EVALUATING THE EFFECTIVENESS OF CONSERVATION WATER-PRICING PROGRAMS

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.