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The Value of Water to Oklahoma

The Value of Water to Oklahoma. Damian C. Adams Larry D. Sanders Agricultural Economics Department Oklahoma State University. Stillwater Newspress (Mar 21, 2007). By April 2007, another story….

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The Value of Water to Oklahoma

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  1. The Value of Water to Oklahoma Damian C. Adams Larry D. Sanders Agricultural Economics Department Oklahoma State University

  2. Stillwater Newspress (Mar 21, 2007)

  3. By April 2007, another story… Heavy rainfall during March washed away drought from nearly the entire state. … The rainfall caused flooding problems in much of the state, … but it appears that it was sufficient to erase many of the lingering impacts of a 2-year-long drought cycle. (http://www.drought.unl.edu/dm/)Across the entire state, topsoil moisture (down to 30 inches) appears replenished, …. Reservoirs … rose several feet in a matter of hours. Several reservoirs still face lingering impacts and need much more rainfall to fully recover, but they appear to be well on their way if normal rainfall continues. … streams appear to be flowing again and more runoff will make it to the lakes, adding to recharge. --Mark Shafer, Director of Climate Information, OK Climatological Survey(http://agweather.mesonet.org/soil/)

  4. Leading to new apparel trends in OK & TX…

  5. What is Water Worth? “We never know the worth of water till the well is dry.”  ~Thomas Fuller, Gnomologia, 1732 “Water flows uphill towards money.”  ~Anonymous, saying in the American West, Cadillac Desert, 1986 “Depends on which specific water services are being valued, as well as where and why the valuation exercise is being conducted.” ~R. Young, 2005

  6. What Determines Water Prices? • Supply and demand • Cost of capture and transportation • Water rights • Non-market impacts & externalities?

  7. Water Demand: Competing Uses Other Uses?

  8. Demand for Water Will Increase What do you think will happen? ? Source: http://www.populstat.info/Americas/usas-okp.htm

  9. Demand Pressures Population growth Industry Recreation Conservation

  10. Water Supply… Historically Speaking

  11. 23 major ground- water basins w/ 320 mil. acre-feet Oklahoma Water supply Water Supply Issues in OK Plenty of water… 34 mil. ac-ft/yr flows out of state via Ark. & Red River basins 1120 square miles of water area in lakes & ponds & over 78,000 miles of rivers & streams Allocated stream water use is 2.6 mil. ac-ft/yr Problem is Allocation– getting it where, when, how much and at a price we want

  12. Oklahoma’s Water Use ___________ ___________ ___________ ___________ ___________ ___________ Source: US Geological Survey, 2000

  13. Oklahoma water resources under pressure More weather volatility Tribal rights OK Water Resources Changes in water law/ rights Lack of Investment Texas rule of capture Growing population Economic development Thirsty neighbors Ethanol production Invasive species Water uptake Water quality diminishes effective water supply Unknown/ unexpected event(s) 20 years ago, how many of these were unexpected events?

  14. Oklahoma water under pressure, but… changes in demand and supply Red cedar eradication Re-use petro pumping water OK Water Resources Desalinate water Wetland use Assigning Property rights Re-use water Conservation Increase the price of water More efficient Irrigation systems Development of new structures Investment in water infrastructure Drought tolerant plants Drought/ flood management Unknown/ Unexpected Events? What role should OCES play?

  15. How can we tell if there is intelligent life elsewhere in the universe? "The surest sign that intelligent life exists elsewhere in the universe is that none of it has tried to contact us.“ Sources: various public websites and emails to instructor; anonymous authorship.

  16. What is my water worth? • It Depends… • Alternative uses • Location • Capture • Transport (incl. right-of-way) • Quality • Treatment • Regulations • Quantity (storage) • Supply/Demand • Within-season cyclicity • Structural shortage & climate change

  17. Daily Water Prices Around the World… $0.85 $0.07 $0.14 $0.47 $0.24 $0.20-35 $8.00

  18. Typical municipal water prices in US and other countries (per cubic yard) Source: World Water Commission for the 21st Century, 1999

  19. Municipal Water Rates in OK $0.26, $0.49 $0.69 $0.25 $0.32 $0.20 Arkansas River Basin Red River Basin $0.27, $0.53 $0.27, $0.53 What determines prices? $0.27 $0.43

  20. Costs of irrigation water by source and category, 2003 (USDA-ERS)

  21. Wetlands as an economic tool: wetland functions, services & values (adapted from Bergstrom and Brazee, 1991, in USDA-ERS EIB-16)

  22. OSU Water Policy Projects • Valuation of Water for Recreation • Water Conservation Programming & Website • Water Law Handbooks • Survey of OK Residents’ Water Conservation Behaviors & Attitudes • Potential Water Quality Trading Program

  23. Non-Market Valuation of Recreation on the Illinois River System in Oklahoma Total Willingness to Pay = Use Value + Nonuse Value

  24. Willingness to pay for changes in water quality and other park attributes * NS indicates that variables are not significantly different from zero.

  25. Lower Illinois study: Trout fishing • Using the Oklahoma Department of Wildlife Conservation’s estimate of 18,400 annual visits (Crews and Summers, 2002) this would imply the recreation value of the trout fishery alone was $2 million per year.

  26. Upper Illinois River:Boating • June 05-Oct 06: $97,484 from a $1/person per trip fee • 94,504 visitors outfitted by companies in the region at an average of $15-$20/per person per day for canoeing and rafting equipment • $1.4-$1.9 million in direct expenditures

  27. Water quality: pollution sources & solution of Water Quality Trading Permits • Sewage treatment plants • Urban stormwater • Septic tanks—rural and urban • Agriculture • Mining/oil/gas fields • Emerging contaminants • An evolving solution: develop artificial markets to trade permits to pollute

  28. Trends for water use in agriculture • Ag water use FALLS as economic development RISES • Less water for Agriculture in the future? • Increased non-Ag demand for water • Urban development (economic & population) • Water sales and transfer out of OK • Recreation • Reduced Ag water access (?) • Changes in water law • Climate change • Improved irrigation technology (e.g., graywater)

  29. Opportunities for Extension • Framing the water-related issues to identify critical research, education needs • Provide feedback/oversight for research efforts • Proactive – planning to meet information, education, knowledge needs • Help stakeholders understand what is at stake • Indirectly support stakeholder policy involvement

  30. Question? • Thank you for your help!

  31. Value of Water in a A Stream With Reuse Withdraw Value User 1: 1.00 af $40.00 returns .4 af • Four Users on a Stream • Ac-Ft Water Worth $40; 40% Return Flow User 2: .40 af $16.00 returns .16 af User 3: .16 af $6.40 returns .064 af User 4: .064 af $2.65 returns --- Tot Withdrawal 1.62af, Tot. $65.05 $40 $6.40 1af .16af .4af flow .064 af $2.65 .064 af .4af Courtesy of A. Stoecker .16af $16

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