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.     

AN INTERDISCIPLINARY APPROACH TO VALUING WATER FROM BRUSH CONTROL1

ABSTRACT: An analytic methodology utilizing models from three disciplines is developed to assess the viability of brush control for water yield in the Frio River basin, Texas. Ecological, hydrologic, and economic models are used to portray changes in forage production and water supply resulting from brush control, and to value supplemental water produced through brush control. Site‐specific biophysical characteristics are used to simulate water yields from brush control across the watershed. Economic benefits from increased animal production for ranchers undertaking brush control are assessed. Benefits to Corpus Christi residential water consumers from ranchers' brush control activities are evaluated using the change in consumer surplus resulting from supplemental water produced through brush control. Results indicate an increase in water yield with brush control on 35 percent of the land area in the basin. However, the cost of brush control is more than the increase in returns it fosters on most range sites. Consumer surplus change for Corpus Christi residents over 25 years is zero under baseline conditions, implying subsidies for brush control in the Frio basin are not worthwhile at this time.