Document Type


Publication Date

January 1982


The Upper Colorado River Basin states contain large deposits of oil shale, tar sands, crude oil, coal, and natural gas, which are or could be used to produce refined petroleum products, natural and synthetic gas, and eletrical power. Agriculture is the predominant water consuming industry of the basin, accounting for 90 percent of the total depletions. Future energy development in the Upper Colorado River Basin will compete with agriculture for the limited supply of water by bidding up the price of water. The study attempts to identify the need for government-sponsored water conservation measures in conjunction with other water saving techniques employed by the private sectors of the economy in response to increased water prices. The objectives of this study are: 1) To determine the total cost to the economy of the public sector investments in water conservation measures induced by salinity regulations, 2) to select the technological process which optimally allocates water from a social point of view, and 3) to determine which water conservation measures in the agricultural and energy sectors are economically efficient. A mixed-integer programming model is used to maximize the returns to land, water, and mineral resources of the Upper Colorado River Basin for the agriculture and energy sectors of the economy. The feasibilities of various water saving techniques by indistires and of government-sponsored water conservation measures (primarily under salinity regulations) are examined within a benefit-cost analysis framework. The model is solved for the base year 1974, and two future years 1985 and 2000 under increased water demand conditions. Solutions for each of the two future years 1985 and 2000 are obtained for five alternative scenarios. The results of the model indicate that public investments in water conservation measures are not economically efficient since the marginal value of water is less than the cost of conservation. However, where externalities due to changes in salinity levels are taken into consideration, the value of water is greater than the cost of various conservation programs. This is because the water saved is used for decreasing the salinity levels downstream through greater dilution. Quantitative welfare measure of alternative salinity control policies and the cost-benefit implications toward government-sponsored water conservation programs are derived. `