Characteristics of Active Water Management Organizations in the Red River Basin

Characteristics of Active Water Management Organizations in the Red River Basin Robert R. Hearne*and Craig Kritsky Paper Presented at the Faculty of Economics Seminar Thammasat University October 20, 2009 *Visiting Fulbright Scholar Faculty of Economics Kasetsart University Bangkok Thailand Department of Agribusiness and Applied Economics North Dakota State University P.O. Box 6050, Fargo, N.D., 58108, USA robert.hearne@ndsu.edu Hearne:Presentation Thamasat 102009

Outline • 1. Institutional Evolution in Water Management • 2. Case Study of Evolution in Red River Basin • 3. Adoption of Activities and Ways of Working • Data and Methods • Results • Discussion Hearne:Presentation Thamasat 102009

Water Management Institutions Institutions are the rules and norms that guide societal behavior. Institutions provide expectations of how others will act. Institutions can be formal, with written codes and bureaucracies, or informal, such as a rule of polite behavior. With low population density, little scarcity, and little conflict “informal” institutions might provide sufficient norms to manage resources. Elinor Ostrom’s work has demonstrated this. But with scarcity, rivalry, heterogeneity among users and uses, potential conflict, the need to finance infrastructure more formal institutions such as written codes and bureaucracies, can be required. Hearne:Presentation Thamasat 102009

Institutional Evolution . Institutions provide expectations about other’s behavior. Stable institutions provide stable expectations. But as the economic and social environment evolve either existing institutions need to evolve or new institutions need to be created. In many aspects the study of institutional evolution is similar to industrial organization. Hearne:Presentation Thamasat 102009

Institutional Evolution Saleth and Dinar (2004) provide an excellent overview of the institutional change literature, especially as it applies to water management. Institutional change can be induced by changes in relative prices and by economic incentives to reduce transactions costs and improve efficiency. We can expect institutional change when the benefits of implementing new rules exceed the costs of change. This institutional evolution is the result of factors that are internal to the sector involved in the transactions [Ruttan and Hayami, (1984); Williamson (1999), North (1990), and Coase (1937)] Hearne:Presentation Thamasat 102009

Institutional Evolution However, public institutions and organizations may not be guided by concerns for efficiency. Political decision makers often favor the inefficiencies of public organizations because they increase political patronage. Efforts to appeal to different constituencies may lead to overlapping roles and duties. Ideologies and factors that are external to the sector might influence decision makers [North, 1990; Williamson, 1999]. Hearne:Presentation Thamasat 102009

Institutional Evolution External factors that influence water management include changes in national fiscal policy, shifts in political ideology, and dramatic transformations in production practices and economic activity. Thus institutional change in the water sector can be the result of internal or external factors. A salient point of this literature is that institutions will evolve or reinvent themselves to meet changing needs, to adopt to new endogenous or exogenous pressures, and to reduce transactions costs (Saleth and Dinar, 2004; Hearne, 2004; Hearne and Donoso, 2005, Hearne, 2007). Hearne:Presentation Thamasat 102009

Institutional Evolution However, public institutions and organizations may not be guided by concerns for efficiency. Political decision makers often favor the inefficiencies of public organizations because they increase political patronage. Efforts to appeal to different constituencies may lead to overlapping roles and duties. Ideologies and factors that are external to the sector might influence decision makers [North, 1990; Williamson, 1999]. External factors that influence water management include changes in national fiscal policy, shifts in political ideology, and dramatic transformations in production practices and economic activity. Thus institutional change in the water sector can be the result of internal or external factors, Hearne:Presentation Thamasat 102009

Water Management Institutions The evolution of water institutions, in the USA and elsewhere follows a general path: 1. potable water and irrigation systems and rules of use; 2. water allocation systems and evolving water codes; 3. single purpose infrastructure development; 4. multipurpose, hydroelectric, infrastructure development. with corresponding institutions for financing and operations; 5. Point source pollution reduction; 6. more formal conflict and water reallocation institutions; 7. non-point source reduction and land/water management; 8. processes to address ecosystem protection and endangered species. . Hearne:Presentation Thamasat 102009

