Transcript water policy 0713 - Department of Agricultural Economics

Implications of Water Planning/Policies
in Oklahoma
Larry D. Sanders
January 2013
Larry D. Sanders
ODAFF Advisory Group
Animal Science Department
Faculty Seminar
Oklahoma State University
9 December 2011
Larry D. Sanders
July 2013
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AGRICULTURE’S ROLE
IN THE STATE’S ECONOMY
Sustainable agricultural industry essential to
Rural & state economy
Provision of ecosystem services
Water access essential to
the success of agriculture
the future of the state’s economy
Provision of ecosystem services
The current state of knowledge limits scientific
ability to evaluate future access to water and
water supply
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Water’s Role in OK Agriculture
• Water is critical to 100% of the agricultural economy
• Direct impact for OK ag sector-- $20.3 billion (total over $28
billion)
• Average streamflow & groundwater recharge likely lower if
no crop production agriculture & stewardship of ag land
managers
• Farms cover 35 of Oklahoma's 44 million acres
– First recipients, first users, and first managers of 75-80%
of Oklahoma's precipitation
.
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Water Supply Issues in OK
Plenty of water in a typical year…
23 major groundwater basins w/
320 mil. acre-feet
1120 square miles
of water area in
lakes & ponds &
over 78,000 miles
of rivers & streams
Oklahoma
Water
supply
34 mil. ac-ft/yr
flows out of
state via
Ark. & Red River
basins
Allocated stream
water use is
2.6 mil. ac-ft/yr
Problem is Allocation– getting it where, when, how
much and at a price we want
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(13 Regions)
33.1%
14.3%
5.2%
41%
OWRB, 2011
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Oklahoma water resources under pressure
More
weather
volatility
Tribal
rights
OK Water
Resources
Changes in
water law/
rights
Unknown/
Unexplained
events
Hydraulic
fracturing
Growing
population
Invasive
species
Water
uptake
Economic
development
Thirsty
neighbors
Ethanol
production
Water quality diminishes
Effective water supply
Lack of Investment
20 years ago, how many of these were
unexpected events?
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Oklahoma water under pressure, but…
changes in demand and supply
Re-use petro
pumping
water
Red cedar
eradication
OK Water
Resources
Desalinate
water
Wetland use
Assigning
Property rights
Re-use
water
Conservation
Development
of new
structures
Investment
in water
infrastructure
Increase
the price
of water
Drought/
flood
management
Unknown/
Unexpected
Events?
More efficient
Irrigation
systems
Drought
tolerant
plants
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Water Planning Regions,
Oklahoma Comprehensive State Water Plan 2012 &
potential major deficits thru 2060
Ground &
Surface;
Irrigation
Surface;
Irrigation
Note: Groundwater
provides 75-87% of
irrigation water supply
Surface;
Mun/Ind
Ground &
Surface;
Mun/Ind
OWRB, 2011
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Complicating “Political” Factors…
•
•
•
•
•
•
•
•
•
Interstate transfers
Intrastate transfers
Conjunctive use
Potential “takings” of
existing rights &
compensation
Redistribution of access
Conservation v. Investment
in new supply
Tribal issues
Instream flow
State budget priorities
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Concerns w/Ag Water Projections in OCWP
• 2060 demand/results may be subject to misinterpretation
• If the 1960 water plan would have forecast 2010
agricultural demand using similar technical rules, would
likely miss:
• Build up in the hog and poultry industries
• Expanded use of irrigation in such crops as cotton,
corn and alfalfa
• Efficiency gains in improved technology
• Aberration of a relatively wet two decades at the end
of the 20th century
• Trend analysis/alternative scenarios based on industry
activity would likely be an improvement by providing a
relevant range of projected needs over the 50 year horizon
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http://climate.ok.gov/index.php/climate/climate_trends/precipitation_history_annual_statewid
e/CD00/prcp/Annual/oklahoma_south-central_u.s
Weather Projections
• Short-intermediate term:
– Climatologists predicting
3-15 years of ongoing
drought pattern in OKTX region 2011+
• Longer term:
– Continued debate about
global climate change
• Risk & uncertainty
require adaptation and
mitigation options &
consideration of public
& private investment
• If govt. isn’t funding,
what will the private
sector be likely to do?
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OK Water for 2060 Act (2012)
• “The Legislature hereby declares that, in order to
protect Oklahoma citizens from increased water
supply shortages and groundwater depletions by the
year 2060 in most of the eighty-two watershed
planning basins in the state as described in the 2012
Update of the Oklahoma Comprehensive Water Plan,
the public policy of this state is to establish and work
toward a goal of consuming no more fresh water in
the year 2060 than is consumed statewide in the year
2012, while continuing to grow the population and
economy of the state and to achieve this goal through
utilizing existing water supplies more efficiently and
expanding the use of alternatives such as wastewater,
brackish water, and other nonpotable supplies. …”
OK Water for 2060 Act (2012)
• Pilot programs for water conservation for communities
w/competitive grants
• Advisory Council
– 15 members
• OWRB executive director (chair)
• 4 appointed by Gov. (mun, rur, ag, water tech)
• 5 appointed by House Speaker (Congr. Dist’s, rec, ind, oil/gas, irrig,
wastewater reuse)
• 5 appointed by Senate Pres. Pro Temp (soil cons, small bus, envir, brackish
water tech)
– Duties (thru 2015)
• Incentives to improve efficiency in ag
• Recommend education programs
• Recommend financial assistance programs to reduce water loss & increase
efficient water use
• First meeting likely Feb 2013
Water Market over time:
With & without “Water for 2060 Act”
Price
$
S’
S
P3
S: Supply of fresh water w/o
Act, assumes continued
expansion in water supply
(investment in infrastructure,
technology, etc.)
