Benefits, Costs, and Distributional Impacts of a Groundwater Trading Program in the Diamond Valley, Nevada
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2016-10-17
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In Nevada’s Diamond Valley, unsustainable groundwater pumping has decreased the aquifer’s water level, raising irrigators’ pumping costs and threatening the viability of existing wells and springs. Continued extraction in excess of natural recharge will trigger a legally required curtailment of water rights in the valley, which was recently declared a critical management area (CMA). The extent of rights curtailment is not mandated, but it could be as high as 64%, the amount required to reach the estimated natural recharge rate. The default policy for curtailment of water rights will occur according to the principle of prior appropriation, whereby rights are revoked in reverse order of their date of issuance. Rights granted most recently will be canceled first, and the revocation will proceed in order of increasing seniority until the government’s desired level of total water extraction is reached. Nevada law requires this intervention to occur within 10 years of the CMA declaration. By law, irrigators and other stakeholders can propose alternative policies for reducing groundwater over-extraction. Because sudden rights curtailment could have detrimental economic impacts, such policies are under discussion. This report analyzes the economic outcomes of sudden and alternative curtailment policies. Using a hydro-economic model tailored to conditions in the region to examine alternative extraction scenarios, the analysis finds that, with no action, the depth to the water table will exceed 200 feet by 2045; with policy action, aquifer levels can be stabilized at 170–180 feet and at higher depths with more gradual curtailment. Across all policy scenarios, net agricultural profit is lowest under the default curtailment policy, and it increases with more gradual curtailment. Under curtailment, allowing parties to trade rights to extract water modestly increases economic benefits relative to no-trade alternatives.
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Zeff, Harrison, Greg Characklis, Marc Jeuland, David Kaczan, Brian Murray and Katie Locklier (2016). Benefits, Costs, and Distributional Impacts of a Groundwater Trading Program in the Diamond Valley, Nevada. Retrieved from https://hdl.handle.net/10161/27127.
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Marc A. Jeuland
Marc Jeuland is a Professor in the Sanford School of Public Policy, with a joint appointment in the Duke Global Health Institute. His research interests include nonmarket valuation, water and sanitation, environmental health, energy poverty and transitions, trans-boundary water resource planning and management, and the impacts and economics of climate change.
Jeuland's recent research includes work to understand the economic implications of climate change for water resources projects on transboundary river systems, a range of primary data collection projects related to analysis of adoption of environmental health improving technology, and analysis of the costs and benefits of environmental health interventions in developing countries. He has conducted multiple field experiments on issues such as: the role of water quality information in affecting household water and hygiene behaviors; the demand for, and impacts of cleaner cookstoves on household well-being; the long-term sustainability and effects of rural sanitation and water supply projects. He has also collected data on preferences for a range of environmental health improvements including cholera vaccines, household water treatment technologies and improved cookstoves. In the energy and development domain, he is currently working on several projects with the Energy Access Project at Duke, and is a co-founder of the Sustainable Energy Transitions Initiative (SETI), along with Professor Subhrendu Pattanayak and scholars from Chile, China and Ethiopia. His energy portfolio includes work related to evaluation of cleaner cooking interventions, measuring energy access and reliability, and reviews of the drivers and impacts literature related to energy.
Jeuland has worked in the past with the World Bank, USAID, the Millennium Challenge Corporation, UNICEF, and many field-based NGOs and community-based implementing organizations.
Prior to his graduate studies and work with the World Bank, Jeuland was a Peace Corps volunteer in Mali, West Africa, where he designed and monitored construction of a pilot wastewater treatment system and trained management personnel at the plant’s managing firm.
Brian Murray
Dr. Brian C. Murray is Director of the Nicholas Institute for Energy, Environment & Sustainability, Research Professor at the Nicholas School of the Environment (primary) and Sanford School of Public Policy (secondary), and Faculty Associate of the Duke Initiative for Science & Society. In 2015 he was Fulbright Visiting Research Chair in Environment and Economy at University of Ottawa’s Institute of the Environment. He is widely recognized for his work on the economics of energy and climate change policy, including the design of market based mechanisms to reduce greenhouse gases and deploy low-carbon energy. Members of the United States Congress, state legislators and regulators have sought the counsel of Dr. Murray and colleagues in developing energy and climate legislative proposals and regulatory options. Their development of the cost containment reserve mechanism is now in use in several greenhouse cap-and-trade programs in North America. Dr. Murray has been invited as a co-author of several national and international assessments of natural resources, especially related to energy and climate change. Of particular note, he serves on a National Academy of Sciences panel on greenhouse gases and the tax code, where he led the panel’s efforts on biofuel subsidies. He was a convening lead author of the Intergovernmental Panel on Climate Change’s Special Report on Land Use, Land Use Change, and Forestry. He has convened several forums of economic modeling experts to examine and communicate the results of their climate, energy and land use policy efforts to the public and private sectors. His research has examined the economic effects of traditional command-based regulatory strategies for pollution control and more market-oriented approaches such as cap-and-trade programs and emission taxes. He has been a consultant to a wide range of clientele in the public and private sector, including numerous federal government agencies, members of Congress and their staff, state regulatory agencies, CEOs and senior staff from Fortune 500 companies, trade groups, nongovernmental organizations, and other academic institutions. He has authored or co-authored over 100 publications in books, edited volumes, and professional journals across a range od disciplines. From 2017-21 he was a regular contributor to Forbes. Prior to coming to the Nicholas Institute in 2006, Dr. Murray was Director of the Center for Regulatory Economics and Policy Research at RTI International, a university-affiliated not-for-profit research institution.
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