Past and future water conflicts in the Upper Klamath Basin: An economic appraisal

Abstract

The water conflict in the Upper Klamath Basin typifies the growing competition between agricultural and environmental water uses. In 2001, drought conditions triggered Endangered Species Act‐related requirements that curtailed irrigation diversions to the Klamath Reclamation Project, costing irrigators tens of millions of dollars. Although this event has significantly elevated the perceived risk of future economic catastrophe in the basin (and therefore the level of conflict among water users), several key changes related to water availability have occurred since 2001. These changes include reduced ESA requirements and increased groundwater pumping capacity, which have lowered the actual risk and severity of future water shortages. In this paper, we use a mathematical programming model to evaluate how these changes alter the likelihood and economic consequences of future shortages. We also consider the effect of more flexible transfers among irrigators via water markets. Our analysis indicates that future drought conditions like those seen in 2001 would have more modest economic impacts than in 2001 and that when combined with contingent groundwater supplementation and water transfer mechanisms such as water markets, both the likelihood and magnitude of economic losses among irrigators would be greatly reduced.