CONJUNCTIVE SURFACE AND GROUND WATER MANAGEMENT IN THE JAKARTA REGION,INDONESIA1

ABSTRACT: This study investigates the degree of economic inefficiency of the current institutional arrangements for surface and ground water management in meeting urban water demand in the Jakarta region. A numerical model of integrated surface and ground water management is developed using GAMS (General Algebraic Modelling System) software. The model maximizes the net present value of social benefits from piped water and ground water consumption across all users over time from 1999 to 2025. Four policy scenarios are examined: the status quo, the social planner's solution, and two ground water pumping quota scenarios: an aggregate ground water pumping quota and a partial quota applied to commercial and industrial users. Three variations in each policy scenario are considered: investment in water infrastructure of the Jakarta water enterprise (PAM Jaya), water demand growth, and discount rates. The status quo, depending on the investment option, the growth of water demand, and the discount rate, results in a 7.4 to 47.8 percent loss in economic efficiency relative to the social planner's solution. The partial quota is the most feasible, applicable, and manageable scenario. The optimal investment option could increase the volume of piped water supply and reduce the cost of water production. The volume of water delivery could increase by up to 156 percent, but it implies only a 35 percent increase in the surface raw water demands above the current level. However, it does not significantly reduce cumulative ground water extraction over the time period considered.     

A COST‐BENEFIT ANALYSIS OF WATER QUALITY PROTECTION IN THE CATAWBA BASIN1

ABSTRACT: The primary objective of this study was to perform a cost‐benefit analysis of maintaining the current level of water quality in the Catawba River basin. Economic benefits were estimated using a stated preference survey method designed to value respondents' willingness to pay for a management plan to protect water quality in the Catawba basin over time. From the surveys conducted with 1,085 area residents, we calculated an annual mean willingness to pay of $139 for the management plan, or more than $75.4 million for all taxpayers in the area. Over the five‐year time horizon in which respondents were asked to pay for the management plan, this resulted in a total economic benefit of $340.1 million. The Watershed Analysis Risk Management Framework model was used to estimate the amount of management activities needed to protect the current level of water quality in the basin over time. Based on the model results, the total cost of the management plan was calculated to be $244.8 million over a ten‐year period. The resulting cost‐benefit analysis indicated that the potential benefits of this management plan would outweigh the costs by more than $95 million.     

A SYSTEMS STUDY OF FUTURE GROUNDWATER DEVELOPMENT COSTS IN THE CHICAGO REGION1

The cost of developing groundwater resources in northeastern Illinois from 198cL2020 is estimated for the purpose of providing a basis for comparing alternative sources. Demands for each township in the study area are estimated at 10-year increments and are satisfied, where the supply is sufficient, in such a way as to minimize the cost subject to constraints on supply. Sources of water are two shallow aquifers with known potential yields and a series of deep aquifers treated as a single unit and modeled on a digital computer. For each township the costs of wells, pumps, power and rehabilitation is estimated for each aquifer on a per million gallons of water per day basis. In addition the cost of groundwater treatment necessary to raise the quality to that of treated Lake Michigan water is considered. Raw water costs are found to vary from 2 to 14 cents per 1000 gallons depending upon the depth to the deep aquifer water. Treated water costs vary from 22 to 53 cents per 1000 gallons, the lower costs applying to the largest users because of the economy of scale. It is found that with proper distribution of pumpage there is sufficient water in storage in the deep aquifers to meet groundwater demands through 2020.     

TARGETING NONPOINT SOURCE POLLUTION CONTROL: PHOSPHORUS IN THE MINNESOTA RIVER BASIN1

ABSTRACT: The state of Minnesota seeks to reduce phosphorus loading to the Minnesota River by 40 percent from current levels. Looking at one major watershed in the river basin, we examined the cost effectiveness of targeting versus not targeting specific practices or regions within a watershed for controlling nonpoint phosphorus pollution from agriculture. Integrating biophysical simulation results from current and alternative farming systems with production cost and return estimates enabled us to analyze this policy. Our results indicated it is more cost effective to reduce nonpoint pollution by targeting particular regions or practices in a watershed compared to not targeting. Specifically, producers farming on cropland susceptible to erosion in close proximity to water will appreciably reduce phosphorus nonpoint pollution loading potential by switching from conventional tillage to conservation tillage and by reducing phosphorus fertilization levels to those recommended by the state extension service. Efforts to target those producers in the Minnesota River Basin could reduce potential transaction costs and compensation from “takings” by approximately $50 million (74 percent) over not targeting.     

