The Water Transfer Effects of Alternative Irrigation Institutions

Abstract

Irrigation districts (IDs) use a large portion of the surface water rights in the American West. Microeconomic analysis of water use conditions within IDs indicates that it can be economically optimal for IDs to engage in less reallocative activities compared to private water rights holders. Institutional insights combine to show that the political orientation of IDs favors irrigation over irrigators in the sense that the rewards of water marketing tend to be incompletely captured. Based on an analysis of 38 years of time series water transfer data, we found that IDs underparticipate in agricultural‐to‐municipal water transfers relative to non‐irrigation districts in terms of water right‐weighted transfers. The results support further policy redesign if reallocation is to be viewed as a scarcity‐solving strategy in ID‐dominated regions.

An overview of water reallocation and the barriers to its implementation

“…Since the agriculture sector controls the majority of water rights, many researchers have focused on how the institutional structure of irrigation organizations (IOs; including irrigation districts) has impeded water reallocation . IOs are entities that hold communal water rights and supply irrigation water to its members.…”

“…IOs are entities that hold communal water rights and supply irrigation water to its members. They are widely found in various forms in both developed (e.g., Ghimire and Griffin) and developing (e.g., Rosegrant and Binswanger) countries. The literature shows that IOs are less likely to transfer water rights than irrigators not in IOs primarily because of difficulties in (1) collectively deciding on transfer prices, (2) determining the distribution of water transfer gains amongst members, (3) providing equitable compensation methods for individual water conservation efforts, and (4) quantifying the incidental district impacts due to seepage reduction (which replenishes aquifers and can be used again) and the increased internal water conveyance cost .…”

“…Water supply management primarily involves structural measures to increase the availability, reliability, and quality of water resources for productive uses, while demand management intends to reduce the use of water through increased efficiency from source to disposal. Reallocation, while considered by some as strictly a demand management strategy, may not directly yield overall water savings but it can greatly increase the benefits received from water use. Reallocation can, however, prompt water conservation since it incentivizes an increase in water productivity and allows any superfluous water to be transferred to more efficient users (i.e., more benefits derived per unit of water), essentially providing additional water supplies for new or growing demands, especially those with higher marginal values of water use.…”

The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land‐Allocation Decisions

“…In this paper, we investigate whether access to irrigation districts enables farmers to mitigate risk in water availability. Irrigation districts are semigovernmental farmer cooperatives that allocate water acquired under prior appropriation rights to their members (Rosen and Sexton ; Griffin ; Libecap ; Ghimire and Griffin ) . They differ from individual farmers in an appropriative system in several respects.…”

Variable Irrigation District Action in Water Trading

“…Literature addressing the water transfer responses of irrigation districts (IDs) and nondistricts in the western United States (U.S.) claims there are significant differences between the reallocative activities of the two groups. IDs are said to be less inclined to transfer water (Bretsen and Hill, ; Ghimire and Griffin, ). This impedes a potentially important strategy for addressing scarcity via water markets, especially in regions dominated by ID‐held water.…”