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ARS Home » Plains Area » Bushland, Texas » Conservation and Production Research Laboratory » Soil and Water Management Research » Research » Publications at this Location » Publication #343594

Research Project: Precipitation and Irrigation Management to Optimize Profits from Crop Production

Location: Soil and Water Management Research

Title: An estimate of the shadow price of water in the southern Ogallala Aquifer

Author
item Williams, Ryan - Texas Tech University
item Al-hmoud, Rashid - Texas Tech University
item Segarra, Eduardo - Texas Tech University
item Mitchell, Donna - Texas Tech University

Submitted to: Journal of Water Resource and Protection
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 2/25/2017
Publication Date: 2/28/2017
Citation: Williams, R.B., Al-Hmoud, R., Segarra, E., Mitchell, D. 2017. An estimate of the shadow price of water in the southern Ogallala Aquifer. Journal of Water Resource and Protection. 9:289-304.

Interpretive Summary: Irrigation water from the Ogallala Aquifer has had influential role on the Texas High Plains in making it an agricultural significant region. However, withdrawals for irrigation have greatly exceeded recharge resulted in a decreasing water resource. Scientists in the ARS led Ogallala Aquifer Program from Texas Tech University have attempt to quantify the shadow price of an additional inch of groundwater resource left in situ for the Southern Ogallala Aquifer. We found that the size of the existing groundwater resource is sufficiently small to result in a divergence between the competitive and socially optimal solutions for withdrawals. Finally, we arrive at a marginal user cost for an additional acre-inch of water which is relatively low. These results are of interest to water policymakers and indicate that value of groundwater left in the aquifer is only slightly different from its value for present withdrawals.

Technical Abstract: In this paper, we attempt to quantify the shadow price of an additional inch of groundwater resource left in situ for the Southern Ogallala Aquifer. Previous authors have shown the degree to which the optimal resource extraction path may diverge from the competitive extraction path based upon varying assumptions. We utilize high-quality data over an unconfined groundwater resource to evaluate the validity of these results. We find that the size of the existing groundwater resource is sufficiently small to result in a divergence between the competitive and socially optimal solutions. We are also able to confirm that the model responds to changes in the parameters in a manner consistent with previous research. Finally, we arrive at a marginal user cost for an additional acre-inch of water which is relatively low, but reasonable given uncertainty about future technological improvements.