Opportunity Costs: Irrigation vs. Hydropower
Project Number G864-06
An analysis is done of the costs imposed on participants in the irrigation diversions from the Colombia River. The hypotheses analyzed are: a) that electricity consumers' welfare is not affected by irrigation diversions, b) that hydropower loss estimates derived using time and location specific data do not differ from those derived using average data, c) that water year does not affect welfare losses, d) that demand elasticity does not affect welfare losses, e) that farmer repayments do not affect welfare losses, and £) that interruption o£ water in critical £low years does not affect welfare losses. Electricity consumers are found to lose welfare when diversions are increased. Considering a potential diversion in central Washington, the annual loss to electricity consumers is in excess of $100 per acre developed. farmers' fields, this addition, the welfare When the government delivers water to loss exceeds $200 per acre. In loss estimates are found to be sensitive to the amount diverters pay o£ pumping costs and the potential interruption o£ diversions. The results under the diversion interruption simulation show potential £or reducing the tradeoffs between irrigation development and hydroelectric power generation.