Evaluating the Possibility of a Water Trading Scenario Coupled With Water Use Restriction in the Texas Southern High Plains

Abstract

Producers in the Texas Southern High Plains face the depletion of the Ogallala aquifer as groundwater withdrawals for irrigation have far exceeded recharge. Policy makers and stakeholders have been analysing various options in order to maintain adequate groundwater stock in the aquifer for future use. This study evaluated the possibility of implementing a water trading scenario coupled with water use restriction in the Texas Southern High Plains. The objective of this study was to examine the water use behaviour of agricultural producers and estimate the limits for the permit price and penalty for violation (when water use exceeds the restriction limit) for a water trading scenario in conjunction with water use restriction. This was accomplished using a non-linear dynamic optimization model for a planning horizon of 50 years. The results suggested that the decision of producers to engage in water trading introduced under a restricted management plan will be impacted by initial water levels in the aquifer, as well as the viability of pumping water when moving further into the planning horizon. The highest change in consumer surplus, price of permit, as well as the penalty of violation was observed in the periods where water becomes limiting and the overall supply of available water declines. It is evident that while management policies such as restricting water use and permitting water trading will have a definitive impact on the regional agricultural economy, they could still serve as useful tools to promote long term conservation of groundwater resources in the region.