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From Almond Shaming to Water Trading: CGE Insights into Managing California's Drought

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  • Glyn Wittwer

Abstract

California has suffered a four year drought that has imposed severe stress on the state's water resources. Irrigators and urban users have both been affected by unprecedented water restrictions. How should California allocate water? The state has long-standing water allocation issues, as economic mechanisms historically have played little or no role in allocation. USAGE-TERM is a multi-regional CGE model that represents 12 key irrigation counties in California as separate economies. Water trading between irrigators would help California cope with drought. In particular, sales of water from annual crops grower to perennial producers may lower the costs of maintaining plantations, given the high fixed costs arising from the alternative action of drilling new wells. Diverting substantial volumes of irrigation water from plantations to urban users may not be consistent with welfare maximisation.

Suggested Citation

  • Glyn Wittwer, 2015. "From Almond Shaming to Water Trading: CGE Insights into Managing California's Drought," Centre of Policy Studies/IMPACT Centre Working Papers g-258, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-258
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    References listed on IDEAS

    as
    1. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
    2. Wittwer, Glyn & Griffith, Marnie, 2011. "Modelling drought and recovery in the southern Murray-Darling basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 1-18, September.
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    Cited by:

    1. Elias Marvinney & Jin Wook Ro & Alissa Kendall, 2020. "Trade-Offs in Net Life Cycle Energy Balance and Water Consumption in California Almond Orchards," Energies, MDPI, vol. 13(12), pages 1-16, June.
    2. Wittwer, Glyn, 2017. "Modelling the millennium drought in the southern Murray-Darling Basin and subsequent drought in California," Conference papers 332875, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    Drought impacts; regional CGE modelling; water trading;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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