Managing Drought Through Water Markets: Farmer Preferences in the Rio Grande Basin1

Abstract: Managing drought in agriculture has taken on growing importance as population growth and environmental concerns place increasing pressures on agricultural water use. One alternative for agricultural water resource management in areas of recurrent drought is allocation through market mechanisms. While past research has aimed to explain why farmers are reluctant to participate in already established water markets, this research seeks to identify the appropriate market mechanism given farmers’ preexisting attitudes toward water markets. Statistical analysis of survey data from 166 farmer interviews in the Rio Grande Basin indicate that farmers are significantly more likely to participate in short‐term water mechanisms, such as spot water markets and water banks than in permanent transfer mechanisms, particularly those that fully separate water rights from land. In sharp contrast to expectations, the choice of market mechanism did not differ significantly between farmers based on their a priori intention to buy, sell or both buy and sell in these markets. Choice of market mechanism also did not differ among farmer types although small, lifestyle or hobby farmers clearly preferred spot water markets to other types of short‐term mechanisms. Evaluating these attitudes a priori may help to design more suitable water market mechanisms for the basin.     

A Transactions Cost Approach to the Theoretical Foundations of Water Markets1

Abstract: Water marketing is often cited as a means of alleviating the stresses attached to allocation of water use. Frequently, marketing is suggested in a context that implies substitution of competitive markets for the allocation based on the prior appropriation doctrine. This study examines water marketing from the perspective of a transactions cost approach to the private and broad social agreements (contracts) that support water allocation. It examines the major behavioral challenges faced by any contract, and the alternative approaches to those challenges, with respect to water allocation. It also examines the impact of market design on the existence of externalities, costs imposed by transactions on society and individuals not party to the transaction. It finds that the most robust water market designs will be found in systems with sufficient property rights protection to support investment, sufficient hydrologic information to provide accurate analysis of third party effects, conjunctive management of surface and groundwater, and a governance structure capable of administering the rules while not determining outcomes.     

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.     

Economic and Ecological Rules for Water Quality Trading1

Horan, Richard D. and James S. Shortle, 2011. Economic and Ecological Rules for Water Quality Trading. Journal of the American Water Resources Association (JAWRA) 47(1):59‐69. DOI: 10.1111/j.1752‐1688.2010.00463.x Abstract: Emissions trading in textbook form uses markets to achieve pollution targets cost‐efficiently. This result is accomplished in markets that regulators can implement without knowing pollution abatement costs. The theoretical promise of emissions trading, along with real‐world success stories from air emissions trading, has led to initiatives to use trading for water pollution control. Yet, trading, particularly when it involves nonpoint sources of pollution, requires significant departures from the textbook concept. This paper explores how features of water quality problems affect the design of markets for water pollution control relative to textbook emissions markets. Three fundamental design tasks that regulators must address for pollution trading to achieve an environmental goal at low cost are examined: (1) defining the point and nonpoint commodities to be traded, (2) defining rules governing commodity exchange, and (3) setting caps on the commodity supplies so as to achieve an environmental target. We show that the way in which these tasks are optimally addressed for water quality markets differs significantly from the textbook model and its real‐world analogs. We also show that the fundamental appeal of emissions trading is lost in the case of realistic water quality markets, as market designs that reduce the costs of achieving water quality goals may no longer be implementable without the regulatory authority having information on abatement costs.     

Management of Water Shortage in the Colorado River Basin: Evaluating Current Policy and the Viability of Interstate Water Trading1

Wildman, Richard A., Jr. and Noelani A. Forde, 2012. Management of Water Shortage in the Colorado River Basin: Evaluating Current Policy and the Viability of Interstate Water Trading. Journal of the American Water Resources Association (JAWRA) 48(3): 411-422. DOI: 10.1111/j.1752-1688.2012.00665.x Abstract: The water of the Colorado River of the southwestern United States (U.S.) is presently used beyond its reliable supply, and the flow of this river is forecast to decrease significantly due to climate change. A recent interim report of the Colorado River Basin Water Supply and Demand Study is the first acknowledgment of these facts by U.S. federal water managers. In light of this new stance, we evaluate the current policy of adaptation to water shortages in the Colorado River Basin. We find that initial shortages will be borne only by the cities of Arizona and Nevada and farms in Arizona whereas the other Basin states have no incentive to reduce consumptive use. Furthermore, the development of a long-term plan is deferred until greater water scarcity exists. As a potential response to long-term water scarcity, we evaluate the viability of an interstate water market in the Colorado River Basin. We inform our analysis with newly available data from the Murray-Darling Basin of Australia, which has used interstate water trading to create vital flexibility during extreme aridity during recent years. We find that, despite substantial obstacles, an interstate water market is a compelling reform that could be used not only to adapt to increased water scarcity but also to preserve core elements of Colorado River Basin law.     