New Challenges for Water Institutions These changing economic, socio-demographic, and climatological factors will imply the need for increaased infrastructure, improved technologies, and flexible water institutions. Flexibility is needed to reallocate water: between sectors, across political boundaries and geographical areas, between ecosystems, and intertemporally. Perhaps the paradigm has shifted from “get the prices right” and “get the property rights right” to “get the institutions right” (Williamson, 1994). Hearne:Presentation Thamasat 102009

Why is Local Water Management Important? Water resources management at the basin level needs to be a cooperative effort. Local water management in rural upstream areas is critical to basin concerns such as water quality and flood control. Recent US Federal government initiatives to promote water quality imply increased efforts to reduce non-point source pollution. This implies land management and local cooperation or enforcement. Thus local water management institutions serve local needs as well as basin needs.

Why is Local Water Management Important? Local water management organizations (WMOs) are responsible for stewardship of water resources for local constituency needs, they should be stakeholder driven. Local goals of water managers: i) Maintain secure quality potable water sources; ii) Promote drainage and flood control for local needs; iii) Provide services for irrigation, recreation, and nature conservation as required for local needs.

Why is Local Water Management Important? Basin wide water management objectives are of greater scale due to important population and economic activities in downstream main channel cities. Objectives include: * maintain secure water supplies; * prevent large scale flood damage; * maintain water quality and meet State/Provincial and Federal water quality standards; * promote environmental quality; * promote regional economic development.

Why is Local Water Management Important? Local WMOs can contribute to basin wide initiatives by: * providing diverse and varied responses and new ideas for implementing policies * balancing top-down centralized initiatives with bottom-up responses * ensuring public participation and facilitating public support * collaborating with Federal government and state/provincial agencies

What do we know about WMOs? In the United States, WMOs * are becoming more common * can be characterized as citizen-based, agency based, or public-private * many are supported by the Federal government * NRCS * EPA * can facilitate non-point pollution control * many are focused on non-point water pollution, recreation development, public education, and advocacy

What does the scientific literature say about WMOs? Very little!!! More and more responsibility is being handed to local watershed management groups, especially under the US EPAs water quality program. But as of yet their has been little analysis of the characteristics of WMOs that can most effectively contribute to new initiatives. This corresponds to research on irrigation water management, initial efforts focused on technical aspects and later efforts on understanding irrigation water user associations.

What does the scientific literature say about WMOs? A few studies have characterized WMOs in the US. But there has been little statistical analysis or evaluation. Analysis of WMOs fits into the study of institutions which includes both economics and political science. Institutions include informal norms, rules, laws, customs, and organizations. Many recent studies on institutional analysis have utilized Elinor Ostrom’s (1990) use of the institutional analysis and development framework.

Red River of the North Basin . • An interesting case study of water management institutions: • Two federal governments: US and Canada • Two States and a Province: Minnesota, ND, Manitoba • Three systems of water law: • riparian rights, Minnesota • prior appropriation, North Dakota • state control, Manitoba • Many local jurisdictions, watershed districts, water boards, conservations districts etc. • A fairly homogenous physical geography, but a variety of institutions, as a factor of different state/provincial priorities Hearne:Presentation Thamasat 102009

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Red River of the North Basin Located near the geographic center of North America 45,000 square miles, about a third in Manitoba. Population of 1.3 million 670,000 in Winnipeg 145,000 in Fargo – Moorhead 57,000 in Grand Forks – East Grand Forks The land area is the remains of giant Glacial Lake Agassiz, and has excellent soils. 84% of land area is dedicated towards agricultural production. Principal crops – wheat and sugarbeets Hearne:Presentation Thamasat 102009

Red River of the North Basin . Because the basin is flat, mostly unregulated, with lots of snow, and flows north (such that upstream snowmelt flows into downstream ice) flooding and drainage are principle concerns of water managers. When flooding does occur it spreads across a wide area and can cause substantial damage. The 1997 “flood of the century” inundated ½ of Grand Forks and almost all of East Grand Forks Because of local ice jams there are frequent local floods along certain river segments Hearne:Presentation Thamasat 102009

