watersheds above the Miyun reservoir, a principal source of surface water for Beijing, are designated to be managed for water production, but under the principle of multiple use. Because of the scarcity of arable land, these watersheds cannot be managed only for drinking water. Efforts are under way to reduce sediment delivery, improve the quality of water entering Miyun reservoir, and improve the welfare of watershed inhabitants. An economic appraisal of a watershed management project for the 3,298‐ha Shixia watershed above the Miyun reservoir, indicates a 24 percent economic rate of return on the investment made in the project. The net present value (NPV) of the project, calculated at a discount rate of 10 percent, is approximately US$3.49 million. Sensitivity analyses indicate that a doubling of labor costs lowers the NPV to US$2.07 million and a 10 percent decrease in benefits lowered the NPV to US$2.87. It is concluded that the implementation of conservation practices on the Shixia Demonstration Watershed represent an economically efficient use of resources.     

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.     

AN ENGINEERING ECONOMIC ANALYSIS OF A PROGRAM FOR ARTIFICIAL GROUNDWATER RECHARGE1

This study describes and demonstrates two alternate methods for evaluating the relative costs and benefits of artificial groundwater recharge using percolation ponds. The first analysis considers the benefits to be the reduction of pumping lifts and land subsidence; the second considers benefits as the alternative costs of a comparable surface delivery system. Example computations are carried out for an existing artificial recharge program in Santa Clara Valley in California. A computer groundwater model is used to estimate both the average long term and the drought period effects of artificial recharge in the study area. For the example problem, the benefits of reduced average annual pumping lifts and reduced incremental subsidence are greater than the total costs of continuing the existing artificial recharge program. Benefits for reduced subsidence are strongly dependent on initial aquifer conditions. The second analysis compares the costs of continuing the artificial recharge program with the costs of a surface system which would achieve the same hydraulic effects. Results indicate that the costs of artificial recharge are considerably smaller than the alternative costs of an equivalent surface system. In evaluating a particular program, consideration should also be given to uncertainties in future supplies and demands for water as well as to the probability of extreme events such as droughts.     

AN ECONOMIC ASSESSMENT OF GROUND WATER RECHARGE IN THE TUCSON BASIN1

ABSTRACT: Bringing water from Colorado River via the Central Arizona Project was perceived as the sole solution for Tucson Basin's water problem. Soon after Central Arizona Project's water arrived in Tucson in 1992, its quality provoked a quarrel over its use for potable purposes. A significant outcome of that quarrel was the enactment of the 1995 Proposition 200. The Proposition 200 precludes the use of Central Arizona Project's water for potable purposes, unless it is treated. Yet, it encourages using it for non‐potable purposes and for replenishing the Tucson aquifer through recharge. This paper examines the economic issues involved in utilizing Central Arizona Project's water for recharge. Four planning scenarios were designed to measure and compare the costs and benefits with and without Central Arizona Project's water recharge. Cost‐benefit analysis was utilized to measure recharge costs and benefits and to derive a rough estimate of cost savings from preventing land subsidence. The results indicate that the institutional requirements can be met with Central Arizona Project's water recharge. The economic benefits from reducing pumping cost and saving groundwater are not economically significant. Yet, when combining the use of Central Arizona Project's water for recharge and non‐potable purposes, it demonstrates positive net economic benefits.     

ESTIMATING THE PUBLIC'S VALUES FOR INSTREAM FLOW: ECONOMIC TECHNIQUES AND DOLLAR VALUES1

ABSTRACT: Sound water resource management requires comparison of benefits and costs. Many of the perceived benefits of water relate to providing instream flow for recreation and endangered fish. These uses have value but no prices to guide resource allocation. Techniques to estimate the dollar values of environmental benefits are presented and illustrated with several case studies. The results of the case studies show that emphasis on minimum instream flow allocates far less than the economically optimum amount of water to instream uses. Studies in Idaho demonstrated that optimum flows that balance benefits and costs can be ten times greater than minimum flows. The economic benefits of preserving public trust resources outweighed the replacement cost of water and power by a factor of fifty in California. While it is important to incorporate public preferences in water resource management, these economic survey techniques provide water managers with information not just on preference but how much the public is willing to pay for as well. This facilitates comparison of the public costs and benefits of instream flows.     

