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Non-market valuation in integrated assessment modeling: The benefits of water right retirement

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  • Manning, Dale T.
  • Rad, Mani Rouhi
  • Suter, Jordan F.
  • Goemans, Christopher
  • Xiang, Zaichen
  • Bailey, Ryan

Abstract

The impact of resource management on natural capital value depends on processes that affect resource stocks over space and time. We develop an integrated assessment modeling framework that links econometric estimates of non-market benefits from a resource stock to a spatially explicit model of resource dynamics. Results from a dichotomous choice contingent valuation survey are used to estimate a marginal willingness to pay function for groundwater, which has no market. We use the model to measure the economic benefits to agricultural producers of a program that pays for water right retirement. Under the baseline scenario, without water right retirement, the benefits from groundwater stocks in the study region decline in value by $3.6 million over 15 years because of groundwater depletion. Water right retirement leads to groundwater benefits that are $0.55 million higher than in the baseline after 15 years, but benefits vary greatly over space. Comparing this to an explicit program cost of $45 million suggests that other social benefits from groundwater stocks must exist to justify the program from a benefit-cost perspective. Valuing the economic benefits from increasing natural capital stocks can inform policy and provide insight into the value of management in resource and environmental systems.

Suggested Citation

  • Manning, Dale T. & Rad, Mani Rouhi & Suter, Jordan F. & Goemans, Christopher & Xiang, Zaichen & Bailey, Ryan, 2020. "Non-market valuation in integrated assessment modeling: The benefits of water right retirement," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:jeeman:v:103:y:2020:i:c:s0095069620300644
    DOI: 10.1016/j.jeem.2020.102341
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    3. Rouhi Rad, Mani & Suter, Jordan F. & Manning, Dale & Goemans, Christopher, 2020. "Subsidies vs. subsidies in the conservation of common property resources," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304401, Agricultural and Applied Economics Association.
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    5. R. Aaron Hrozencik & Jordan F. Suter & Paul J. Ferraro & Nathan Hendricks, 2024. "Social comparisons and groundwater use: Evidence from Colorado and Kansas," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 946-966, March.

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    More about this item

    Keywords

    Non-market valuation; Natural capital; Integrated assessment modeling; Groundwater; Conservation policy; Contingent valuation method;
    All these keywords.

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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