Economics of water allocation to instream uses in a fully appropriated river basin: Evidence from a New Mexico wild river

Abstract

In fully appropriated multiple-use river basins, a major potential competitor for a share of water may be publicly sponsored appropriations to supplement low streamflows for fish, wildlife, and recreation, which generates economic values not revealed in the marketplace. Based on a survey of instream recreationists on New Mexico's Rio Chama a travel cost model is developed to identify the potential recreation demand for instream flows. A discrete optimal control model is formulated that solves for the intraseasonal allocation of reservoir releases which maximizes the yearly value of instream recreation benefits, net of values of competing uses in the basin. Results indicate that in New Mexico, reservoir releases which augment low streamflows can return gross recreation benefits in the range of $900 to $1100 per acre-foot (ac ft) of water consumed (1 ac ft = 1.233 x 10 3 m3). This compares to a $40/ac ft cost of using the water. Consequently, results strongly support the hypothesis of potential economic payoff from public investments in and management of instream flow reservations. 1981; Schribner, 1979;Tarlock, 1975Tarlock, , 1978Tarlock, , 1979Thompson, 1982;Welsh, 1976].Increased demands by special interest groups for instream flow reservations from improved sports fisheries have led to studies which link streamflow depth, velocity, and substrate to fish habitat suitability. Criteria adopted by these studies are, however, largely hydrological or biological, with little focus on economic values to compare with costs incurred. Where economic studies have been conducted which optimize economic values in river basin systems, the objective function chosen has commonly been commercial values such as hydroelectricity, with instream "needs" accounted for as an extra minimum flow constraint [Palmer and Snyder, 1985]. Few economic studies have been conducted which explicitly examine economic benefits from instream flow reservations in multiple-use river basins. Exceptions include Daubeft and Young [1981], Walsh et al. [1980, 1985], and Narayanan et al. [1983], all of which used contingent valuation methods as described by Cummings et al. [1985].Given present public attitudes toward environmental values and the relative scarcity of sites in which minimum streamflows are currently maintained, there may be some economic merit in allocating water and/or water rights for fish and wildlife habitat, whitewater boating, and related instream uses. Before water allocations to an instream use pass the test of economic efficiency in a multiple-use basin, it must be demonstrated that the willingness to pay for the instream use exceeds the opportunity cost (benefits foregone) of diverting the water from a competing use (e.g., agriculture).The major objective of this paper ig to test the hypothesis that public investments in and management of stream flow reservations in a multipurpose river basin can be an economically efficient competitor with existing out-of-stream diversions for traditional commercial purposes. To test this hypothesi...

Effects of hydropower operations on recreational use and nonuse values at Glen Canyon and Flaming Gorge Dams

“…The study by Ward (1987) provides additional evidence in support of the tentative conclusion just noted. "his study examined the relationship between streamflows and the benefits from angling and white-water boating on the Rio Chama River, located in northern New Mexico.…”

“…While the figures reported above correspond closely to those reported in the study by Ward (1987) for angling, it is important to remember that more than angling is included in the latter study. Iii addition, the number of survey respondents was used as a proxy for use rates on the river sections included in the study.…”

“…Three identified in this review are Narayanan (1986), Ward (1987), and Duffield et al (1992). In view of the findings reported by Vandas et al (1990) and Bishop et al (1987), one would expect the relationship between use rates and streamflows to be similar to that between the quality of the experience and streamflows.…”

How certain are visitors of their economic values of river recreation: An evaluation using repeated questioning and revealed preference

“…Since public agencies often do not charge market clearing prices for access to rivers for recreation, economists estimate the value of river recreation using either revealed preference methods such as the travel cost method [Ward, 1983[Ward, , 1987 they have traded money the form of travel costs for access to the river for recreation. In our study, sampled visitors took an average of 12 trips per year, thus providing them with the opportunity to learn as they would with repeated market transactions.…”

“…Since public agencies often do not charge market clearing prices for access to rivers for recreation, economists estimate the value of river recreation using either revealed preference methods such as the travel cost method [Ward, 1983[Ward, , 1987 or intended behavior methods such as contingent valuation [Duffield et al, 1992].…”