Marginal Value Of Water Research Articles

The economic unsustainability of the Spanish national hydrological plan

This paper analyses the economic aspects of the Ebro water transfer, which have been overlooked in the Spanish National Hydrological Plan. The questions exam ined are the cost of transferred water, and irrigated agriculture in the Levante and south-eastern regions, which are the main water transfer destinations. Results show that the water transfer is not economically sustainable, because the costs of the diverted water are higher than the current marginal value of water in agriculture, and crop profitability is insufficient to pay for the whole volume of transferred water. A compromise solution between increasing water supply and demand management measures will combine a reasonable water price increase with water desalination in coastal counties. This solution would reduce water demand with a moderate effect on farmers' revenue and net income. Spain could find alternative investment projects to the water transfer, able to improve social welfare.

The Economic Value of Water in Recreation: Evidence from the California Drought

A significant barrier to economically efficient management of most reservoir systems is lack of reliable information about how recreational values change with reservoir levels. This paper presents evidence on marginal values of water for recreation at Corps of Engineer reservoirs in the Sacramento, California, District. Data on visitors were collected by origin and destination before and during the early part of the 1985–1991 California drought. Because lake levels varied widely during the sample period, water's effect on visits was isolated from price and other effects. An estimated regional travel cost model containing water level as a visit predictor provided information to compute marginal values of water in recreation. For the range of the lake levels seen, annual recreational values per acre‐foot (1234 m3) of water vary from $6 at Pine Flat Reservoir to more than $600 at Success Lake. These findings are limited to use values of visitors who travel to the reservoirs and do not reflect passive use values to people who value the reservoirs but never visit them. Analysts could apply similar methods to other river basins in which a public agency controls the management of multiple water uses.

Marginal Price of Lake Recreation and Aesthetics: An Hedonic Approach

AbstractEfficient allocation of water requires knowledge of water's value in both consumptive and nonconsumptive uses. This study estimates the marginal value of water in lake recreational and aesthetic (RA) use. An hedonic price equation (employing the Box-Cox functional form) indicates lake front location, distance to lake, and scenic view are significant RA characteristics of housing. Water front properties command a premium price for the private access they offer. Beyond the water front, the marginal RA price falls rapidly with increasing distance, becoming asymptotic to some minimum. Twenty-two percent of housing price is found to be attributable to the RA component.

Testing whether waterfowl hunting benefits increase with greater water deliveries to wetlands

The change in waterfowl hunting benefits due to an increase in water deliveries to the levels required for biologically optimal wildlife refuge management at California's San Joaquin Valley National Wildlife Refuges are estimated with the Travel Cost Method, using both ordinary least squares and Poisson count data estimators. To test whether these increases were statistically significant, the Krinsky and Robb technique was used to find confidence intervals around the consumer surplus point estimates. The increases in consumer surplus were found to be statistically significant in 5 of the 6 refuges based on OLS regression estimates and in all 6 refuges using Poisson count data regression estimates. In addition, a comparison of the marginal value of an acre-foot of water in consumptive recreational use versus agriculture use is made, with the finding that the marginal value of water in waterfowl hunting was greater than the marginal value of water in agriculture for one of the six refuges.

National estimates of the recreational value of streamflow

This paper presents one practical method of valuing the recreational fishing benefits generated by a unit of water as it moves downstream. A cross‐sectional analysis is employed to estimate the change in individuals' fishing behavior due to a change in availability of fishery resources. A proxy for the availability of stream fishery resources is derived from the link between changes in streamflow consumption to changes in the quality of fishing downstream. The results show that marginal increases in streamflow can generate recreational benefits that exceed the marginal value of water in agriculture in some regions of the country.

Benefits of increased streamflow: The case of the John Day River Steelhead Fishery

Conflicts between instream water uses such as fish production and traditional out‐of‐stream uses are an important water resource issue. One criterion for evaluating the merits of alternative water allocations is economic efficiency. This study uses an integrated approach to measure the recreational steelhead fishery benefits of incremental streamflow changes in the John Day River in Oregon. The analysis combines a steelhead fishery production model with a contingent valuation assessment of changes in fishing quality to obtain estimates of the marginal value of water in producing fishing quality. The results suggest that increased summer flows to enhance fishing have a marginal value of about $2.40 acre‐foot. When expressed in terms of water actually consumed, the value may be up to 10 times higher. These values are sensitive to the location of flow alterations in the river, potential for downstream uses and number of anglers in the fishery.

