An interregional trade model is developed for assessing the potential of limited market institutions to alleviate water scarcity. The model differs from those of Takayama and Judge, since curvilinear demand functions are employed and an unequal number of supply and demand regions are specified. The model is applied to California using regional supply and demand functions estimated for 1980, 1995, and 2020. The results show that water transfers can be substituted for new supplies to the extent that less than 100,000 ac ft (123 × 106 m3) of new capacity could be justified by 2020. The net benefits to buyers and sellers total $66 million for 1980 and rise to $219 million by 2020. The work also demonstrates that trade would lead to premature drawdown of groundwater resources in the absence of management and might create excess supply capacity for urban regions.
Economic analyses of irrigated agriculture stress that yield levels which maximize profits can be attained with less water than maximum yields. A premise of such analyses is that irrigated soils have perfectly uniform rates of infiltration. A general method for evaluating the effects of nonuniform infiltration rates on optimal levels of water application is developed. Empirical analyses of the implications of non‐uniform infiltration rates on optimal levels of applied water, yields, and profits are reported for corn (Zea maysL.) and cotton (Gossypium hirsutumL.). The results are critically influenced by the nature of the water yield relationships postulated for these crops. For corn, where excessive water applications apparently have no effect on yield, nonuniform conditions reduce yield and profit. These outcomes can be offset by increasing water applications and optimal levels of applied water increase as the degree of uniformity declines. For cotton, nonuniformity leads to decreases in yields and profits that cannot be offset by increased water applications. This is attributable to the apparent sensitivity of cotton yields to excessive applications of water. For both crops, increases in the price of water provide little incentive to improve the uniformity of infiltration. The results demonstrate that conventional economic analyses which ignore infiltration uniformities, underestimate optimal levels of applied water, often substantially.
Global population is projected to increase over year 2000 levels by 30% in 2025 and by 50% in 2050. Producing sufficient food to feed a more populous Earth will be a challenge requiring additional developed water supplies. Existing supplies are unevenly distributed around the planet. Some developing countries lack sufficient water to grow the food necessary to feed the growing population. With time, more countries will join that group. The strategies available to produce more food depend upon which sources are available. Two options open to all countries are improving the productivity of water in agriculture and importing virtual water in food. For some, the additional options of bringing more land into production or harvesting rainwater may also be available. All these measures reallocate water to agricultural uses from environmental uses. Such reallocations may impose potentially large losses in the form of environmental services and environmental amenities. Difficult water allocation decisions with enormous values at stake confront humanity. These decisions are confounded because they entail the protection of the global commons for which there is no successful experience to draw on.
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