Feb. 27, 2013 Meeting

NSF Economics Working Group meeting 2/27/13

 

To do before next meeting:

• Get a better map of the ag districts and begin thinking about how we can lump some together-Allie
• Comment and make changes to research questions as needed –Everyone
• Write out a simple two sector model that describes the general architecture of our model-Allie will start it and the group will make comments

 

Broad Research questions we would like to be able to answer once our model is built (from Chris)

1. Implications of seasonal changes in climate conditions and runoff of water use
2. Incentives to improve ag efficiency
   1. How do 3 institutions alter water use and adoption of irrigation technology

i.      Can sell water to cities

ii.      With permanent water rights transfers

iii.      Without permanent water rights transfers

1. Water rights markets with and without water leasing markets, what are the financial implications?
2. The decrease in ag due to economic conditions frees up water more than offsetting increased demands from climate change
3. Is ag decreasing because of economic conditions and freeing up water, or is water leaving ag and causing ag to decrease?
4. What is the benefit of conservation?
   1. If it allows us to keep water in ag, is this water enough to impact ag?
   2. If water is used for landscaping?
   3. If water used for increased population
   4. If water is used for landscaping by existing cities
   5. What is the real cost of urban conservation?
      1. Related to what could be done with the water (keep in ag, used to grow, used for landscaping, etc.)

 

Specific Research questions we would like to be able to answer once our model is built

1. Who will be the winners and losers under climate change policies
2. If the hydrograph changes so that the water year changes, this would change our water allocation system, what would happen if we relax the water rights system and test some different policy decisions.
3. Ag production is impacted by climate change in numerous ways, we would have climate variability on the plains and in the mountains that we could model differently.
   1. Rainfall
   2. Temperature
   3. Irrigation
   4. Seems like timing is going to be a very important aspect to capture to answer many of these questions.
      1. Mazdac is going to be doing daily time step hydrology model, we are going to most likely be at a yearly or seasonal level
      2. There is some optimal solution given an institutional setup that this CGE could solve for. Then we could change things to determine welfare effects of different policies (i.e. the constraints).
      3. What would be the effect of out of basin transfers?
      4. What are the incentives to efficiency improvements given a number of different institutional settings? (you get to keep the consumptive use gain, you do not get to keep the gain…)
         1. These are some of the bills that are now being run in the legislature that are meant to encourage efficiency.
         2. How do these three different institutions influence the economic landscape
         3. If you reduce transactions costs of selling/leasing water rights, how does this influence the marketplace?
         4. What are the effects on people in the towns that are not growing? What happens to the small towns that are losing ag?
         5. What happens when cities purchase rural water?
         6. Is agricultural irrigated acreage going to decline because agricultural is becoming less productive on its own or because the cities are buying up the water?
         7. Conservation in cities
            1. We have already seen a drop in the amount of water used by each person as city water has made gains in efficiency. There is more room to further conserve, bearing the cost on the people living in the city to have more water in ag.
            2. What is the benefit of conservation if we have more water in ag? But what is the loss on the consumer side of things (laws, gardens, etc.)? What is the cost of urban conservation?
            3. How much water are we really talking about? How many acres will actually be impacted?
            4. Landscaping is really a drought bank for cities, so that they can put in place restrictions when we are in drought. If we don’t have this, how are we going to be resilient against drought?

i.      By conserving more and more we are reducing our safety net for when a drought comes. Can we determine an optimal level of conservation given the increased likelihood of climate variation predicted by climate change?

1. Water rights markets versus water leasing markets.
   1. We will need a good baseline—which is no reallocation.
   2. There is a public finance component to this question
   3. What is the impact of change in uncertainty on outcomes?

 

Spatial resolution possibilities:

• Dictated by priority date. How heterogeneous do we need to make water rights as we need to allocate off of seniority?
• Water district level (this seemed like the idea most liked by the group in terms of being able to answer the questions we are interested in)
• Aggregated into 4 regions, three along the front range and one on the plains

Mazdak question:

• What is the hydrology model going to be able to tell us? Will it tell us both native flows and water management?