The right to use versus the right to sell: Spillover effects and constraints on the water rights of irrigation organization members

Irrigation organizations often place restrictions on individually arranged water sales to outside parties. It is shown that these restrictions may be consistent with efficient water use and transfers in cases where individually arranged transfers would impose detrimental spillover effects on other members of the organization. Joint optimization in the presence of spillover effects implies that organization level water trading activity will increase with an increasing market price of water and will decrease with an increase in the internal net marginal value of water. Regression analysis and other empirical evidence are found to be consistent with these implications. These results suggest that irrigation organizations engage in efficient water transfers on behalf of their members and that locally imposed restrictions on individual water transfers are not necessarily economically inefficient.

Water allocation under alternative water supply conditions

The purpose of this paper is to develop a method for estimating the marginal value of water to alternative users. The framework developed employs input-output and linear programming methods and is applied to a rural area of South Carolina. Pricing water resources according to their value of marginal product will lead to efficient allocation of the water and maximum Gross Regional Product under alternative water supply conditions.

Recreational Demands for Maintaining Instream Flows: A Contingent Valuation Approach

AbstractRecreational uses of streams, although nonconsumptive, increasingly conflict with traditional off‐stream uses of water in arid regions. Recreational demands for instream flows have collective good attributes such that the recreationists' preferences may be inadequately reflected in water allocation decisions. The contingent valuation approach was adapted to impute instream flow shadow prices from a sample of recreationists on the Cache la Poudre River in northern Colorado. During periods of relatively low flows, the estimated instream flow marginal value exceeds the marginal value of water in irrigation, suggesting a need for altered water allocation policies.

Energy-Water-Salinity: Upper Colorado River Basin

Coal, oil shale, and uranium resource developments in the Upper Colorado River Basin are expected to consume large amounts of water that will alter both the quantity and quality of downstream flows. An evaluation of the water resource impacts from alternative energy developments will assure a continued high level of water use throughout the Colorado River. A mathematical model that simulates the salt and water exchange phase of potential fuel conversions has been developed. The analysis is based on a subbasin division of the Upper Colorado River Basin utilizing a minimum cost linear programming algorithm. Model results are presented for minimum cost energy developments, marginal value of water, and impacts of interstate water transfers.

Least‐cost allocation and valuation model for water resources

A mathematical economic model of water use and water quality is formulated that allows for trade‐offs between the technologies of water use and waste treatment and the capacities of different regions for waste assimilation. The input‐output coefficients of water‐using production processes are written as functions of intake water quality so that the feedback effects of waste discharge on the economic process itself may be evaluated. The model determines the combination of production processes in each region that minimizes the overall cost of meeting a given bill of final demands, including demands for water quality (i.e., water quality standards). Such a model could be used to evaluate water development projects on a consistent basis; in particular it would calculate the marginal values of water in different regions and the marginal costs of meeting different water quality objectives.

Estimating marginal value of water for irrigated olive grove with the production function method

Economic valuation of irrigation water is done through the use of production functions for the case of the olive grove. In order to do so the integration of an agronomic model (based on the production function) and an economic model linked to the profitability of the crop (the ratio of revenue and operating costs) in the area under study is proposed. The study case encompasses the Guadalbullon River Sub-basin area, belonging to the Guadalquivir River Hydrologic Demarcation (Southern Spain). Within the overall deficit of the Guadalquivir River basin, the Guadalbullon River poses a special problem as it is unregulated and there are important irrigated fields on its banks, most of them olive groves. Net marginal value of water obtained (having deducted the variable costs of production including harvesting and irrigation) is€ 0.60 m–3 for the allocation of 1,000 m3 ha–1 and € 0.53 m–3 for the water right allowance of 1,500 m3 ha–1 (average for period 2005/2008). The results obtained support the recommendation by other authors suggesting the use of deficit irrigation in olive, additionally the high value of water estimated contributes to explain the substantial increase in irrigated olive area in Andalucia.

Marginal Values of Dilution Waters

The marginal value of water for dilution of waste is observed to be small when computed on either a long run or a short run basis. A policy of clean water places a low marginal value on dilution water since these values increase in many situations with any increase in allowable concentration of waste in the receiving water. The marginal value of waters used to dilute saline irrigation return flows is generally higher than those used to dilute oxygen demanding wastes because of the relative currently higher salt removal treatment costs and the much higher allowable receiving water concentration for most salts.