Economic Planning

WWR provided the Idaho Department of Water Resources (IDWR) with an economic analysis of various water management options identified by the Eastern Snake Plain Aquifer Management Plan Committee. The objective of the economic analysis was to develop information to assist in the selection of a set of water management alternatives designed to improve groundwater levels within the Eastern Snake Plain Aquifer. Overall, IDWR is considering the various tools available to achieve a 600,000 to 900,000 acre-feet per year change in the Eastern Snake Plain water budget. The water management tools considered included aquifer recharge, new surface water storage, conversion of groundwater users to surface water sources, and leases and purchases of water rights.

Specifically, the economic analysis focused on estimation of the direct costs associated with implementation of a variety of groundwater demand reduction alternatives, including water right leasing and purchasing, to reduce withdrawals of groundwater from the aquifer. Examination of the economic tradeoffs of the various water management options provided important information for the state of Idaho that can be refined over time as additional information on the physical effects of the water management options are realized. The economic analysis addressed the likely costs of water in various uses and locations in the Eastern Snake Plain to inform the committee of the funds necessary to implement the program on various scales. The analysis developed a flexible economic model that could be adjusted to consider changes in the water management options throughout the planning process, identify likely budget requirements, and focus demand reduction efforts on regions with the most cost-effective outcomes.

WWR is providing economic analysis in support of proposed water supply development alternatives to develop additional water storage infrastructure in the Upper San Joaquin Basin, California. The project is being managed by the Bureau of Reclamation as part of a larger effort to study opportunities for additional surface water storage in the state. The economic analysis involves estimation of the direct economic benefits to urban and agricultural water users as well as regional benefits to the California economy.

WWR is developing and employing a variety of economic models consistent with the Department of Interior’s “Principles and Guidelines” to estimate the economic benefits associated with the project alternatives. The economic benefits to irrigated agriculture in California’s Central Valley are being estimated through the use of the Central Valley Production Model (CVPM), a mathematical optimization model that estimates the marginal contribution of additional water supply to farm incomes in the region. The model also estimates the change in crop mix that will result from changes in long-term water supply reliability, an important input to the regional economic analysis. Economic benefits to urban water users are being estimated through the development of a water transfer pricing model. WWR developed a statistical model of water market transactions to forecast future water market prices in various regions of California under different hydrologic conditions. The model relies upon past market transfers of water in the state as well as estimates of the regional water conveyance costs and losses. The economic analysis is being incorporated into a feasibility report that will address the full range of costs and benefits associated with the project alternatives.