Farm-level irrigation and the marginal cost of water use: evidence from Georgia

We create a proxy for the cost of irrigation water in Georgia from a sample of Georgia irrigators by investigating the marginal cost of pumping groundwater. We then combine this proxy with agronomic and climatic variables to estimate the response of agricultural water use to differences in the marginal cost of irrigation. The results show that pumping costs are a significant determinant of water use, and imply that agricultural water use would be moderately affected by institutional changes that would explicitly price water.     

ECONOMICS OF SCREENING FOR PESTICIDES IN GROUND WATER1

ABSTRACT: In the United States, millions of dollars are currently spent to monitor water quality for a whole suite of organic compounds. However, results of several surveys conducted in the past decade indicate that only a few pesticides occur in a small proportion of wells. Screening methods based on historical evidence of contamination patterns and knowledge of the locales will have significant potential to reduce these costs and effectively identify contamination problems. In this paper, the economics of utilizing two screening methods, sequential analysis and sample compositing, in the design of monitoring strategies is captured In the form of mathematical models and illustrated for a state-level monitoring program. When the two methods are adopted, the total analytical cost to conclusively identify contaminated wells in a network of 4,000 wells is shown to range from $12,500 to $1,575,000 depending on the extent of contamination. In contrast, the total analytical cost of a conventional program where all the wells in the network are sampled and tested for a standard suite of pesticides at a cost of $250/sample is one million dollars. Given such wide range in costs, it is prudent to incorporate the screening concepts presented in this paper in the development of cost-effective monitoring programs.     

Impacts of Urbanization and Intensification of Agriculture on Transboundary Aquifers: A Case Study

The objectives were to (1) delineate the complex set of rules governing the fate and transfer of water rights as agricultural land is urbanized in Texas and New Mexico in the United States and Chihuahua in Mexico and (2) estimate the change in water use as a result of such urbanization. Important additional determinants of water use in the region include intensification of agriculture and the hydroschizophrenic policy framework. We conducted interviews with key informants to identify the possible outcomes for changes in water rights as land is urbanized. We constructed decision trees for each of the three jurisdictions, Chihuahua, Texas, and New Mexico, that identified the possible outcomes from urbanization. For each of the possible outcomes in the decision tree, we estimated a range of potential water use outcomes and the most likely water use outcome on a per unit of land area basis. Results show that urbanization of agricultural land has almost no impact on the aggregate demand for or use of surface water. However, the impacts of urbanization on groundwater use vary considerably over the region from Texas to New Mexico to Chihuahua. In New Mexico and Chihuahua where groundwater rights can be leased or sold to other users, the likely impact is a net increase in groundwater use as land is urbanized, ranging from 0 to 3,000 m³/ha in New Mexico and averaging 3,000 m³/ha or more in Chihuahua. In Texas, there is a net benefit in groundwater savings, but those savings are subject to being offset by increased groundwater pumping to meet the needs of expanding pecan production. The net result is continued groundwater depletion, threatening the life of the transboundary aquifers, the Hueco Bolson and the Mesilla Bolson, in the Middle Rio Grande basin (defined as the part of the basin between Elephant Butte Reservoir in New Mexico to the confluence of the river with the Rio Conchos from Mexico).     

Cost/Benefit Considerations for Recent Saltcedar Control,Middle Pecos River,New Mexico