Red River of the North Basin: Water Quality Water quality in the Red River Basin is generally good. Most groundwater is suitable for drinking. Most surface water is suitable for swimming and fishing, with low concentrations of nitrates and pesticides. There are impaired waters, for fish consumption, swimming, and aquatic life, but the latter are rare. The Red River is noted for being relatively free of invasive aquatic species, such as the zebra mussel which has caused substantial damage in the Great Lakes and Mississippi Basins. Lake Winnipeg has a valuable commercial fishing industry which employs one thousand. Hearne:Presentation Thamasat 102009

What is Interesting about the Red River Basin? Flood control and drainage remain a primary concern Basin remains vulnerable to prolonged drought Water quality is generally in the Basin * few non-attainment zones * pesticide and nitrate concentrations are low * groundwater is mostly potable * minimal impact of wastewater * high levels of suspended sediments * relatively free of invasive aquatic species Lake Winnipeg has a algae problem from high nutrient levels including high levels of nitrogen and phosphates coming from Red River Hearne:Presentation Thamasat 102009

What is Interesting about the Red River Basin? The primary land use is agriculture, with good soils. The physical geography of the Red River Basin is somewhat homogenous, but the different political constituencies and water laws make it an interesting case study of water management institutions. Despite different priorities, there is cooperation in the basin to achieve common needs. Hearne:Presentation Thamasat 102009

What do we know about WMOs in the Red River Basin? Within Manitoba, Minnesota, and North Dakota there are a variety of WMOs. We have: watershed districts, water resource districts, soil and water conservation districts, conservation districts, resource conservation and development councils, tribal departments of natural resources lake associations, and a variety of agency based and citizen based WMOs.

What do we know about WMOs in the Red River Basin? There are a variety of different formats for these WMOs. * In Minnesota, many WMOs are formed along watershed boundaries. * In North Dakota the water resource boards correspond to counties. * In Manitoba, groups of municipalities form conservation districts. * In Minnesota and North Dakota many local WMOs have the power to tax.

What do we know about WMOs in the Red River Basin? There are a variety of different formats for these WMOs. * There are a a variety of joint-powers agreements that formalize collaboration between small WMOs for specific projects or purposes. * Many WMOs, US conservations districts and ND water resource districts, have been formed under 1930s legislation. * Many US WMOs receive Federal support especially from the NRCS. * Most WMOs are engaged in public education.

What do we want to learn about WMOs in the Red River Basin? The variety of WMOs with different formats serving similar purposes leads to some simple questions: * What is working? * How can water management be improved by learning from other WMOs? * Is more collaboration needed? * How can WMOs collaborate better? * Are local WMOs providing needed public participation for the establishment of water quality standards?

What do we want to learn about WMOs in the Red River Basin? The variety of WMOs with different formats serving similar purposes leads to some simple questions: * Are WMOs changing with the times to meet evolving needs? * Which WMOs can most effectively utilize increased support? * How can extension programs and government assistance be modified to better improve WMOs? and water management?

Methodology An adoption study was conducted to assess the characteristics of these WMOs have participated in water quality activity, collaboration, successful grant activity etc. Data was gathered on activities and characteristics. Hearne:Presentation Thamasat 102009

Methodology After a series of meetings with local experts and stakeholders, two survey instruments were developed. One for organizations and one for boards. Seventy-six Red River Basin WMOS were in the survey population:12 Minnesota WDs, 20 Minnesota SWCDs, 24 North Dakota WRDs, and 20 SCDs. 350 surveys were sent to board members Hearne:Presentation Thamasat 102009

Methodology Hearne:Presentation Thamasat 102009

Methodology There were not enough observations for an MANOVA analysis All dependent variables were regressed against he 17 characteristics OLS, poisson, and negative binomial models, models were attempted The model with lowest AICC indicator was selected When no significant variables were encountered a logit model was attempted Hearne:Presentation Thamasat 102009

Results 36 of 76 WMOS returned a survey, although there was much missing data. 181 of 350 board members completed the surveys Regressions for four dependents variables did not produce useful results: i) the value of wildlife habitat projects; ii) the value of aquatic habitat projects; iii) the value of potable water supply projects; and iv) the level of ditch maintenance. Hearne:Presentation Thamasat 102009

Results Hearne:Presentation Thamasat 102009

Characteristics of Active Water Management Organizations in the Red River Basin