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.     

Transboundary Groundwater Policy: Developing Approaches in the Western and Southwestern United States1

Hathaway, Deborah L., 2011. Transboundary Groundwater Policy: Developing Approaches in the Western and Southwestern United States. Journal of the American Water Resources Association (JAWRA) 47(1):103‐113. DOI: 10.1111/j.1752‐1688.2010.00494.x Abstract: The western and southwestern United States include dozens of groundwater basins that cross political boundaries. Common among these shared groundwater basins is an overlay of differing legal structures and water development priorities, typically, with insufficient water supply for competing human uses, and often, a degraded ecosystem. Resolution of conflicts over ambiguously regulated groundwater has clarified transboundary groundwater policy in some interstate basins, while transboundary groundwater policy in international basins is less evolved. This paper identifies and contrasts approaches to transboundary groundwater policy, drawing from recent conflicts and cooperative efforts, including those associated with the interstate compacts on the Arkansas and Pecos Rivers; the Hueco and Lower Rio Grande Basins shared by New Mexico, Texas, and Mexico; and the Mexicali Basin in California and Mexico. Some efforts seek to fit groundwater policy into existing surface water allocation procedures; some strive for a better fit – incorporating scientific understanding of key differences between groundwater and surface water into policy frameworks. In some cases, neither policy nor precedent exists. The collective experience of these and other cases sets the stage for improved management of transboundary groundwater; as such, challenges and successes of these approaches, and those contemplated in several hypothetical model agreements, are examined.     

Spatial Distribution of Water Supply in the Coterminous United States1

Abstract: Available water supply across the contiguous 48 states was estimated as precipitation minus evapotranspiration using data for the period 1953‐1994. Precipitation estimates were taken from the Parameter‐Elevation Regressions on Independent Slopes Model (PRISM). Evapotranspiration was estimated using two models, the Advection‐Aridity model and the Zhang model. The evapotranspiration models were calibrated using precipitation and runoff data for 655 hydrologically undisturbed basins, and then tested using estimates of natural runoff for the 18 water resource regions (WRR) of the 48 contiguous states. The final water supply coverage reflects a mixture of outputs from the two evapotranspiration models. Political, administrative, and land cover boundaries were mapped over the coverage of mean annual water supply. Across the entire study area, we find that 53% of the water supply originates on forested land, which covers only 29% of the surface area, and that 24% originates on federal lands, including 18% on national forests and grasslands alone. Forests and federal lands are even more important in the West (the 11 western contiguous states), where 65% of the water supply originates on forested land and 66% on federal lands, with national forests and grasslands contributing 51%.     

Control of Tamarix in the Western United States: Implications for Water Salvage, Wildlife Use, and Riparian Restoration

Non-native shrub species in the genus Tamarix (saltcedar, tamarisk) have colonized hundreds of thousands of hectares of floodplains, reservoir margins, and other wetlands in western North America. Many resource managers seek to reduce saltcedar abundance and control its spread to increase the flow of water in streams that might otherwise be lost to evapotranspiration, to restore native riparian (streamside) vegetation, and to improve wildlife habitat. However, increased water yield might not always occur and has been substantially lower than expected in water salvage experiments, the potential for successful revegetation is variable, and not all wildlife taxa clearly prefer native plant habitats over saltcedar. As a result, there is considerable debate surrounding saltcedar control efforts. We review the literature on saltcedar control, water use, wildlife use, and riparian restoration to provide resource managers, researchers, and policy-makers with a balanced summary of the state of the science. To best ensure that the desired outcomes of removal programs are met, scientists and resource managers should use existing information and methodologies to carefully select and prioritize sites for removal, apply the most appropriate and cost-effective control methods, and then rigorously monitor control efficacy, revegetation success, water yield changes, and wildlife use.     

