Managing the Columbia River Instream Flows, Water Withdrawals, and Salmon Survival (2004) / Chapter Skim
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6 Better Management of Existing Water Supplies
6 Better Management of Existing Water Supplies
Pages 146-174
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From page 146... ...
Further more, because they focus on improved water use efficiencies, they do not require additional water withdrawals and can thus also contribute to viable salmon populations and a healthy Co lumbia River ecosystem. THE ECONOMIC VALUE OF WATER As discussed throughout this report, the waters of the Co lumbia River today sustain a wide variety of economic activities.
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From page 147... ...
states by specifying how water rights holders use water. This requires some understanding the economic value of water across a range of different uses.
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From page 148... ...
Thus, a farmer's demand for irrigation water is a derived demand that depends on the demand for the crop being sold. The effect of crop value on water value is confirmed in numer ous studies that have shown that the marginal value of water is higher for high-value crops than for low-value crops.
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From page 149... ...
Empirical evidence of this effect is found in a study in which marginal values for a representative Columbia River basin crop mixture were inferred to be $46 per acre-foot when water was tightly restricted but were only a few dollars per acre-foot when water available to the crop was not restricted (Bernardo and Wittlesey, 1989)
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From page 150... ...
. In summary, patterns of wa ter values observed in actual transactions in water banks in Cali fornia, Oregon, and Washington are generally consistent with those that would be suggested by economic theory and data (higher water values for higher-value crop mixes)
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From page 151... ...
The implications of the values accepted by the Supreme Court for agricultural water may be significant, particu larly in litigation concerning reductions in irrigation water deliv eries to agriculture arising from state or federal policies or ac tions. Municipal The marginal value of water for residential purposes depends on the end use and the level of current consumption; marginal value is typically less for outdoor consumption (e.g., lawns)
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From page 152... ...
The actual cost of water delivered to residential users in San Diego will be substan tially higher than $230 per acre-foot. The Imperial Irrigation District-San Diego agricultural-urban water transfer is a good example of how conserved water can be transferred to a use of greater economic value and how water supplies might be aug mented in order to sustain economic growth without increasing withdrawals from surface or groundwater supplies.
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From page 153... ...
. The study estimated water values for energy generation based on the alternative cost of requiring more thermal power generation to replace reduced hydropower generation.
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From page 154... ...
. Studies of the marginal value of water for recreation indicate that estimates of water values differ substantially, de pending on recreational activity, magnitude of streamflow, and quality of the water.
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From page 155... ...
Short-run estimates of water value for navigation typically utilize the alternative cost method; the value of water used to support navigation is equal to the savings of using water-based transportation over railroad transportation, minus the costs of operation and maintenance of the waterway. Long-run estimates include the costs of construction of the waterway (it is assumed that railroad rates reflect all fixed and variable costs, while barge rates reflect only private costs and not waterway costs, since user fees are uncommon)
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From page 156... ...
Although existence values appear to be very site and context specific, studies of existence values for other species and ecosystems suggest that the value of the waters in the Columbia River system in providing habitat for di verse species is high and of importance when making public pol icy decisions concerning the basin's water resources. Ideally, when comparing the efficiency of alternative water allocations, policy makers should obtain estimates of the sum of all use and nonuse values to determine the "total economic value" of a par ticular water allocation.
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From page 157... ...
In the context of the Columbia River basin, salmon have particularly important cultural and symbolic values. Although not quantifi able in economic terms, these types of values often enjoy strong political support.
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From page 158... ...
generally began using water markets in the 1970s as a means to address some of the inflexi bilities inherent in the doctrine of prior appropriation (NRC, TABLE 6-1 Marginal Values of Water in the Columbia River Basin Value Range per Acre foot Use (1999 U.S.$a) Agriculture $3-$200 Municipal $34-$403 Industrial $10-$1248 Hydropower $4-$62 Recreation $7.70-$130 Navigation $5.60 Waste assimilation $0.20-0.28 Not available on an Passive uses acre-foot basis a Converted into 1999 U.S.$ using Consumer Price Index annual figures.
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From page 159... ...
. Water markets and water banks were developed as a means to reallocate water from lower-value uses to higher-value uses, or to environmental uses.
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From page 160... ...
, mu nicipalities purchase agricultural water rights through water markets to meet rising water demands driven by human popula tion growth. Although most water markets are intrastate, an interstate wa ter market was recently authorized by the federal government to allocate waters of the Colorado River.
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From page 161... ...
Rural areas of origin in water transfers often perceive that they have compromised their future. Cultural values associated with water are among public values not likely to be protected in pri vate water markets.
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From page 162... ...
Additional resources may be necessary in the Columbia River basin to help state agencies perform these duties if such markets are pursued. Governments as participants in water markets need skills and resources that go beyond those required in regulating markets.
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From page 163... ...
. Water banks hold promise for water problems such as those that recently occurred in the Klamath River basin.
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From page 164... ...
This and other water banks in California are managed by the State Department of Water Resources. In December 2002 the Imperial Irrigation District (IID)
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From page 165... ...
The main criticism has been that EWA managers may have paid too much for water at certain times, al though it is reasonable to expect that agencies with limited ex perience in water markets may make some mistakes as they gain experiences with these processes. The Columbia River basin has had some experiences with market-based water transfer mechanisms.
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From page 166... ...
Water Conservation Water markets are designed to enable transfers of water sup plies among potential users. Typically, the supply of available water is assumed to be fixed over a particular time period.
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From page 167... ...
In many parts of the country, water conservation has emerged as an important source of "new" water supply. In places where available surface and groundwater supplies are fully appropriated or overappropriated, making more efficient use of existing supplies frees up water to serve new demands.
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From page 168... ...
, conservation investment is a more at tractive proposition. As discussed in this report, farmers in Cali fornia's Imperial Valley have negotiated with the Metropolitan Water District to transfer conserved water to urban users in ex change for financial support in the installation of conservation technologies, and similar strategies would seem to hold promise in the Columbia River basin.
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From page 169... ...
In establishing urban water use fees, the relations between fees and conservation incentives should be considered. Adjusting to Water Shortages The climate of the Columbia River basin is characterized by annual fluctuations in snowpack, precipitation, and streamflow.
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From page 170... ...
Continued use of wells in Oregon, specifically during nondrought years, will be limited by growers' ability to obtain permanent water rights for them. Re cently drilled wells are generally permitted for use only during declared droughts (ibid.)
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From page 171... ...
Producers plant high value crops in fields with reliable water supplies, sometimes de spite the presence of inferior- quality soil. During drought peri ods, low-value crops like wheat and hay are often irrigated with reduced amounts of irrigation water or may not be planted at all (Faux and Perry, 1999)
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From page 172... ...
. Prior appropriation requires that water be put to beneficial uses, but it does not prioritize water rights based on willingness to pay considerations, or the eco nomic or social return, of water applications.
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From page 173... ...
Although they are not perfect, water markets and banks have demonstrated advantages in producing both flexibility and security in a number of contexts. Market-based programs -- several of which have been used to good effect across the West -- such as water banks, environmental water accounts, and water rights sales and leases, along with careful monitoring of outcomes, would allow man agement organizations to learn more about the value (or lack thereof)
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From page 174... ...
Successful creation of water markets and water banks thus often holds great potential to identify "new" sources of wa ter and may therefore increase beneficial uses and reduce tensions; but human resources investments to ensure that adequate organizational, environmental, and social frameworks are essential and may be substantial. The State of Washington and other Columbia River basin entities should continue to explore prospects for water transfers and other market based programs as alternatives to additional withdrawals.
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