Evidence Supporting Cap and Trade as a Groundwater Policy Option for Reducing Irrigation Consumptive Use1

Thompson, Christopher L., Raymond J. Supalla, Derrel L. Martin, and Brian P. McMullen, 2009. Evidence Supporting Cap and Trade as a Groundwater Policy Option for Reducing Irrigation Consumptive Use. Journal of the American Water Resources Association (JAWRA) 45(6):1508‐1518. Abstract: In the American West water is becoming an increasingly scarce resource. Obligations to bordering states, endangered species protection, and long‐term resource sustainability objectives have created a need for most western states to reduce the consumption of irrigation water. In Nebraska specifically, the Nebraska Department of Natural Resources (NDNR) and local Natural Resource Districts (NRDs) are meeting a large part of this need by using a regulatory approach, commonly called groundwater allocation. The cost of allocation, which occurs in the form of reduced economic returns to irrigation, could be greatly reduced by using an integrated cap and trade approach. Much like environmental cap and trade programs which are used to reduce the cost of limiting environmental pollution, the trading of capped groundwater allocations can reduce the cost of limiting water use. In an analysis of a typical case in the Nebraska Republican Basin, we found that the impact of a water market to trade groundwater allocations depended on the size of the allocation and on the characteristics of the land and irrigation systems involved in the trade. Potential economic benefits from trade ranged from US$0 to US$120 per 1,000 cubic meters traded, from US$25 to US$250 per 1,000 cubic meters of reduction in consumptive use, and from US$16 to US$50 per hectare of irrigated land in the region. The highest benefits occurred at relatively high allocations, which capped withdrawals at 65‐75% of the expected unrestricted pumping level. These gains from trade would be split between buyers and sellers based on the negotiated selling price.     

ESTIMATING THE BENEFITS OF PHOSPHORUS POLLUTION REDUCTIONS: AN APPLICATION IN THE MINNESOTA RIVER1

ABSTRACT: In order to make economically efficient decisions about water quality improvements, data on both the costs and benefits of these improvements is needed. However, there has been little research on the benefits of reducing phosphorus pollution which implies that policy decisions are not able to make the comparison of costs and benefits that is essential for economic efficiency. This research attempts to ameliorate this situation by providing an estimate of the benefits of a 40 percent reduction in phosphorus pollution in the Minnesota River. A 1997 mail survey gathered information on Minnesota residents'use of a recreational site on the Minnesota River, the Minnesota Valley National Wildlife Refuge, and their willingness to pay for phosphorus reductions in the Minnesota River. The random effects probit model used in this research to investigate household willingness to pay for phosphorus pollution reductions in the Minnesota River incorporates recent innovations in nonmarket valuation methodology by using both revealed and stated preference data. This model estimated annual household willingness to pay for phosphorus reductions in the Minnesota River at $140. These results may be used in combination with cost estimates to determine the economic efficiency of phosphorus clean up.     

ASSESSING THE ECONOMIC BENEFITS OF GROUND WATER FOR ENVIRONMENTAL POLICY DECISIONS1

ABSTRACT: The full range of environmental and economic services of ground water need to be accounted for in policy decisions. Non-recognition of these services imputes a lower value for the ground water resource in establishing policies. We describe a conceptual framework for identifying and measuring the economic value of groundwater. The valuation framework links changes in physical characteristics of ground water to services provided by ground water and the economic effects of changes in ground water services. In addition to the framework, we develop a general protocol to follow for assessing the benefits of ground water policies. Application of the protocol will aid in establishing structure and consistency across policy assessments and improve the accuracy and completeness of benefit estimates, avoid double-counting problems, and eliminate duplication of ground water valuation efforts.     

