WATER EXCHANGES: TOOLS TO BEAT EL NIÑO CLIMATE VARIABILITY IN IRRIGATED AGRICULTURE1

ABSTRACT: Using a case study of the Yakima River Valley in Washington State, this paper shows that relatively simple tools can be used to forecast the impact of the El Niño phenomenon on water supplies to irrigated agriculture, that this information could be used to estimate the significantly shifted probability distribution of water shortages in irrigated agriculture during El Niño episodes, and that these shifted probabilities can be used to estimate the value of exchanges of water between crops to relieve some of the adverse consequences of such shortages under western water law. Further, recently devised water‐trading tools, while not completely free under western water law to respond to forecasted El Niño episodes (ocean circulation patterns), are currently being employed during declared drought to reduce the devastating effects of water shortages in junior water districts on high valued perennial crops. Additional institutional flexibility is needed to take full advantage of climate forecasting, but even current tools clearly could prove useful in controlling the effects of climate variability in irrigated agriculture. Analysis shows the significant benefit of temporarily transferring or renting water rights from low‐value to high‐value crops, based on El Niño forecasts.