Value of Improving Canal Conveyance Efficiency

Surface water for irrigation is commonly delivered through canals and ditches, where conveyance losses can be substantial. Despite the policy relevance of improving the delivery infrastructure, there are no empirical estimates of the value of improvements in canal conveyance efficiency. In this paper, we estimate the willingness to pay for improving conveyance efficiency by exploiting the relationship between canal conveyance efficiency and producers’ investments in on-farm irrigation technology across two river basins in Colorado. We show that producers are more likely to invest in on-farm irrigation efficiency when canal conveyance efficiency is lower, consistent with private adaptation to losses in the delivery system. We use this relationship to recover are vealed preference value for improvements in canal conveyance efficiency. We find an average value of $2,898.71 per canal for a one percentage point increase in conveyance efficiency in the South Platte River Basin and $1,898.58 in the Rio Grande Basin. Using these estimates, we compare the benefits of canal lining with the costs and find that there are no canals in the study area for which benefits exceed costs. Taken together, these findings help explain the limited historical investment in canal conveyance improvements in our study area and shed light on opportunities for investment.