Relative Value of Water for Hydropower and Municipal Supply in Southeastern Reservoirs

Population growth in the Southeast has driven withdrawals for municipal water beyond the limits of local supplies. With few options left for development of virgin sources, a number of urban areas are looking toward demand management and additional supplies by reallocating storage in reservoirs that were built primarily or in part for hydropower. Hydropower has become a lesser part of the mix of energy sources, and the question arises as to value of water for that purpose relative to its value for municipal use. Three cases are used to examine the issue. Effects of withdrawal for municipal water supply on output of electric energy are estimated. Benefits of foregone energy are evaluated using the least cost alternative for replacement, and benefits for municipal water are estimated using costs for development of new sources. Benefits for use as municipal water are found to be considerably higher than benefits for hydroelectric energy at existing prices, even higher than the least cost alternative for replacement. Given the spatial distribution of the cases, that finding would appear to hold in general across the region.     

ECONOMIC ANALYSIS OF WETLAND RESTORATION ALONG THE ILLINOIS RIVER1

Creating and restoring wetland and riparian ecosystems between farms and adjacent streams and rivers in the Upper Mississippi River Basin would reduce nitrogen loads and hypoxia in the Gulf of Mexico and increase local environmental benefits. Economic efficiency and economic impacts of the Hennepin and Hopper Lakes Restoration Project in Illinois were evaluated. The project converted 999 ha of cropland to bottomland forest, backwater lakes, and flood‐plain wetland habitat. Project benefits were estimated by summing the economic values of wetlands estimated in other studies. Project costs were estimated by the loss in the gross value of agricultural production from the conversion of corn and soybean acreage to wetlands. Estimated annual net benefit of wetland restoration in the project area amounted to US$1,827 per ha of restored wetland or US$1.83 million for the project area, indicating that the project is economically efficient. Impacts of the project on the regional economy were estimated (using IMPLAN) in terms of changes in total output, household income, and employment. The project is estimated to increase total output by US$2,028,576, household income by US$1,379,676, and employment by 56 persons, indicating that it has positive net economic impacts on the regional economy.     

MULTI-CRITERION RANKING OF ALTERNATIVE LONG-RANGE WATER RESOURCE SYSTEMS1

ABSTRACT The definition and comparison of alternative water resource systems designed to meet long-range goals (say 60 years) is illustrated by a case study in Hungary. A comprehensive cost-effectiveness approach is adapted to define goals, specifications, criteria, alternatives and their capabilities. Specifications include demands given in probabilistic terms. The comparison of alternative systems is based on 12 criteria, one of which is the balance between total energy consumed and peak energy produced. Important factors involving social elements, such as flood protection and land and forest use, are described both as monetary quantities and as qualitative appreciations. Five alternative systems are defied involving flat land reservoirs, pumped storage reservoirs, interbasin transfer, and conjunctive use of surface and ground water. International cooperation is then used to rank systems and reduce the problem to a tradeoff between only two alternatives.     

AGRICULTURAL POLLUTION CONTROL: IMPLICATIONS FROM THE RURAL CLEAN WATER PROGRAM1

ABSTRACT: The Rural Clean Water Program has provided a unique opportunity to study the economics of agricultural nonpoint source pollution control. Several implications for improving the economic efficiency of future agricultural nonpoint source pollution control programs can be drawn from the results. First, individual projects should be targeted towards water bodies that have water quality problems causing economic damages. Considerable variation can exist among areas in the magnitude of economic damages, which may not be proportional to physical impacts. Second, the relative costs and effectiveness of the practices selected to reduce the delivery of pollutants can vary dramatically from one location to another. Early identification and emphasis on cost-effective BMPs can substantially reduce project costs and may make a project economically justifiable that would not otherwise be so. Finally, some projects that do not hive potential economic benefits from water quality improvements exceeding government cost may have on-farm benefits from reduced costs and increased long-term yields that are sufficient to make total benefits (water quality and on-farm) exceed costs.     