Changes in Patterns of Streamflow From Unregulated Watersheds in Idaho,Western Wyoming,and Northern Nevada1

Clark, Gregory M., 2010. Changes in Patterns of Streamflow From Unregulated Watersheds in Idaho, Western Wyoming, and Northern Nevada. Journal of the American Water Resources Association (JAWRA) 46(3):486-497. DOI: 10.1111/j.1752-1688.2009.00416.x Abstract: Recent studies have identified a pattern of earlier spring runoff across much of North America. Earlier spring runoff potentially poses numerous problems, including increased risk of flooding and reduced summer water supply for irrigation, power generation, and migratory fish passage. To identify changing runoff patterns in Idaho streams, streamflow records were analyzed for 26 U.S. Geological Survey gaging stations in Idaho, western Wyoming, and northern Nevada, each with a minimum of 41 years of record. The 26 stations are located on 23 unregulated and relatively pristine streams that drain areas ranging from 28 to >35,000 km². Four runoff parameters were trend tested at each station for both the period of historical record and from 1967 through 2007. Parameters tested were annual mean streamflow, annual minimum daily streamflow, and the dates of the 25th and 50th percentiles of the annual total streamflow. Results of a nonparametric Mann-Kendall trend test revealed a trend toward lower annual mean and annual minimum streamflows at a majority of the stations, as well as a trend toward earlier snowmelt runoff. Significant downward trends over the period of historical record were most prevalent for the annual minimum streamflow (12 stations) and the 50th percentile of streamflow (11 stations). At most stations, trends were more pronounced during the period from 1967 through 2007. A regional Kendall test for water years 1967 through 2007 revealed significant regional trends in the percent change in the annual mean and annual minimum streamflows (0.67% less per year and 0.62% less per year, respectively), the 25th percentile of streamflow (12.3 days earlier), and the 50th percentile of streamflow (11.5 days earlier).     

A Comparison of Three Federal Datasets for Thermoelectric Water Withdrawals in the United States for 2010

Historically, thermoelectric water withdrawal has been estimated by the Energy Information Administration (EIA) and the U.S. Geological Survey's (USGS) water‐use compilations. Recently, the USGS developed models for estimating withdrawal at thermoelectric plants to provide estimates independent from plant operator‐reported withdrawal data. This article compares three federal datasets of thermoelectric withdrawals for the United States in 2010: one based on the USGS water‐use compilation, another based on EIA data, and the third based on USGS model‐estimated data. The withdrawal data varied widely. Many plants had three different withdrawal values, and for approximately 54% of the plants the largest withdrawal value was twice the smallest, or larger. The causes of discrepancies among withdrawal estimates included definitional differences, definitional noise, and various nondefinitional causes. The uncertainty in national totals can be characterized by the range among the three datasets, from 5,640 m³/s (129 billion gallons per day [bgd]) to 6,954 m³/s (158 bgd), or by the aggregate difference between the smallest and largest values at each plant, from 4,014 m³/s (92 bgd) to 8,590 m³/s (196 bgd). When used to assess the accuracy of reported values, the USGS model estimates identify plants that need to be reviewed.     

The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin1

Leidner, Andrew J., M. Edward Rister, Ronald D. Lacewell, and Allen W. Sturdivant, 2011. The Water Market for the Middle and Lower Portions of the Texas Rio Grande Basin. Journal of the American Water Resources Association (JAWRA) 47(3):597‐610. DOI: 10.1111/j.1752‐1688.2011.00527.x Abstract: Regional water management on the United States’ side of the middle and lower portions of the Rio Grande basin of Texas has been aided by a functioning water market since the early 1970s. The water market operates over a region that stretches from the Amistad Reservoir to the Rio Grande’s terminus into the Gulf of Mexico. This article provides an overview of the organizations, institutions, policies, and geographic particulars of the region’s water‐management system and its water market. In recent years, this region has experienced high population growth, periodic droughts, and a reallocation of water resources from the area’s agricultural sector to the municipal sector. Demand growth for potable water and a relatively fixed supply of raw water are reflected in increasing prices for domestic, municipal, and industrial water rights. Rising prices in the presence of scarcity and the transfer of water from lower‐value to higher‐value uses indicate that the market is operating as suggested by economic theory. Reasons for the market’s functionality are presented and discussed. Finally, suggestions are presented which might mitigate potential complications to market operations from aquifer depletion and aid the management of instream river flows.     

