COST SHARING IN TRANSITION: THE CASE OF PLAN 6, CENTRAL ARIZONA PROJECT1

ABSTRACT: In the past, development of Federal water resource projects depended heavily or exclusively on Federal financing of construction costs. However, pressures on the Federal budget, environmental issues, and the notion that there are economic efficiency gains when beneficiaries of Federal water resource projects increase their cost share are causing changes. The case of the Central Arizona Project Plan 6 is a noteworthy example of the transition to more non-Federal participation in water resource development. This is because the non-Federal financing is to be provided for a project already under construction. The negotiation and terms of the Plan 6 financing agreement between the Department of the Interior and multiple interests in Arizona are used as an example of how Federal water project cost sharing is in a state of transition. The negotiation process is described, a financial analysis is provided, and the terms of the agreement and policy issues that were deliberated in the Executive Branch of the Federal Government are discussed.     

CASE STUDIES OF AGRICULTURAL WATER CONSERVATION1

Farmers from four irrigation districts in Texas and California were questioned about water conservation practices they are now using, those they plan to adopt, and potential incentives that government might offer to induce still further water conservation on their part. While responses differed somewhat from place to place and among individual farmers, the general results were: a) farmers reported that “water conservation” is not new to them, it is something they practice regularly; b) recent innovations such as laser controlled land leveling devices have permitted some substantial water use reductions in recent years; and c) even greater incentive mechanisms that government could provide and that farmers would accept as useful incentives, such as long term low interest loans for water saving equipment, would probably not be able to reduce water use in agriculture much further than 15 percent below current levels. It is recommended nonetheless that Federal agencies and local water districts and individuals should nonetheless pursue water conservation training and education programs, demonstrations of conjunctive use and water banking opportunities for water saving, and increased loan programs for installation of water saving equipment.     

ANALYZING THE IMPACT OF LAND USE ON SEWER SERVICE AREA PLANNING1

ABSTRACT: The density and distribution of land uses has important consequences for the planning of sewerage systems and for the costs of these systems. This paper examines these consequences using a simplified service area model. The model determines the area to be served by a central waste treatment plant, where alternative on-lot disposal systems are also available. The model is applied to various urban area configurations, which are summarized by their total populations and by their population density distributions. Both minimum regional cost and minimum local cost service area configurations are determined. In addition, the sensitivity of the model to the parameters of the cost and population density functions is assessed. It is found that the model is most sensitive to the parameters of the collection cost function.     

WATER SUPPLY COSTS FOR SMALL PRIVATE UTILITIES1

ABSTRACT: This paper examines the cost of water supply for small and mid-sized private water utilities. An econometric approach was employed in which data on utility costs and characteristics were used to estimate a total water supply cost function from which average and marginal costs were derived. The results suggest that although average and marginal costs decline with output, the rate of decline rapidly approaches zero, and unit costs therefore appear to remain relatively constant over a wide range of output. Implications of the results for pricing policy are examined.     

INTEGRATING SOCIAL BENEFIT COST ACCOUNTING INTO WATERSHED RESTORATION AND PROTECTION PROGRAMS1

ABSTRACT: Successful watershed management requires consideration of multiple objectives and the efficient use of scarce public and private resources. One way to address these multi-faceted issues is through Social Benefit-Cost Accounting (SBCA). SBCA is a systematic method of addressing complex social and economic issues relevant to proposed watershed management projects. Benefits of using this technique include: benefits and costs of watershed projects are better understood; politically sensitive issues tend to be put into perspective; and stakeholders' interests are placed on a level playing field. An example from Bogota, Colombia demonstrates how SBCA can be used to value the benefits and costs of a proposed project. By addressing the benefits and costs to all stakeholders, the design of watershed management programs can be improved to achieve goals in a cost-effective manner.     

POTENTIAL EFFECTS OF CLIMATE CHANGE ON AGRICULTURAL WATER USE IN THE SOUTHEAST U.S.1

ABSTRACT: Climate change has the potential to have dramatic effects on the agricultural sector nationally and internationally as documented in many research papers. This paper reports on research that was focused on a specific crop growing area to demonstrate how farm managers might respond to climate-induced yield changes and the implications of these responses for agricultural water use. The Hadley model was used to generate climate scenarios for important agricultural areas of Georgia in 2030 and 2090. Linked crop response models indicated generally positive yield changes, as increased temperatures were associated with increased precipitation and CO2. Using a farm management model, differences in climate-induced yield impacts among crops led to changes in crop mix and associated water use; non-irrigated cropland received greater benefit since irrigated land was already receiving adequate moisture. Model results suggest that farm managers will increase cropping intensity by decreasing fallowing and increasing double cropping; corn acreage decreased dramatically, peanuts decreased moderately and cotton and winter wheat increased. Water use on currently irrigated cropland fell. The potential for increased water use through conversion of agriculturally important, but currently non-irrigated, growing areas is substantial.     

