1. Modeling Impacts of Policy Responses to Prolonged and Severe Drought in the Upper Rio Grande River Basin Dr. James F. Booker, Siena College Douglas T. Hickey Professor of Business and Associate Professor of Economics Ari M. Michelsen, Texas A&M University, El Paso Frank A. Ward, New Mexico State University

4. Drought is a human construct and may relate to hydrologic, ecologic, or economic impacts

7. Policy Responses Endangered Species Protections Realistic incentives including pricing Regional water reallocations Interstate water reallocations Do nothing

8. Modeling impacts of policy responses Physical impacts on flows, stocks, and uses Distribution of economic impacts –by region and state –by use sector (agricultural, municipal) Efficiency impacts

10. Long term reforms Environmental protections Realistic incentives Reallocation from agriculture to other uses

11. Drought as catalyst for institutional change

12. Allocating the Colorado River October 17, 2002: “Southern California water officials agreed Wednesday to shift water from desert farms to San Diego.” “The farmers would be paid $258 to $400 an acre-foot for water that costs them $15.50 per acre-foot.” Source: Los Angeles Times

13. Shores of Lake Mead: Las Vegas Valley Water District Lake Powell at Hite Marina: Living Rivers

14. Introduction About the upper Rio Grande Modeling extended drought and policy responses Physical and economic impacts Extensions to other river basins

16. How much water is in this river? (annual mean flow in million acre-feet) Mississippi340 Colorado16 Hudson10 Rio Grande2 Schoharie Creek1

17. Rio Grande Headwaters, Colorado, USA

18. Rio Grande Headwaters, Colorado: Supply 660,000 Ac-Ft / Yr

19. Rio Grande Gorge: Northern New Mexico

20. Michelsen

22. Rio Puerco, New Mexico: Supplies 32,000 Ac-Ft /Yr

23. Rio Grande, Southern New Mexico Ag Uses 495,000 Ac-Ft / Yr

25. Michelsen

26. Rio Grande at El Paso, Texas: M&I Uses 140,000 Ac-Ft / Yr

27. Rio Grande at Juarez, Mexico: Ag Uses 60,000 Ac-Ft / Yr

28. Who gets what: existing policies Interstate compacts and treaties State water allocation institutions Allocations within federal irrigation projects Reservoir operating rules

29. Rio Grande Compact: Entitlement=f(inflows)

30. Legally allowed diversions lowest decile median highest decile Colorado New Mexico Texas Mexico

31. Basic Dynamic Model of a Rio Grande Type System Depletable reservoir/aquifer (and no pumping constraint) Variable surface flow Two users

34. Background Ward et al. Institutional Adjustments for Coping With Prolonged and Severe Drought in the Rio Grande Basin, WRRI Technical Completion Report No. 317, Feb. 2001.

35. The Rio Grande Setting Highly variable river basin inflows Extensive use and availability of renewable and non-renewable groundwater Reservoir storage equal to several years average annual inflow Rapidly growing (3+ %) urban population; agriculture uses ~90% of surface water Presence of an endangered species

42. Albuquerque water demand growth Source: City of Albuquerque, Public Works Dept., 1997

43. Endangered Species and the Rio Grande September 19, 2002: “A judge on Wednesday ordered federal water managers to release water earmarked for cities and irrigators to keep the Rio Grande flowing for the endangered silvery minnow.” October 18, 2002: “Water Release Halted. The decision by the 10th Circuit Court of Appeals means the endangered silvery minnow is on its own this autumn …. ‘That really means the end of the silvery minnow in the river.’ ” Source: Albuquerque Journal

44. Endangered Species: the Rio Grande silvery minnow - distribution Source: Desert Fishes Council

45. Rio Grande Basin Water Budget, Normal Year

46. Rio Grande Model (RMA) Flows (instream, surface and groundwater inflows, diversions, pumping from groundwater, return flows, conveyance losses) Stocks (nonrenewable groundwater, reservoirs) Lags (shallow groundwater availability and surface recharge, riparian usage) Institutions Net economic benefits of water use by sector, region, and year (projected 40 years)

48. MODEL VERIFICATION

50. Drought Scenarios: 6 year future projection 100% of historic median flows 75% of median 50% of median

51. Policy scenarios Law of the River (do nothing) Intra compact water bank Interstate water bank

52. Law of the River Drought Damages

53. Change in Use with Intracompact Banking

54. Change in use between intracompact banking and interstate banking

55. Change in Benefits with Intracompact Banking

56. Change in benefits between intracompact banking and interstate banking

57. Specific conclusions Monetary drought damages are small in relation to regional economic activity Interstate compact results in concentrated impacts on users at the “end of the pipe.” Policy change can reduce 1/3 of drought damages: maybe drought will not be a catalyst for change here.

58. General conclusions I Regional (often intrastate) policy changes achieve most of the possible efficiency gains. => INCREASED FLEXIBILITY IN WATER ALLOCATION AT THE REGIONAL LEVEL CAN ACHIEVE MOST OF THE POSSIBLE EFFICIENCY GAINS.

59. General conclusions II Interstate agricultural productivity differences lead to only modest gains from interstate water banks. => Interstate water banking will in many (most?) cases simply transfer agricultural activity. (Municipal demands can be met regionally.)

60. Interpreting aggregated models: Historic low flow days vs. annual flow

61. What is an “extreme” drought? Major crop/pasture losses; extreme fire danger; widespread water shortages or restrictions Palmer Drought Index : -4.0 to-4.9 Soil moisture percentile: 3-5% Streamflow percentile: 3-5% Standardized Precipitation Index: -1.6 to-1.96 Source: National Drought Mitigation Center, University of Nebraska-Lincoln