Impacts of Multiple Stresses on Water Demand and Supply Across the Southeastern United States1

Abstract: Assessment of long‐term impacts of projected changes in climate, population, and land use and land cover on regional water resource is critical to the sustainable development of the southeastern United States. The objective of this study was to fully budget annual water availability for water supply (precipitation ? evapotranspiration + groundwater supply + return flow) and demand from commercial, domestic, industrial, irrigation, livestock, mining, and thermoelectric uses. The Water Supply Stress Index and Water Supply Stress Index Ratio were developed to evaluate water stress conditions over time and across the 666 eight‐digit Hydrologic Unit Code basins in the 13 southeastern states. Predictions from two Global Circulation Models (CGC1 and HadCM2Sul), one land use change model, and one human population model, were integrated to project future water supply stress in 2020. We found that population increase greatly stressed water supply in metropolitan areas located in the Piedmont region and Florida. Predicted land use and land cover changes will have little effect on water quantity and water supply‐water demand relationship. In contrast, climate changes had the most pronounced effects on regional water supply and demand, especially in western Texas where water stress was historically highest in the study region. The simulation system developed by this study is useful for water resource planners to address water shortage problems such as those experienced during 2007 in the study region. Future studies should focus on refining the water supply term to include flow exchanges between watersheds and constraints of water quality and environmental flows to water availability for human use.     

Implications of Upstream Flow Availability for Watershed Surface Water Supply across the Conterminous United States

Although it is well established that the availability of upstream flow (AUF) affects downstream water supply, its significance has not been rigorously categorized and quantified at fine resolutions. This study aims to fill this gap by providing a nationwide inventory of AUF and local water resource, and assessing their roles in securing water supply across the 2,099 8‐digit hydrologic unit code watersheds in the conterminous United States (CONUS). We investigated the effects of river hydraulic connectivity, climate variability, and water withdrawal, and consumption on water availability and water stress (ratio of demand to supply) in the past three decades (i.e., 1981–2010). The results show that 12% of the CONUS land relied on AUF for adequate freshwater supply, while local water alone was sufficient to meet the demand in another 74% of the area. The remaining 14% highly stressed area was mostly found in headwater areas or watersheds that were isolated from other basins, where stress levels were more sensitive to climate variability. Although the constantly changing water demand was the primary cause of escalating/diminishing stress, AUF variation could be an important driver in the arid south and southwest. This research contributes to better understanding of the significance of upstream–downstream water nexus in regional water availability, and this becomes more crucial under a changing climate and with intensified human activities.     

Science and Decision Making: Water Management and Tree‐Ring Data in the Western United States1

Abstract: Growing populations, limited resources, and sustained drought are placing increased pressure on already over‐allocated water supplies in the western United States, prompting some water managers to seek out and utilize new forms of climate data in their planning efforts. One source of information that is now being considered by water resource management is extended hydrologic records from tree‐ring data. Scientists with the Western Water Assessment (WWA) have been providing reconstructions of streamflow (i.e., paleoclimate data) to water managers in Colorado and other western states (Arizona, New Mexico, and Wyoming), and presenting technical workshops explaining the applications of tree‐ring data for water management for the past eight years. Little is known, however, about what has resulted from these engagements between scientists and water managers. Using in‐depth interviews and a survey questionnaire, we attempt to address this lack of information by examining the outcomes of the interactions between WWA scientists and western water managers to better understand how paleoclimate data has been translated to water resource management. This assessment includes an analysis of what prompts water managers to seek out tree‐ring data, how paleoclimate data are utilized by water managers in both quantitative and qualitative ways, and how tree‐ring data are interpreted in the context of organization mandates and histories. We situate this study within a framework that examines the coproduction of science and policy, where scientists and resource managers collectively define and examine research and planning needs, the activities of which are embedded within wider social and political contexts. These findings have broader applications for understanding science‐policy interactions related to climate and climate change in resource management, and point to the potential benefits of reflexive interactions of scientists and decision makers.     