Effects of Climate and Land Cover on Hydrology in the Southeastern U.S.: Potential Impacts on Watershed Planning

The hydrologic response to statistically downscaled general circulation model simulations of daily surface climate and land cover through 2099 was assessed for the Apalachicola‐Chattahoochee‐Flint River Basin located in the southeastern United States. Projections of climate, urbanization, vegetation, and surface‐depression storage capacity were used as inputs to the Precipitation‐Runoff Modeling System to simulate projected impacts on hydrologic response. Surface runoff substantially increased when land cover change was applied. However, once the surface depression storage was added to mitigate the land cover change and increases of surface runoff (due to urbanization), the groundwater flow component then increased. For hydrologic studies that include projections of land cover change (urbanization in particular), any analysis of runoff beyond the change in total runoff should include effects of stormwater management practices as these features affect flow timing and magnitude and may be useful in mitigating land cover change impacts on streamflow. Potential changes in water availability and how biota may respond to changes in flow regime in response to climate and land cover change may prove challenging for managers attempting to balance the needs of future development and the environment. However, these models are still useful for assessing the relative impacts of climate and land cover change and for evaluating tradeoffs when managing to mitigate different stressors.     

Application of game theory for a groundwater conflict in Mexico

Exploitation of scarce water resources, particularly in areas of high demand, inevitably produces conflict among disparate stakeholders, each of whom may have their own set of priorities. In order to arrive at a socially acceptable compromise, the decision-makers should seek an optimal trade-off between conflicting objectives that reflect the priorities of the various stakeholders. In this study, game theory was applied to a multiobjective conflict problem for the Alto Rio Lerma Irrigation District, located in the state of Guanajuato in Mexico, where economic benefits from agricultural production should be balanced with associated negative environmental impacts. The short period of rainfall in this area, combined with high groundwater withdrawals from irrigation wells, has produced severe aquifer overdraft. In addition, current agricultural practices of applying high loads of fertilizers and pesticides have contaminated regions of the aquifer. The net economic benefit to this agricultural region in the short-term lies with increasing crop yields, which requires large pumping extractions for irrigation as well as high chemical loading. In the longer term, this can produce economic loss due to higher pumping costs (i.e., higher lift requirements), or even loss of the aquifer as a viable source of water. Negative environmental impacts include continued diminishment of groundwater quality, and declining groundwater levels in the basin, which can damage surface water systems that support environmental habitats. The two primary stakeholders or players, the farmers in the irrigation district and the community at large, must find an optimal balance between positive economic benefits and negative environmental impacts. In this paper, game theory was applied to find the optimal solution between the two conflicting objectives among 12 alternative groundwater extraction scenarios. Different attributes were used to quantify the benefits and costs of the two objectives, and, following generation of the Pareto frontier or trade-off curve, four conflict resolution methods were then applied.     

Estimating Current and Future Groundwater Resources of the Maldives

The water resources of the atolls of the Republic of Maldives are under continual threat from climatic and anthropogenic stresses, including land surface pollution, increasing population, drought, and sea‐level rise (SLR). These threats are particularly acute for groundwater resources due to the small land surface area and low elevation of each island. In this study, the groundwater resources, in terms of freshwater lens thickness, total volume of fresh groundwater, and safe yield are estimated for the 52 most populous islands of the Maldives for current conditions and for the year 2030, with the latter accounting for projected SLR and associated shoreline recession. An algebraic model, designed in previous studies to estimate the lens thickness of atoll islands, is expanded in this study to also estimate volume of groundwater. Results indicate that average current lens thickness, groundwater volume, and per capita safe yield are approximately 4.6 m, 1,300 million liters, and 300 l/day, and that these values will decrease by approximately 10, 11, and 34%, respectively, by the year 2030. Based on results, it is demonstrated that groundwater, in terms of quantity, is a viable source of water for the islands of the Maldives both now and in coming decades, particularly for islands with large surface area and low population. Study results can provide water resource managers and government officials with valuable data for consideration in water security measures.     

