Measuring demand for irrigation water and foregone direct benefits of irrigation water transfers

摘要

Due to the growing competition for limited water supplies in Colorado as well as in many other parts of the western United States, the transfer of irrigation water to higher-valued uses plays an increasingly important role for improving the economic efficiency of water resource allocation. Under Colorado's legal system governing water rights, irrigation water transfers are permitted as long as water consumption of the new use is not greater than the historical consumptive use. Nevertheless, it is often questioned if the benefits resulting from these transfers are large enough to outweigh the associated costs. A major unresolved question is the price elasticity of irrigation water demand and, closely related to that, the magnitude of foregone direct benefits in irrigated agriculture resulting from water transfers.;To measure price elasticity and foregone direct benefits, a two-stage crop simulation/linear programming model is developed for the service area of an irrigation company in northeastern Colorado. The model takes into account a range of on-farm adjustment possibilities to reduced irrigation water availability. The crop simulation model estimates crop yield as a function of water applied at different points in time. Irrigation activities generated are entered into the linear programming model which maximizes net return through the efficient allocation of available water. A series of scenarios with alternative assumptions of on-farm adjustments are examined, and impacts of reduced water supplies on the marginal value of water, foregone direct benefits, and consumptive use are analyzed.;The results demonstrate that estimates for the price elasticity of irrigation water demand are strongly influenced by the assumptions of the underlying model. Also, foregone direct benefits in irrigated agriculture are relatively limited over a wide range of water reductions as long as several adjustment possibilities are allowed for. However, there is a strong tradeoff between, on the one hand, minimizing reductions in agricultural production and thus foregone direct benefits resulting from irrigation water transfers and, on the other hand, making irrigation water available to new uses by reducing consumptive use in agriculture. These results should be of interest to policy makers considering water reallocation policy alternatives.