What’s Water Really Worth?

Friday, November 21 2008

Nov. 21, 2008 Written by Ken Kingery MOSCOW, Idaho – Idaho scientists and policy makers have a new tool to help make decisions when it comes to the state’s valuable water resources, as well as to help predict possible climate change effects. But you won’t find it anywhere in a field or on a river. Instead, it’s posted for anyone to use on the University of Idaho’s Idaho Water Resources Research Institute (IWRRI) Web page. The new spreadsheet allows users to calculate the demand for water for irrigation in any given location by supplying several specific local variables. Once determined, the information can be used with other information like location, supply and demand to determine the value of water. This, in turn, can be used to set prices in a water conservation program, or to determine how to best serve the area’s needs through new irrigation or dam projects. “In Idaho, more than 90 percent of the water consumption is used for irrigation in agriculture,” said Garth Taylor, professor of agricultural economics. “Thus it becomes extremely important to any policy dealing with water demand, dams or conservation that we understand what the farmers’ demand for irrigation water is.” After downloading the spreadsheet, users input the maximum yield of the crop being grown, the level of evapotranspiration, the efficiency of the irrigation method being used and the current price of the produce being grown. Each of these factors is a known number, including evapotranspirtation, which is the amount of water actually used by the crops to grow. With the new document, what used to take weeks or months and hundreds of thousands of dollars to study can be well-estimated in only an afternoon’s work. What comes out of the spreadsheet is the demand curve for an area’s water and its elasticity, or the amount that demand will change with price. “For example, people really changed their driving habits when gas has hit four dollars per gallon,” said Bryce Contor, a research hydrologist at the University of Idaho’s People of Idaho Water Research Institute in Idaho Falls and collaborator on the project. “But when it was three dollars per gallon, nothing really changed. Somewhere between, the price got to a level where people began conserving their gas. Suppose we wanted to do the same thing with water. If we want farmers to conserve their water, we price it differently.” According to Contor, the benefit of the spreadsheet is in knowing just how much to raise the price of the water. Too little and nothing will change. Too much and farmers may not be able to adequately adapt their methods to cover the costs, even after reducing consumption. Additionally, the value of water is important to projects such as aqueducts and dams. Historically, engineers have made assumptions about the demand for water based solely on the acreage of farms and the average amount of water used for a specific crop. But in some instances, when the cost of an irrigation system is too high and raises the price of water too much, farmers simply change their farming practices instead of using the projected amount of water. “If some projects had done an economic demand of water, they would have found out the amount of water required was less than what they were sizing for and could have built a smaller project,” said Contor. “Knowing the demand curve helps to not waste taxpayer’s money on unnecessary projects.” Because of the general nature of the input data required, the spreadsheet can be used anywhere in Idaho, or in the world for that matter. What’s more, Contor said, it can be used to predict what will happen to water demand in the presence of climate change, and compare climate effects to crop price fluctuations. Many people all over the world need this kind of information, including Idaho’s State Climatologist Russell Qualls, also an associate professor of biological and agricultural engineering at the University of Idaho. “The spreadsheet is an excellent tool to make decisions regarding how much acreage to plant and irrigate,” said Qualls, who uses the spreadsheet to see how different climate change factors might affect the Snake River plain. “It truly is a useful tool to maximize farm or system profits.” The document, titled “Spreadsheet Tool for Estimating Economic Demand for Irrigation Water Using Commodity Prices and Evapotranspiration Production Functions,” can be found at the IWRRI Web site, www.iwrri.uidaho.edu. # # # About the University of Idaho Founded in 1889, the University of Idaho is the state’s flagship higher-education institution and its principal graduate education and research university, bringing insight and innovation to the state, the nation and the world. University researchers attract nearly $100 million in research grants and contracts each year; the University of Idaho is the only institution in the state to earn the prestigious Carnegie Foundation ranking for high research activity. The university’s student population includes first-generation college students and ethnically diverse scholars. Offering more than 150 degree options in 10 colleges, the university combines the strengths of a large university with the intimacy of small learning communities. For information, visit www.uidaho.edu. Media Contact: Ken Kingery, University Communications, (208) 885-9156, kkingery@uidaho.edu

About the University of Idaho
The University of Idaho helps students to succeed and become leaders. Its land-grant mission furthers innovative scholarly and creative research to grow Idaho's economy and serve a statewide community. From its main campus in Moscow, Idaho, to 70 research and academic locations statewide, U-Idaho emphasizes real-world application as part of its student experience. U-Idaho combines the strength of a large university with the intimacy of small learning communities. It is home to the Vandals. For information, visit www.uidaho.edu.