Document Type


Publication Date

January 1975


Twelve measures of regional economic growth, including populations and three measures of income were compared for areas with and without water investment in 246 counties and 42 water resources subareas in the states of Utah, Colorado, New Mexico, Montana, Wyoming, Idaho, and Nevada. Simple mean omparisons for these measures compiled for the decades of 1940-1950, 1950-1960, and 1960-1970 failed to support the hypothesis that economic growth of those counties and subareas receiving water investment was significantly highter than in those areas which did not, with the possible exception of the 1940-1950 decade. This result is obciously tempered by the fact that with-without comparisons taken on a cross-sectional basis may be inaccurage to the extent that spatial units used in the analysis are not homogenous in all respects but the presence or absence of water investment. Population, farm income, median family income, and per acre agricultural land values as measures of economic growth were regressed on various classes of water investment (Total, M&1, Recreation, and Irrigation investment, and other related variables) for the spatial units. Results obtained from this analysis were inconclusive with respect to the hypothesized role of water investment in effectuating economic growth. For small areas in New Mexico where more detailed records of water investment were available, a nine equation econometric model was estimated using a three-stage least squares analysis. As specified, this model facilitated an examination of the interactive effect of water development as a causal variable and as an endogenous variable which responds to other growth inducements. Test statistics for multi-equation systems are only indicative, and the statistical results were nonconclusive, although expected signs on the coefficients were obtained in most instances. Input-output and economic base-models were used to examine two case studies of water investment in Western Coloado. The objective was to demonstrate the methodology and the magnitudes of change in regional economic activity (gross regional output, exports, income, and employment) which could be associated with major irrigation-type water developments. In this analysis it was found that total gross output attributable to the projects ranged from zero in the petroleum and mining sectors to a high of 260,302 in the dairy industry. Multiplicative effects on employment income and gross economic activity ranged from 1.06 to 2.30 times their initial magnitude. Income and employment multipliers were of similar magnitude. it should be recognized that these estimates cannot e viewed in the same manner as similar growth increments at the national level, as would typically be done, because of the strong possibility of regional offsets occurring in other regions not participating in water development. To the extent that growth in other areas is reduced by the growth of a particular region, these reductions should be subtracted from the growth measured in the latter set of regions. In all tests conducted no conclusive evidence was found taht water development causes regions to grow faster than those regions which did not receive water investment. This is not to say that growth in those regions receiving water investment was not higher than it would have been had the investment not been made. However, it does provide evidence that, an average among the regions included within this analysis, that those areas which did not receive major water investments grow at a faster rate than those which did. Thus, the input-output approach shows potential inpacts from water investment in a general equilibrium context, but rest son the assumption that other concurrent events which could produce similar or offsetting effects in the region are held constant. The cross-section analysis measures total changes in a regional economy overtime, but the multiplicity of events, other than water investment, may obscure the effects of water investment.