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Irrigation District Adoption Of Water Conserving Rate Structures

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  • Michelsen, Ari M.
  • McGuckin, J. Thomas
  • Taylor, R. Garth
  • Huffaker, Ray G.

Abstract

A binary choice model was used to identify the attributes that influence irrigation district adoption of conservation rate structures. Using principles of rate design and irrigation district administration as a framework, measures of irrigation district rate structure objectives and physical and economic conditions were developed. The factors investigated characterize the constraints under which districts operate, value and cost of water, quantity of water delivered and revenue risk for districts. Rate structure adoption was predicted with over 75% accuracy. Both significant and non-significant factors are key to understanding rate choice. Districts were more likely to adopt conservation rate pricing when the cost of water to farmers was greater, higher value crops were grown and in areas with warmer and longer growing seasons. These conditions may be interpreted as reflecting the presence of greater opportunity costs in allocating water between low and higher valued uses. Conservation rate pricing was less likely to be adopted by districts where the proportion of alfalfa to total acreage was higher and with higher per acre deliveries of water. Somewhat surprisingly, annual variation in water deliveries (which should increase the risk of revenue shortfalls) and size of the district (larger districts being more sophisticated) have little bearing on the type of rate structure adopted.

Suggested Citation

  • Michelsen, Ari M. & McGuckin, J. Thomas & Taylor, R. Garth & Huffaker, Ray G., 1998. "Irrigation District Adoption Of Water Conserving Rate Structures," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20964, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea98:20964
    DOI: 10.22004/ag.econ.20964
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    File URL: https://ageconsearch.umn.edu/record/20964/files/spmich01.pdf
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    References listed on IDEAS

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    2. Huffaker, Ray G. & Whittlesey, Norman K., 1995. "Agricultural Water Conservation Legislation: Will It Save Water?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 10(4), pages 1-5.
    3. Huffaker, Ray G. & Whittlesey, Norman K. & Michelsen, Ari M. & Taylor, R. Garth & McGuckin, J. Thomas, 1998. "Evaluating The Effectiveness Of Conservation Water-Pricing Programs," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-8, July.
    4. David Zilberman, 1997. "Allocation and Pricing at the Water District Level," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 952-963.
    5. Michael D. Rosen & Richard J. Sexton, 1993. "Irrigation Districts and Water Markets: An Application of Cooperative Decision-Making Theory," Land Economics, University of Wisconsin Press, vol. 69(1), pages 39-53.
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