Journal of Agricultural and Resource Economics
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Recent Bureau of Reclamation policies encourage or require irrigation districts to adopt price conservation incentives. Using unpublished survey results and new district-level information, we examine the rate structures and incentives of district water pricing. Our findings reveal that the majority of districts use fixed charges independent of the quantity of water delivered and that most conservation rate structures recently implemented are designed so that the first tier quantity allocation satisfies most crop water needs. Although other district management objectives may be satisfied, price incentives are diminished or nonexistent. The question of whether conservation is being achieved is tautological and depends on how each district defines conservation.
Charging farmers increasing block prices for irrigation deliveries is advocated as a means of encouraging agricultural water conservation in the West. We formulated a model of a hypothetical irrigated river basin to investigate the hyrdro-economic circumstances in which such pricing leads to water conservation. Our results indicate that increasing delivery prices may encourage irrigators to make adjustments with countervailing impacts on consumptive water use and conservation. Whether these countervailing impacts combine to conserve water or increase its consumptive use must be resolved empirically. An alternative resolution of this ambiguity is to assess water prices in terms of consumptive use.
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