Date of Award:
Doctor of Philosophy (PhD)
Economics and Finance
Jay C. Andersen
The economic efficiency of water development in Utah, including transfer systems, has seldom been examined, nor has the costs of public policies which result in deviations from efficient allocations. In order that public officials be better informed about water allocations , the present effort examines the efficient allocation of water in time frames up to 2020 under several alternative assumptions and calculates the cost of alternative policies.
Us ing mathematical programming techniques, a computer mode l is developed to determine the supply (marginal cost) and demand (value of marginal product) relationships for agricultural water, given depletions for municipal and industrial (M & I) and wetland requirements. The model maximizes net profit per acre t o an average agriculturalist in each of ten study areas in Utah. Proposed interbasin transfers and their costs are included in supply. The optimal solution gene rated is an efficient allocation, since maximization of net profits occurs only when value of marginal product equals marginal cost.
The requirements for M & I water are projected into the future using trending and probable industrial development. An efficient allocation (optimal solution) is generated by the model f or 1965, 1980, 1990, 2000, 2010, and 20 20. Th e timing of investments in water distribution systems can be determined from these solutions.
Using alternative assumptions about policies (minimum inflows to Great Salt Lake and water salvage) several alternative temporal distributions are determined. Additionally, the effect of restrictions on groundwater pumping (present levels of storage must be maintained) are examined. The costs to users in higher supply curves (marginal costs) are approximated by areas between supply curves. In addition, losses to agricultural users from diminished efficient new production can be approximated.
The critical factors in large proposed water transfers in Utah appear to be the growth of M & I requirements along the Wasatch Front, particularly in the Jordan River Basin. Sufficient water is available in the Colorado River Basins to provide maximum transfers, full oil shale and power generation development, and efficient agricultural production. Restrictions on groundwater pumping and water salvage in the Jordan River Basin and maintenance of high inflows to Great Salt Lake make transfers necessary sooner. The costs of such restrictions approaches 25 percent of the total investment by agriculture in transfer systems. If no r e strictions are made, but investment in these systems occurs now, a loss of foregone returns to alternative investment equal to about 70 percent of the total agricultural investment is incurred by society.
Keith, John, "The Economic Efficiency of Inter-Basin Transfers of Agricultural Water in Utah: A Mathematical Programing Approach" (1973). All Graduate Theses and Dissertations. Paper 3121.
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