POLICY OBJECTWES AND ECONOMIC INCENTWES FOR CONTROLLING AGRICULTURAL SOURCES OF NONPOINT POLLUTION1

In this paper, we review the physical characteristics of agricultural non point pollution and discuss the implications for setting appropriate pollution control objectives and designing incentive-based pollution control policies. First, we discuss that policy objectives must be designed carefully to ensure positive economic net benefits can be expected from pollution control. Next, we review several classes of incentives and recommend the use of design-based incentives (i.e., incentives based on variable input use, management practices, and land use) for controlling non point pollution. Cost-effectiveness requires that incentives elicit three types of responses from farmers: (1) use variable inputs at appropriate levels, (2) adopt appropriate management practices, and (3) make appropriate land use decisions at the extensive margin of production. If a set of incentives fails to induce the correct responses, the resulting runoff levels and hence ambient pollution levels and damages will be too large relative to policy goals. A review of existing programs suggests that greater program coordination and improved targeting of incentives are needed for further water quality improvements. Alternatively, properly designed market-based systems may be effective alternatives. These systems would reduce overall pollution control costs by allowing markets to allocate point source and non point source control costs more efficiently.     

Forests and competing land uses in Kenya

Indigenous forests in Kenya, as in other developing countries, are under heavy pressure from competing agricultural land uses and from unsustainable cutting. The problem in Kenya is compounded by high population growth rates and an agriculturally based economy, which, even with efforts to control birth rates and industrialize, will persist into the next century. Both ecological and economic consequences of these pressures need to be considered in land-use decision making for land and forest management to be effective. This paper presents one way to combine ecological and economic considerations. The status of principal forest areas in Kenya is summarized and competing land uses compared on the basis of ecological functions and economic analysis. Replacement uses do not match the ecological functions of forest, although established stands of tree crops (forest plantations, fuel wood, tea) can have roughly comparable effects on soil and water resources. Indigenous forests have high, although difficult to estimate, economic benefits from tourism and protection of downstream agricultural productivity. Economic returns from competing land uses range widely, with tea having the highest and fuel wood plantations having returns comparable to some annual crops and dairying. Consideration of ecological and economic factors together suggests some trade-offs for improving land allocation decisions and several management opportunities for increasing benefits or reducing costs from particular land uses. The evaluation also suggests a general strategy for forest land management in Kenya.The views and interpretations expressed in this article are those of the authors and should not be attributed to the World Bank, its affiliated organizations, or any individual acting on their behalf.     

Assessment of Groundwater Depletion and Implications for Management in the Denver Basin Aquifer System

The Denver Basin Aquifer System (DBAS) is a critical groundwater resource along the Colorado Front Range. Groundwater depletion has been documented over the past few decades due to the increased water use among users, presenting long‐term sustainability challenges. A spatiotemporal geostatistical analysis is used to estimate potentiometric surfaces and evaluate groundwater storage changes between 1990 and 2016 in each of the four DBAS aquifers. Several key depletion patterns and spatial water‐level changes emerge in this work. Hydraulic head changes are the largest in the west‐central side of the DBAS and have decreased in some areas by up to 180 m since 1990, while areas to the northwest show increases in hydraulic head by over 30.5 m. The Denver and Arapahoe aquifers show the largest groundwater storage losses, with the highest rates occurring in the 2000s. The results highlight uncertainty in the volumetric predictions under various storage coefficient calculations and emphasize the importance of representative aquifer characterization. The observed groundwater storage depletions are due to a combination of factors, which include population growth increasing the demand for water, variable precipitation, and drought influencing recharge, and increased groundwater pumping. The methods applied in this study are transferable to other groundwater systems and provide a framework that can help assess groundwater depletion and inform management decisions at other locations.