Estimating the value of irrigation water transferred to instream flow : A case study of Umatilla County, Oregon Public Deposited

http://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/t722hc94x

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  • Agricultural water supplies are becoming increasingly uncertain in the western United States due to elevated demands from competing water users, environmental restrictions on surface water withdrawals as a result of the establishment of the Endangered Species Act in 1973, and potential climatic changes. Since many rural communities in the West are economically dependent on irrigated agriculture, reduced water supplies may significantly impact the agricultural sector. The objectives of this study were to: 1) estimate the impacts of reduced surface water supplies and elevated instream flow requirements on commercial agriculture in the Milton-Freewater area of northeastern Oregon and 2) estimate the value of irrigation water and the cost to transfer water from commercial agriculture operations to instream use assuming a water market existed (i.e. voluntary transfers to a hypothetical buyer). Two models written in the General Algebraic Modeling System (GAMS) were developed to estimate economic impacts. Each model represented one irrigation district in the area with its characteristics in terms of irrigated acreage, crops grown, irrigation practices, and water usage. The models were then modified to reflect changes in surface water supplies, increased minimum stream flow requirements, and the existence of a water market, which allocates water to non-agricultural uses. Results indicate that with reduced surface water supplies (10% reduction in river levels) and higher stream flow requirements (additional 5 cfs left instream), both districts (Walla Walla River Irrigation District and Hudson Bay District Improvement Company) experience reductions in net revenues ranging from 0.9% to 4.2 % in Walla Walla and between 11% and 15% in Hudson Bay. Moreover, the reduction in irrigated acreage led to negative impacts on labor income with more significance in the senior right holder district (declines vary between 0.7% to 4.1% in Walla Walla and from 0.7% to 2.5% in Hudson Bay). In the presence of a water market, while net revenues decreased due to retiring irrigated acreage, income from water market activities increased steadily to reach $2.4 million and $2.9 million in Walla Walla and Hudson Bay respectively. At relatively low prices per acre-foot (about $19 in Hudson Bay and $25 in Walla Walla) majority of irrigation water was transferred instream (80% to 90%) and row crop and apple acreage was retired. High-valued wine grapes were taken out of production when prices were in excess of $100 per acre-foot, while only adding approximately 2 additional cfs instream. In addition to the long-term sale of the water right, a market for land fallowing was established for the field and row crops. Producers were offered per acre payment to fallow land and transfer water instream. Prices per acre accepted to fallow land and leave irrigation water for instream flow enhancement were on average about $63.
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