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In many parts of the world including the western United States, the allocation of water is governed by complex water laws that dictate who receives water, how much they receive, and when. Because these rules are generally based on the seniority of water rights, they are not necessarily focused on maximizing economic value across the entire economy. The maximization of value from water use economy-wide is a complex optimization problem that must explicitly consider each user’s water demand, willingness to pay (WTP) function, and the feedbacks among users in a coupled natural-human system model. In this study, we distill these complexities into a simple MATLAB® model developed to represent a two-user economy with water-dependent sectors representative of agriculture and industry. We feed the model with realistic values of relative water use, relative willingness to pay, and return flows to explore the relationships among these factors in water-limited systems. We find that the total economic value generated from water-dependent users depends primarily on the total water available in the system. However, for a given volume of water available, economic value is not necessarily maximized when all the water is appropriated to the user with the highest WTP. Rather, total economic value depends on the amount of water available, the relative WTP between the two users, and on the return flows generated from each sector’s water use. While our simple two-user model is a significant abstraction of the complexities inherent in natural systems, our study provides important insights into the coupled natural-human system dynamics of water allocation and use in water-limited environments.
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Demand for an Environmental Public Good in the Time of COVID-19: A Statewide Water Quality Referendum
Abstract Due to COVID-19, many households faced hardships in the spring of 2020 – unemployment, an uncertain economic future, forced separation, and more. At the same time, the number of people who participated in outdoor recreation in many areas increased, as it was one of the few activities still permitted. How these experiences affect the public’s willingness to pay (WTP) for environmental public goods is unknown. During the early months of the pandemic, we conducted a stated preference survey to value statewide water quality improvements in Delaware. While a majority of participants report experiencing hardship of some sort (economic, emotional, etc.), mean household WTP declined by only 7 % by May 2020.
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- Award ID(s):
- 1757353
- PAR ID:
- 10333428
- Date Published:
- Journal Name:
- Journal of Benefit-Cost Analysis
- Volume:
- 13
- Issue:
- 1
- ISSN:
- 2194-5888
- Page Range / eLocation ID:
- 107 to 119
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1017/bca.2021.14
