MORE RESERVOIRS OR TRANSFERS? A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS OF PROJECTED WATER SHORTAGES IN THE ARKANSAS RIVER BASIN
By: Goodman, D. Jay
Goodman, D. Jay, MORE RESERVOIRS OR TRANSFERS? A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS OF PROJECTED WATER SHORTAGES IN THE ARKANSAS RIVER BASIN, Journal of Agricultural and Resource Economics, Volume 25, Issue 2, December 2000, Pages 698-713
A computable general equilibrium model of the southeastern Colorado economy is used to compare the economic impacts of a proposed increase in reservoir storage to an alternative: temporary water transfers. While both provide municipalities with reliable water supply during droughts and are shown to benefit both rural and urban communities, temporary transfers are accomplished at a much lower economic and environmental cost. This analysis illustrates how computable general equilibrium models provide a more realistic portrayal of the impact of policy changes than input-output analysis by allowing substitution in response to economic conditions.