The Economic Value of Secure Water: Landowner Returns to Defining Groundwater Property Rights (original) (raw)
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Evidence suggests that advances in technology may be hastening the physical exhaustion of the Ogallala aquifer. This situation places the State of Kansas in a difficult situation. In administering water policy, State agencies are required to achieve an absolute reduction in water consumption, while maintaining the economic viability of irrigated agriculture in western Kansas. In order to maintain the profitability of irrigated agriculture, technological innovations need to continually be developed through research and adopted by the agricultural community. The question is how to allow this process to continue while at the same time reducing water consumption from the Ogallala aquifer. Two potential policy alternatives are the Voluntary Water Rights Transition Program (VWRTP) and the Conservation Reserve Enhancement Program (CREP) currently under consideration by the State of Kansas. In order to implement these programs, the State of Kansas, policy makers, and stakeholders need input from the economic community on both program structure as well as the market value of water rights. This research suggests that the value of water for agricultural purposes depends upon the spatially fixed, site-specific characteristics of the land on which the water is used. These factors include water source, soil type, crop type, depth to water, saturated thickness of the aquifer, the seniority level of the water right, average annual water usage, and local precipitation. Additionally, evidence suggests that the markets for irrigated and nonirrigated cropland are separate and distinct and as such should be modeled separately. Conventional as well as spatial econometric hedonic models were developed to estimate the value of water rights in the five groundwater management districts in central and western Kansas. The spatially unadjusted OLS hedonic models for irrigated and nonirrigated land are
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Estimation of agricultural policy cost for a given level of groundwater conservation requires the establishment of an accurate baseline condition. This is especially critical when benefits and cost of a conservation program are estimated relative to the status quo policy or baseline situation. An inaccurate baseline estimate will lead to poor estimates of potential water conservation savings and/or agricultural policy cost. Over a 60-year planning horizon per acre net present value is as much as 29.8% higher for a study area when aquifer characteristics are modeled as homogenous and set to their average area value than when the heterogeneity in aquifer characteristics is explicitly modeled.
Private Water Utility Landholdings: Financial and Political Implications
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Ecosystem services research has led to policies favoring watershed land protection at the federal, state, local, and private levels, notably at drinking water treatment facilities. A few researchers have connected land use and water utilities by estimating surface water treatment costs through raw water sediment load. However, more comprehensive cost-benefit research of private watershed land ownership is absent. In my research, I develop a distributional cash flow model to estimate the magnitude and timing of costs and benefits to a Connecticut private water company, the local community, and to the economy as a whole using Connecticut Public Utilities Regulatory Authority data, interviews, regulatory landscape, tax regime, and non-market valuation benefits transfer. The base case model predicts positive NPV to all parties in Connecticut: 3,828,432,329totheeconomyfrom2010through2025,where3,828,432,329 to the economy from 2010 through 2025, where 3,828,432,329totheeconomyfrom2010through2025,where1,461,824,087 of that is from benefits to the company and $2,366,608,242 is from bene...
Rule of Capture and Urban Sprawl: A Potential Federal Financial Risk in Groundwater-Dependent Areas
International Journal of Water Resources Development, 2012
This paper illustrates the potential federal financial risk created by groundwater over-abstraction, rapid urbanization, competing economic interests and institutional arrangements in groundwater-dependent areas of Texas. In the Upper Trinity Groundwater Conservation District (UTGCD), located in the Dallas-Fort Worth Metropolitan Area, urban sprawl creates suburbanized rural areas reliant upon the Upper Trinity Aquifer. Within the past 10 years, competing economic interests for groundwater have intensified as the area has experienced rapid urban sprawl combined with escalating Barnett Shale hydraulic fracturing activity, which coincided with two extreme droughts in 2006 and 2011. Urban sprawl generates business opportunities and tax revenues for state and local governments in the short term, but if groundwater-overabstraction leads to land subsidence, financial risk is transferred to the federal government due to increased risk exposure from federal housing loans and government-backed residential lending.
Interjurisdictional Spatial Externalities in Groundwater Management∗
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When designing groundwater management policies, it is important to account for spatial externalities that result from the common pool nature of the resource. Spatial externalities may arise not only among individual groundwater users sharing the same aquifer, but also among groundwater water managers whose separate jurisdictions do not each cover an entire aquifer. In this paper, we develop a model of interjurisdictional spatial externalities in groundwater management. We find that groundwater managers each managing a subset of the plots of land that overlie an aquifer and each behaving non-cooperatively with respect to other groundwater managers will over-extract water relative to the socially optimal coordinated solution if there is spatial movement of water between patches that are managed by different groundwater managers. We apply our model to a detailed spatial data set to analyze and estimate interjurisdictional spatial externalities in groundwater management in California un...
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Numerous studies have been published that consider the relationship between open spaces and property values. In this study, we examine the potential impact of water restrictions on the value of different types of green space. Restrictions on the use of water on outdoor areas are a popular means for governments or utilities to limit water use in urban areas. In this paper, a hedonic pricing model is used to analyse the effects that increasingly severe water restrictions might have on the perceived value of public and private green spaces in Adelaide, South Australia. A hedonic pricing model is estimated that contains housing characteristics, neighbourhood amenities, fixed effects to control for unobserved neighbourhood characteristics and temporal control variables for inflation. The findings suggest that water restrictions are not having a significant impact of the value of outdoor spaces on private properties. There are indications that substitutions may be occurring with the proximity to playgrounds, which are watered more regularly, becoming significant with increasing severity of water restrictions. However, close proximity to large public parks with trails for walking which remain in a natural state throughout the year (brown and dry in summer) is negatively correlated with the selling price regardless of water restrictions. This suggests that households in this market may be using some public green spaces for recreation in lieu of private areas but not all public open spaces are equal. This has implications for urban and landscape planners, especially given the likelihood of ongoing water restriction under climate change.