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Water Storage Capacity versus Water Use Efficiency: Substitutes or Complements?

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  • Yang Xie
  • David Zilberman

Abstract

Investments in water use efficiency and water storage capacity are two common approaches to tackling water scarcity and adapting to climate change. We show that they are not always substitutes. Efficiency improvement can increase the demand for storage capacity in two scenarios: (1) if it increases water demand; (2) if, as a result of re-optimization of water inventory control, it increases the probability that the storage capacity will be exhausted. We identify properties of water demand and productivity under which the two scenarios will happen, and illustrate the potential complementarity using an empirical example of the California State Water Project. The results are also applicable to choices among infrastructure investment, improved consumption efficiency, and conservation of other storable resources, for example, energy.

Suggested Citation

  • Yang Xie & David Zilberman, 2018. "Water Storage Capacity versus Water Use Efficiency: Substitutes or Complements?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 265-299.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/694178
    DOI: 10.1086/694178
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    Cited by:

    1. Guerra Vallejos, Ernesto & Bobenrieth Hochfarber, Eugenio & Bobenrieth Hochfarber, Juan & Wright, Brian D., 2021. "Solving dynamic stochastic models with multiple occasionally binding constraints," Economic Modelling, Elsevier, vol. 105(C).
    2. Dorner, Zack, 2019. "A behavioral rebound effect," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    3. Zilberman, David & Gordon, Ben, 2018. "California water: the present and looking to the future," Western Economics Forum, Western Agricultural Economics Association, vol. 16(1).
    4. Julio Berbel & Alfonso Expósito & Carlos Gutiérrez-Martín & Luciano Mateos, 2019. "Effects of the Irrigation Modernization in Spain 2002–2015," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(5), pages 1835-1849, March.
    5. Berbel, Julio & Expósito, Alfonso, 2022. "A decision model for stochastic optimization of seasonal irrigation-water allocation," Agricultural Water Management, Elsevier, vol. 262(C).

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