The economics of land application of fresh and composted broiler litter with an environmental constraint

Land application of broiler litter is a common disposal method due to its value as a fertiliser substitute, but presents potential environmental problems because of nutrient runoff. Composting has been suggested as an alternative due to the formation of more stable organic components. The land application of fresh and composted broiler litter are compared as alternative disposal methods. The costs of land application of broiler litter are dominated by spreading because of low nutrient densities relative to commercial fertilisers. Composting broiler litter before land application appears to be substantially less economically attractive than land application of fresh broiler litter because of high costs of production and higher spreading costs due to even lower nutrient density. However, when environmental constraints are placed on the phosphorus concentration from hayfield runoff, composting becomes a more attractive alternative. Composting becomes more viable as the land base for application becomes smaller relative to broiler production; as alternative disposal costs for litter become higher; and as environmental constraints become stricter.     

THE IMPORTANCE OF INSTITUTIONAL STRUCTURE IN CONTROLLING AGRICULTURAL RUNOFF1

Abstract: Agricultural runoff, such as dissolved mineral salts and selenium, creates pronounced downstream impacts to agricultural producers and to wildlife. The ability to manage these problems efficiently depends critically on the institutional pricing structure of irrigation water delivery agencies. An important characteristic of irrigation water delivery is whether irrigators pay per unit of water received or make one payment regardless of the quantity of water received. In this study we compare the effectiveness of agricultural runoff reduction policies in two regions that employ these different water pricing structures. We find that reduction policy is more effective and can be achieved at a lower cost when water is priced on a per unit basis and that growers have greater incentive to act on their own to reduce runoff problems. Operating under a per unit pricing system encourages water conservation and runoff reduction, which creates public benefits that are not achieved under the single-payment, fixed allotment method of irrigation water delivery.     

Choosing policy instruments for controlling ozone depleting substances in a developing context: the case of Chile

Chile ratified the Montreal Protocol in 1990 which sets out an agenda for the reduction and then elimination of ozone depleting substances (ODS); however, by 1998 the country had not yet defined a strategy to encourage greater compliance, so that in the same year the National Environmental Commission decided to examine the policy options available. This paper examines the process followed to develop this strategy. As a first step it was necessary to look at how far the implicit policy of "business as usual" could be stretched without jeopardizing Chile's compliance obligations. A second step included quantifying compliance costs and their impact on different policy instruments and so policy choice. Finally, the attitudes of decision-makers or participants were identified, by interviews with officials of the different public agents involved, in order to weigh their views about policy. A strategy was proposed, based on this information, which the Chilean regulator has used, although not in its entirety. The methodology developed could well be useful for developing-country Protocol signatories building their own appropriate compliance strategy.     

Biodiversity Conservation, Ecosystem Functioning, and Economic Incentives under Cocoa Agroforestry Intensification

Abstract:  World chocolate demand is expected to more than double by 2050. Decisions about how to meet this challenge will have profound effects on tropical rainforests and wild species in cocoa-producing countries. Cocoa, "the chocolate tree," is traditionally produced under a diverse and dense canopy of shade trees that provide habitat for a high diversity of organisms. The current trend to reduce or eliminate shade cover raises concerns about the potential loss of biodiversity. Nevertheless, few studies have assessed the ecological consequences and economic trade-offs under different management options in cocoa plantations. Here we describe the relationships between ant ecology (species richness, community composition, and abundance) and vegetation structure, ecosystem functions, and economic profitability under different land-use management systems in 17 traditional cocoa forest gardens in southern Cameroon. We calculated an index of profitability, based on the net annual income per hectare. We found significant differences associated with the different land-use management systems for species richness and abundance of ants and species richness and density of trees. Ant species richness was significantly higher in floristically and structurally diverse, low-intensity, old cocoa systems than in intensive young systems. Ant species richness was significantly related to tree species richness and density. We found no clear relationship between profitability and biodiversity. Nevertheless, we suggest that improving the income and livelihood of smallholder cocoa farmers will require economic incentives to discourage further intensification and ecologically detrimental loss of shade cover. Certification programs for shade-grown cocoa may provide socioeconomic incentives to slow intensification.