1. 1 Chapter 15 Water Resources --Water is a biological necessity for human existence --Freshwater supplies for humans and ecosystems come from surface water and accessible groundwater aquifers --Recent development in desalination technology and increases in the scarcity of freshwater have turned many communities toward the ocean for freshwater supplies --The eastern half of the U.S. is humid and well watered, while the western half is arid or semiarid

2. Water withdraws per capita per day were 1,506 gallons in 1960, 1,916 in 1980, and 1,430 in 2000 Agriculture (irrigation) and industrial uses (power plants) account for the biggest withdraws; they both decreased from 1980 to 2000 Per capita domestic water use = (public supply + rural domestic self-supply) / population = (43.3 billion gallons per day + 3.6 billion gallons per day) / 285.3 million = ___ gallons per day, this is in 2000; it is 128 in 1960 and 163 in 1980 About ___% of water withdrawals are from groundwater aquifers and ___% from surface waters 2 1. Water Use in the United States Table 15-1, p.288

3. A substantial portion of surface water withdraws in costal states are saltwater used as cooling water in power plants and industrial cooling Irrigation is largely a western phenomenon, which increases the per capita withdraws for those regions More industrial states have larger water use quantities 3 Some Interesting Facts

4. In the east, there is a continuing need for the effective management of large water systems, to adapt to the demands of growing urban and suburban population Management and preservation of coastal and inland wetlands for the effective functioning of water system has become a major issue In the east, many groundwater aquifers have been contaminated from chemicals or from saltwater intrusion; in the west, many aquifers have been exploited at rates far exceeding recharge rates In the west, urban areas are searching for new sources of water to support rapidly growing populations. One possibility is to transfer water that normally goes to agricultural irrigation Growing demands for instream water services (like boating, fishing, ecosystem protection, and scenic values) must be balanced with traditional demands for water withdrawals 4 Contemporary Water Resource Problems in the U.S.

5. The first European settlers along the northeastern U.S. coast in the 17 th century applied English legal doctrine to water resources – The rights to the use of water (other than for irrigation which was a right reserved to the government) belonged to those people who owned the banks of the streams or lakes; this is known as riparian water rights (the Latin word riparius means “situated on the banks of a natural watercourse or body of water”) – Each riparian landowner had the rights to a reasonable use of the water in the stream 5 2. Water Law in the United States Surface Water

6. When settlers ventured into the western part of what was to become the U.S., given the arid conditions of the region, the law of prior appropriation was developed – It gives water rights to the first person who appropriates it and makes beneficial use of it; also called “first in time, first in right” – While riparian water law tends to see water rights holders as equal in status, prior appropriation creates priorities such that first users have rights that take precedence over those coming later (senior and junior water rights) – Most of small- and medium-sized rivers were fully appropriated by the end of the 19 th century and the result was a widespread system of privately built diversion ditches, small impoundments, and the like; during the first 2/3 of the 20 th century, the federal government sponsored construction of large dams and canals 6 Surface Water (con’t)

7. 7 Groundwater http://pubs.usgs.gov/of/1993/ofr93-643/

8. Groundwater is extracted from underground aquifers; in many cases, they are hydrologically interconnected to surface water resources, recharging from, and discharging to, water in streams and lakes Early English groundwater law, which provided the foundation for early U.S. law, conferred the rights of absolute ownership to those who held surface rights over an aquifer – This allowed any landowner to pump as much as they wished out of the aquifer – Open-access externalities: when one person pumps water without restriction, it can adversely affect the water supply available to others using the same aquifer 8 Groundwater

9. Most domestic water in the U.S. is supplied by public water supply companies A cost-based pricing rule: set prices so that revenues cover costs (profits are thought to be inappropriate for public enterprises) – Average-cost pricing: the total costs of delivering water are divided by the total quantity of water delivered; and the unit water price set accordingly 9 3. Water Pricing Average Cost Pricing

10. Figure 15-1 shows a supply and demand curve for water for a community water supply system – Water is regarded as a normal economic good – Efficient quantity is q 1 and efficient price is p 1. Suppose the water company charges p 1 : total cost of water supply = c + d; total revenue = a + b + c + d. The company runs a profit (which is a + b) – To avoid profits, the utility usually prices below p 1, like p 2 (called average-cost pricing): total cost = c + d + e + f + g; total revenue = b + c +e. It can find the point where total cost = total revenue, or d + f + g = b; not efficient—from q 1 to q 2, the utility will produce some water for which MB < MC 10 Average Cost Pricing (con’t) Figure 15-1, p.294

11. The potential gains from trade would lead to adjustments where resources shift out of the relatively low-valued uses and into the higher-valued uses Figure 15-5 shows two water demand functions: municipal and industrial (M&I) water used in an urban area; water used in irrigation in the nearby farming area – Because of the way water rights have been allocated in the past, the city is consuming q 1 while irrigators are applying q 4 ; marginal value of water for M&I is $80, that for agriculture is $15, gains from trade exist 11 4. Water Rights Transfers and Markets Water Transfers Figure 15-5, p.299

12. – If an acre-foot of water is reallocated from agriculture to M&I, the net gain = $80 – $15 = $65 – As long as these marginal valuations differ, reallocation will continue to have positive net benefits – Total gain is maximized by reallocating to the point where the marginal valuations are equal (at a price of $30; and q 2 – q 1 = q 4 – q 3 ) – Market transactions occur because willing sellers meet willing buyers and trade at a price agreed to by both participants (price should be between two marginal valuations); buyers gain (a + b) from purchasing q 2 – q 1 ; the sellers lose (c + d) from selling q 4 – q 3 ; total net gain = (a + b) – ( c + d) 12 Water Transfers (con’t)

13. The curve labeled B shows benefits, starting to the right of the origin. Some minimal amount of water is necessary before any benefits appear at all. The function increases, reaching a maximum at a 1, and then declines, because larger flows actually reduce most instream values The curve labeled C shows costs; it rises to the right and becomes increasingly steep. The primary costs of instream flows are the values of forgone water withdrawals 13 5. Instream Flow Protection Optimal Instream Flows Figure 15-6, p.306

14. The instream flow that maximizes total benefits is a 1 The instream flow that maximizes net benefits is a*; at a*, ___ (the slope of the B curve) = ___ (the slope of the C curve) The model’s application in any real-world case is difficult: – Getting necessary data to determine the relationships is hard – There is more than just one type of instream benefit, and the optimal flow rates may differ among the benefit types 14 Optimal Instream Flows (con’t)