Water Allocations in the South Saskatchewan River Basin

SSRB area Source: “Some SSRB info and Approved SSRB Water Management Plan Implementation Project,” Alberta Environment

SSRB River Basins Source: “Some SSRB info and Approved SSRB Water Management Plan Implementation Project,” Alberta Environment

Current Allocation method Source: “Some SSRB info and Approved SSRB Water Management Plan Implementation Project,” Alberta Environment “FITFIR” “First in time, first in right” Oldest water licenses get priority over newest Oldest licenses are the largest Municipalities often have the oldest licenses Licenses rarely sequential geographically

Problems Source: “Some SSRB info and Approved SSRB Water Management Plan Implementation Project,” Alberta Environment All four river basins are oversubscribed. Two river basins have experienced degraded environmental conditions by not meeting Instream Flow Needs (IFN). Large amounts of water have to be moved between river basins to meet demand and agreements with Saskatchewan. Economists believe FITFIR is not “economically” efficient.

Goods High Subtractability Low Subtractability Low Excludability High Excludability Private Goods Common Pool Resources Public Goods Toll Goods limited access CPR Source: Adapted from Ostrom, Elinor (2005). Understanding Institutional Diversity. Princeton University Press. Princeton, NJ, U.S.A.

Proposed solutions 1) Free market approach based on Murray-Darling River Basin in Australia (new Water Act) 2) Leave existing Water Act intact, but increase Water Conservation Objectives (WCOs) and clawbacks on transfers 3) Community-based management/localized decision-making (minor changes to Water Act)

Issues Market-based approaches ignore water is a common pool resource, not a private good. Murray-Darling River Basin had severe environmental degradation during droughts. Economists’ reports are overly optimistic? Not a lot of political support for community-based management, but a lot of political support for market-based approaches.

Proposed Modeling Need to compare predicted outcomes against each other on the same playing field. Use Institutional Analysis and Development framework to develop the rules based on the proposed solutions. Test if conditions such as IFN are met. Test economic outcomes.

Proposed Modeling Likely choice would be agent based modeling, using the rules developing through IAD examination of the proposed solutions. Model has to be able to handle both sequential and simultaneous deterministic and stochastic events and outcomes. Localized failures can affect downstream agents.

Parameters Volume of water licenses Geographic location of water licenses Priority numbers of water licenses Inter-provincial and international water agreements Inter-river basin transfers Naturalized flow and natural recharges

Variables Rainfall Price of oil Price of selling water license Price of short term transfer of water license Population growth IFN/WCO levels