Can Alternative Transfer Mechanisms Alleviate Water Shortages?

Can Alternative Transfer Mechanisms Alleviate Water Shortages?

by Dr. Andrew Ayres, Assistant Professor of Economics, University of Nevada, Reno; Research Fellow, Public Policy Institute of California

Wednesday, November 19 @ 10:30 - 11:30 a.m.

CHASS INTS 4146

ABOUT THE SEMINAR: Increasing water scarcity in the American West is driving interest in reallocating more water from agriculture, where roughly 80% of water is consumed, to serve growing urban populations. However, agricultural irrigators often hesitate to sell water due to concerns over physical and pecuniary impacts in their local economies. Alternative transfer mechanisms (ATMs) are contracts designed to avoid these impacts by reallocating water when it is especially scarce, for example during drought, while maintaining agricultural production in other years. These arrangements often entail incomplete contracting over land use (e.g., fallowing) rather than a transfer of water rights, thereby avoiding many of the transaction costs associated with conventional water marketing. We study the effects of the PVID-MWD Fallowing and Forbearance Program, the largest and longest-running ATM, which transfers water from rural California to the largest municipal water provider in the Western U.S. Our findings reveal that conserved water volumes have in general been overestimated, highlighting difficulties in contracting over water via fallowing and emphasizing the importance of improved measurement techniques in designing water transfers.

ABOUT THE SPEAKER: Dr. Andrew Ayres is an Assistant Professor of Economics at the University of Nevada, Reno. His main areas of research include environmental and natural resource economics, institutional economics, applied econometrics, and water policy. The primary line of investigation considers how institutions (rules, norms, and regulation) are adopted and subsequently influence human behavior and resource conditions in river basins. Much of his work concerns the governance of groundwater and surface water resources with a focus on the definition and evolution of property rights and other legal processes that affect water management, in particular water markets. Some of his recent work examines the efficiency and distributional implications of groundwater management, with a focus on water market dynamics and managing impacts from fallowed lands. Andrew was Fulbright Fellow and worked in Germany on projects related to climate change, energy, river restoration, and water pricing. Andrew holds a Ph.D. from the University of California, Santa Barbara, and a B.A. from Pomona College.