Major benefits were weighed against major costs associated with recent saltcedar control efforts along the Middle Pecos River, New Mexico. The area of study was restricted to both sides of the channel and excluded tributaries along the 370 km between Sumner and Brantley dams. Direct costs (helicopter spraying, dead tree removal, and revegetation) within the study area were estimated to be $2.2 million but possibly rising to $6.4 million with the adoption of an aggressive revegetation program. Indirect costs associated with increased potential for erosion and reservoir sedimentation would raise the costs due to increased evaporation from more extensive shallows in the Pecos River as it enters Brantley Reservoir. Actions such as dredging are unlikely given the conservative amount of sediment calculated (about 1% of the reservoir pool). The potential for water salvage was identified as the only tangible benefit likely to be realized under the current control strategy. Estimates of evapotranspiration (ET) using Landsat TM data allowed estimation of potential water salvage as the difference in ET before and after treatment, an amount totaling 7.41 million m³ (6010 acre-ft) per year. Previous saltcedar control efforts of roughly the same magnitude found that salvaged ET recharged groundwater and no additional flows were realized within the river. Thus, the value of this recharge is probably less than the lowest value quoted for actual in-channel flow, and estimated to be < $63,000 per year. Though couched in terms of costs and benefits, this paper is focused on what can be considered the key trade-off under a complete eradication strategy: water salvage vs. erosion and sedimentation. It differs from previous efforts by focusing on evaluating the impacts of actual control efforts within a specific system. Total costs (direct plus potential indirect) far outweighed benefits in this simple comparison and are expected to be ongoing. Problems induced by saltcedar control may permanently reduce reservoir capacity and increase reservoir evaporation rates, which could further deplete supplies on this water short system. These potential negative consequences highlight that such costs and benefits need to be considered before initiating extensive saltcedar control programs on river systems of the western United States.     

USING CONTINGENT VALUATION AND BENEFIT TRANSFER TO EVALUATE WATER SUPPLY IMPROVEMENT BENEFITS1

ABSTRACT: Many water systems in small cities and rural areas throughout the United States are facing water quality and supply problems. These problems are typically not the result of an unexpected event, but are the result of growth trends or decreasing water quality experienced over several years. This analysis uses the contingent valuation and benefit transfer methods to evaluate the willingness to pay for a rural water system in northcentral Montana. Both of the procedures resulted in similar values, ranging from about $4.05 to $7.50 per household per month for urban residents and $5.40 to $11.50 per household per month for rural residents, which is equal to 11 percent to 23 percent of current average water costs. The willingness to pay estimates do not include non-household water users. This analysis shows that useful planning information can be obtained from relatively inexpensive contingent valuation mail survey data and the benefit transfer method as long as the limitations of the data are understood. The willingness to pay for ensuring good quality rural water supplies in the future is likely to be low compared to the costs of extensive diversion and treatment systems. Willingness to pay estimates provide decision makers with information that can be used to avoid building a large water supply system that water users do not want to connect to because of high costs.     

Changes in electrical generator cooling systems: Are they cost-effective sources of water now and under climate change?

In the United States, thermal power plant electrical generators (EGs) are large water diverters and consumptive users who need water for cooling. Retrofitting existing cooling systems to dry cooling and building new facilities with dry cooling can save water and reduce EG's vulnerability to drought. However, this can be an expensive source of water. We estimate that the cost of water saved by retrofitting cooling in existing EGs ranges from $0.04/m³ to $18/m³ depending on facility characteristics. Also water savings from building new EGs with dry cooling ranges in cost per unit water from $1.29/m³ to $2.24/m³. We compare costs with that for water development projects identified in the Texas State Water Plan. We find the water cost from converting to dry cooling is lower than many of the water development possibilities. We then estimate the impact of climate change on the cost of water saved, finding climate change can increase EG water use by up to 9.3% and lower the costs of water saved. Generally, it appears that water planners might consider cooling alterations as a cost competitive water development alternative whose cost would be further decreased by climate change.     

Costs and benefits of urban erosion and sediment control: The North Carolina experience

The EPA’s new nonpoint source pollution control requirements will soon institutionalize urban erosion and sediment pollution control practices nationwide. The public and private sector costs and social benefits associated with North Carolina’s program (one of the strongest programs in the country in terms of implementation authority, staffing levels, and comprehensiveness of coverage) are examined to provide general policy guidance on questions relating to the likely burden the new best management practices will have on the development industry, the likely costs and benefits of such a program, and the feasibility of running a program on a cost recovery basis. We found that urban erosion and sediment control requirements were not particularly burdensome to the development industry (adding about 4% on average to development costs). Public-sector program costs ranged between $2.4 and $4.8 million in fiscal year 1989. Our contingent valuation survey suggests that urban households in North Carolina are willing to pay somewhere between $7.1 and $14.2 million a year to maintain current levels of sediment pollution control. Our benefit-cost analysis suggests that the overall ratio is likely to be positive, although a definitive figure is elusive. Lastly, we found that several North Carolina localities have cost recovery fee systems that are at least partially self-financing. This article is based on research by the authors for the North Carolina Department of Environment, Health and Natural Resources (DEHNR). The views are those of the research team and do not necessarily reflect the position of DEHNR.     

