Central Arizona Project

This project examines community perceptions and decisions about climate science, economics, and policies associated with resilience strategies that address increasing water scarcity in the Southwest. Strategies to be evaluated include: investments in built infrastructure (e.g., reservoirs and pipelines); incentive-based risk-sharing agreements; and watershed ecosystem services. The project emphasizes how ecosystem services can buffer water impacts of climate change, as well as the potential for climate mitigation as a strategy to enhance water supply security. Project outputs will include a replicable method for co-producing resilient water-related climate adaptation and mitigation strategies, including scientific and economic evaluation. Potential outcomes include improved water supply reliability and cooperation on adapting to shortages for a regional economy that exceeds $3 trillion annually.

This project examines the impacts of drought and climate change on climate sensitive sectors in the Southwest, focusing on agriculture, outdoor recreation, and tourism. Drafted a funded grant proposal on Economic Impacts on Drought on Agriculture, Recreational Tourism, and Rural Communities to a combination of NIDIS and the Arizona Department of Water Resources.

Persistent drought and climate change affect water and energy costs, and hence choices made by farms, cities and industrial water and energy users, as well as energy and water providers’ operations. This project examines potential climate change and variability adaptation strategies related to water and energy in the Colorado River and Rio Grande Basins, including northwestern Mexico. Researchers are investigating how climate influences the market price of water and developing a menu of water and energy supply reliability tools with guidelines for using these tools.

This project examines the potential for market mechanisms to facilitate voluntary reallocation of scarce water across different uses, specifically from agricultural to environmental purposes. It considers the scope for using reverse water auctions to obtain water for riparian restoration. This includes study of the economic theory behind reversed auctions as well as lessons from applications. It also examines the scope of the USDA Conservation Reserve Enhancement Program (CREP) to complement state and local programs for environmental water acquisitions.

Researchers at the University of California, Riverside have access to proprietary data on prices and quantities of water market trades. A hypothesis of the CLIMAS research is that USDA data on crop rental rates can be used to assess what likely water transfer prices will be. We plan to collaborate in the coming year, combining data to test this hypothesis.