P2
D (2060)
P1
D (2012)
Q1
S’: Supply of fresh water w/Act,
assumes no more water available
(annually) in 2060 than 2012; Price
increases certain (conservation w/reuse, technology, behavior change,
trade-offs among users, etc.)
Quantity of available water
Q2
Who will benefit?
Who will lose?
What Determines
Water Prices?
• Supply and demand
• Cost of capture and
transportation
• Water rights
• Non-market impacts &
externalities
OK Population, 1960-2010 and Trend to 2060
6000
5000
thousands
4000
3000
2000
1000
0
• Trends suggest:
– shift from ag and rural water
use to urban municipal and
industrial uses
– Increased mining of aquifers
– More competition for surface
and groundwater
– More challenges from TX for OK
OK (61%)
water
Linear (OK
– Large increases in water costs
(61%))
from competing uses within and
outside the state
– Increases in water quality
pressures and cost to resolve,
maintain and enhance water
quality
• Energy costs will also rise,
suggesting further pressure on
increasing water cost
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The technological fix? Who pays?
• Some suggest technology may
ease pressure on water supply:
– More efficient irrigation
systems (drip; timer; moisture
sensors, etc.)
– More low-water impact
drought tolerant ag production
– More efficient residential
systems (conserving plumbing
fixtures; xeriscape, etc.)
– Replacement/upgrade to more
efficient pipeline, pump and
treatment systems for
domestic rural and urban
systems
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The technological fix (continued)?
• Some suggest technology may ease pressure on water
(continued):
– More efficient industrial systems (low water impact;
closed-loop systems, etc.)
– Use/re-use of grey water in such industrial processes as
ethanol production
– Desalinization of deep water sources
– Use of water from petroleum pumping
• If/when such technology successful, costs will likely rise,
including energy inputs
– How will increased costs impact competitiveness and
overall economic development?
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Concerns at the Farm/Ranch/Business Level
• Individual or farm owning water rights with offer to buy or
sell (ex: farm or ranch has opportunity to sell water rights
to a land developer)
– Opportunity cost is key factor
• Compare with water production or market value to
without water production or market value
• May be a nonmarket value to use that can also be
measured/considered (recreation, amenity, etc.)
– Value of $ over time is also important
– Water quality may also be an issue
• Will loss of water diminish water quality on the farm
or improve water quality for the developer?
– Some may hold onto an emotional intrinsic value that
cannot be measured
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Global water extraction & use,
by major consumer, 1900-2025
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http://www.unep.org/dewa/vitalwater/article43.html
Other farm/ranch concerns
• Farm considers drought management options; net present
value of alternatives (benefits less costs, over time, with
the value of time considered)
– Red cedar eradication
– Pond/tank improvement or development
– Drip irrigation system
– Cell grazing
– No-tillage or conservation cover crops to retain ground
moisture
– Shift to drought tolerant crops
– Change crop-livestock ratio or mix
– Riparian zone management
– Wetland maintenance/enhancement/development
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Concerns for Communities/Region/State
• Community or region or tribe may have opportunity to buy or sell
water rights (ex.: sale of water to El Reno, OK, or Tarrant County, TX;
ex: purchase of water to improve water quality)
– Legal factors must be resolved (state moratorium, state-tribal
compact, intra-state or inter-state transer barriers, whose rights
are senior or prevail)
– Opportunity cost is a key factor in valuation
• what is the seller giving up in current and future income?
• Can competing uses be evaluated?
• May be a nonmarket value to use that can also be
measured/considered (recreation, amenity, etc.)
• Water quality may affect value
– Inventory of current supply and estimation of future supply (can
the supply be scientifically measured; is conjunctive
use/interaction a critical component, and can it be scientifically
measured?)
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Other State/Regional Concerns
• Evolving water rights and impact on economic
development and quality of life for regional or state
residents
• Coordinating decisions on micro scale that could
impact region or state
– Intra-state transfers
– Inter-state transfers
– Permitting for large users (municipal, industrial);
examples:
•
•
•
•
water canal in downtown OKC
water use for ethanol processing plants
recreational water use on irrigation lake
Water for hydraulic fracturing
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Global Population Issues:
10-14 billion in 2060?
• Consider Strategic Opportunities for Agricultural
States Like Oklahoma
– More global hunger
– Meat protein relatively more expensive
• Consider need for research on efficiency gains for
agricultural water use
• Consider growing value of water surplus in local
areas/regions
– Opportunity cost?
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How does OK want to be positioned for being a
part of the US & global economies in 2060?
•
•
•
•
More industrial?
More residential?
More agricultural?
More
“natural/environmental”?
• What will be the water
needs for each economic
Contact:
Larry Sanders
[email protected]
Selected photos courtesy of OSU Ag Comm
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