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.     

ALTERNATIVES FOR SALINITY MANAGEMENT IN THE COLORADO RIVER BASIN1

ABSTRACT The Colorado River Basin faces the dilemma of an increasing demand for water while presently struggling with salinity concentrations approaching critical levels for some water uses. Based upon projected development salinity concentrations are predicted to exceed 1200 mg/1 at Imperial Dam by the year 2010. Annual losses to the basin economy associated with increased salinity will exceed $50 million by the year 2010. Although methods of controlling salt discharges are relatively unrefined, certain conclusions, based upon Bayesian statistical methods, can be reached. Five basic alternatives for coping with the problem are presented and evaluated in this paper: (1) do nothing; (2) adopt arbitrary salinity standards; (3) limit development; (4) control salt discharges at a cost equal to the cost of doing nothing, or (5) minimize total costs to the basin. Total costs associated with any given alternative, or the given salinity resulting, are the sum of salinity detriments (cost to users for water of increased salinity plus economic multiplier effects) plus the cost of constructing salt discharge control works. These impacts upon basin economy and Colorado River water quality for each alternative are presented and related to questions of equity which will play a role in arriving at any long-term solution to the Basin's problem.     

Evaluating the impact of uncertainty and variability on the value chain optimization of a forest biomass power plant using Monte Carlo Simulation

Mathematical programming models have been used to optimize the design and management of forest bioenergy supply chains. A deterministic mathematical model is beneficial for making optimum decisions; however, its applicability to real-world problems may be limited because it does not capture all the complexities, including uncertainties in the parameters, in the supply chain. In this paper, a combination of Monte Carlo Simulation and optimization model is used to evaluate the impact of uncertainty in biomass quality, availability and cost, and electricity prices on the supply chain of a forest biomass power plant. The optimization model is a deterministic mixed integer non-linear model with monthly time steps over a 1-year planning horizon. Variability in biomass quality, i.e. moisture content (MC) and higher heating value (HHV), based on the historical data of a real case study is studied in detail and fitted probability distributions are used in the model, while for electricity prices different scenarios are considered. The results show that the impact of variability in the MC on profit is higher than that of uncertainty in HHV. It is observed that the annual profit ranges between $13.3 million and $17.9 million in the presence of all possible uncertainties while its average is $15.5 million. Uncertainty in biomass availability and cost and electricity price results in the risks of having annual profit of less than $14 million and low monthly storage levels.     

MULTICRITERION ANALYSIS OF GROUNDWATER CONTAMINATION MANAGEMENT1

ABSTRACT: Multicriterion decision making (MCDM) techniques were used to analyze a groundwater contamination management problem from the viewpoint of conflicting multiple objectives. The groundwater management model was used to find a compromise strategy for trading off fresh water supply, containment of the waste, and total pumping cost in a hypothetical confined aquifer affected by previous waste disposal action. A groundwater flow model was used to formulate the hydraulic constraints. A linear system model was used to describe drawdown and velocity as functions of the decision variables which were pumping rates. The model determines the pumping location and rates. A modified c-constraint method was used to generate the set of nondominated solutions which were the alternative compromise strategies. Three different MCDM techniques, Compromise programming (CP), ELECTRA II and MCQA II, were used to select a “satisficing” alternative. Analysis of the results showed that, although these techniques follow different principles, the same preferred strategies were reached. Also, it was noticed that maintaining high groundwater velocities is expensive and difficult. In order to meet a two year target date, large amounts of water had to be pumped. Therefore, rapid restoration results in large pumping volumes and high costs.     