Return to the River: Environmental Flow Policy in the United States and Canada1

Abstract: This paper provides an overview and summary of United States and Canadian federal, state, and provincial laws that offer some form of legal protection for environmental flows. Special attention is given to the new “second generation” law established in Texas and to ways western states are beginning to encourage transactions that help restore dewatered streams. Progress in the eastern states and some Canadian provinces to provide environmental flow protection is addressed. Based on this review, this paper presents recommended elements of a “model” environmental flow policy.     

A Framework for Incorporating the Impact of Water Quality on Water Supply Stress: An Example from Louisiana,USA

Water of poor quality can directly impact the budget of water available for key user groups. Despite this importance, methods for quantifying the impact of water quality on water availability remain elusive. Here, we develop a new framework for incorporating the impact of water quality on water supply by modifying the Water Supply Stress Index (WaSSI). We demonstrate the usefulness of the framework by investigating the impact of high salinity waters on the availability of irrigation water for agriculture in Louisiana. The WaSSI was deconstructed into sectoral components such that the total available water supply could be reduced for a particular demand sector (agricultural irrigation in this example) based on available water quality information. The results for Louisiana highlight substantial impacts on water supply stress for farmers attributable to the landward encroachment of saline surface water and groundwater near the coast. Areas of high salinity near the coast also increased the competition for freshwater resources among the industrial, municipal, and agricultural demand sectors in the vicinities of the municipal areas of Lake Charles, Lafayette, and Baton Rouge, Louisiana. The framework developed here is easily adaptable for other water quality concerns and for other demand sectors, and as such can serve as a useful tool for water managers.     

Water Mass Balances for the Solaire and the 2020 Tower: Implications for Closing the Water Loop in High‐Rise Buildings1

Abstract: Building water mass balances were performed for one 150‐story conventional building scenario for comparison with three scenarios of the 2020 Tower, a hypothetical 150‐story high‐rise building with on‐site wastewater treatment and reuse. To ensure that the assumptions for the hypothetical building are appropriate, a one‐year water balance was also conducted of the existing 27‐story Solaire building that partly closes the water/wastewater loop, meters major water flows and implements low‐flow/water conserving fixtures and appliances. For comparison, a conventional 27‐story building scenario with the same low‐flow/water conserving fixtures as the Solaire but no water reuse was also assessed. The mean daily indoor water use in the Solaire was 246 l/(d cap) which exceeds mean daily water use found in the literature. The water mass balances showed that an urban high‐rise building needs another source of water even when potable reuse water is produced because of losses during water end use and treatment (i.e., evaporation, water in treatment residues). Therefore, water conservation (i.e., modification of human behavior) and water efficiency improvements (i.e., equipment, appliances and fixtures) are important major factors in reducing the municipal water needed in all scenarios.     

Water Stress Projections for the Northeastern and Midwestern United States in 2060: Anthropogenic and Ecological Consequences

Future climate and land‐use changes and growing human populations may reduce the abundance of water resources relative to anthropogenic and ecological needs in the Northeast and Midwest (U.S.). We used output from WaSSI, a water accounting model, to assess potential changes between 2010 and 2060 in (1) anthropogenic water stress for watersheds throughout the Northeast and Midwest and (2) native fish species richness (i.e., number of species) for the Upper Mississippi water resource region (UMWRR). Six alternative scenarios of climate change, land‐use change, and human population growth indicated future water supplies will, on average across the region, be adequate to meet anthropogenic demands. Nevertheless, the number of individual watersheds experiencing severe stress (demand > supplies) was projected to increase for most scenarios, and some watersheds were projected to experience severe stress under multiple scenarios. Similarly, we projected declines in fish species richness for UMWRR watersheds and found the number of watersheds with projected declines and the average magnitude of declines varied across scenarios. All watersheds in the UMWRR were projected to experience declines in richness for at least two future scenarios. Many watersheds projected to experience declines in fish species richness were not projected to experience severe anthropogenic water stress, emphasizing the need for multidimensional impact assessments of changing water resources.     

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.