RECIRCULATING WELLS: GROUND WATER REMEDIATION AND PROTECTION OF SURFACE WATER RESOURCES1

ABSTRACT: Several chlorinated solvent plumes threaten the sole‐source aquifer underlying the Massachusetts Military Reservation at the western end of Cape Cod. Sensitive surface water features including ponds, cranberry bogs, and coastal wetlands are hydraulically connected to the aquifer. For one of the plumes (CS‐10 the original remedy of 120 extraction and reinjection wells has the potential for significant disruption of surface water hydrology, through the localized drawdown and mounding of the water table. Recirculating wells with in‐well air stripping offer a cost‐effective alternative to conventional pump‐and‐treat technology that does not adversely affect the configuration of the water table. Pilot testing of a two well system, pumping 300 gpm, showed a capture radius of > 200 feet per well, in‐well trichloroethylene (TCE) removal efficiencies of 92 to 98 percent per recirculation cycle, an average of three recirculation cycles within the capture zone, and no measurable effect on water table elevations at any point within the recirculation/treatment zone. During 120 days of operation, the mean concentration of TCE in the treatment zone was reduced by 83 percent, from 1,111 μg/l to 184 μg/l. Full‐scale design projections indicate that 60 wells at an average spacing of 160 feet, having an aggregate recirculation 11 MGD, can contain the CS‐b plume without ground water extraction or adverse hydraulic effects on surface water resources. The estimated capital costs for such a system are about $7 million, and annual operations‐and‐maintenance costs should be about $1.4 million, 40 percent of those associated with a pump and treat system over a 20‐year period.     

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.     

DISTRIBUTIONAL ISSUES IN WESTERN MUNICIPAL AND INDUSTRIAL WATER SUPPLY1

ABSTRACT Financing and repayment provisions of western water projects effect transfers of income among federal taxpayers, electric power users, local water users, and property owners. We use the Bonneville Unit of the Central Utah Project as a case study in the distribution of municipal and industrial water costs. We examine the distribution of costs among taxpayers and water users in different political/geographical jurisdictions, and how this distribution is affected by water law, cost allocation procedures, and the choice of revenue source for local repayment of reimbursable costs. In light of the magnitude of distributional effects of present water policy, we conclude that lack of open debate on water issues is unfortunate. We conclude with speculation on the relationship of western water policy to the motivation of western water leaders who are instrumental in its formulation     

A Quantitative Method for Estimating Probable Public Costs of Hurricanes

/ A method is presented for estimating probable public costs resulting from damage caused by hurricanes, measured as local government expenditures approved for reimbursement under the Stafford Act Section 406 Public Assistance Program. The method employs a multivariate model developed through multiple regression analysis of an array of independent variables that measure meteorological, socioeconomic, and physical conditions related to the landfall of hurricanes within a local government jurisdiction. From the regression analysis we chose a log-log (base 10) model that explains 74% of the variance in the expenditure data using population and wind speed as predictors. We illustrate application of the method for a local jurisdiction-Lee County, Florida, USA. The results show that potential public costs range from $4.7 million for a category 1 hurricane with winds of 137 kilometers per hour (85 miles per hour) to $130 million for a category 5 hurricane with winds of 265 kilometers per hour (165 miles per hour). Based on these figures, we estimate expected annual public costs of $2.3 million. These cost estimates: (1) provide useful guidance for anticipating the magnitude of the federal, state, and local expenditures that would be required for the array of possible hurricanes that could affect that jurisdiction; (2) allow policy makers to assess the implications of alternative federal and state policies for providing public assistance to jurisdictions that experience hurricane damage; and (3) provide information needed to develop a contingency fund or other financial mechanism for assuring that the community has sufficient funds available to meet its obligations. KEY WORDS: Hurricane; Public costs; Local government; Disaster recovery; Disaster response; Florida; Stafford Act     

Emission versus Input Taxes for Diffuse Nitrate Pollution Control in the Presence of Transaction Costs

The most important obstacle to solving diffuse pollution problems is that emissions are either unobservable or cannot be observed at a reasonable cost. Biophysical models may provide sufficient information to set a cost-effective emission tax. However, evidence from recent studies has shown that transaction costs for emission-based policies are higher per hectare than for input-based policies. An economic model of agriculture for the Kennet catchment in south-east England shows that, when transaction costs are accounted for, an input tax is more efficient than an emission tax over a range of emission standards. This result has policy implications in that it indicates, first, that economists' policy recommendations should account for transaction costs, and, secondly, that the standard advice that emission-based policies are superior may be wrong where transaction costs differ substantially between emission- and input-based policies.