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ARS Home » Plains Area » Bushland, Texas » Conservation and Production Research Laboratory » Soil and Water Management Research » Research » Publications at this Location » Publication #355076
Research Project: Precipitation and Irrigation Management to Optimize Profits from Crop Production

Location: Soil and Water Management Research

Title: The impact of discount rate and price on intertemporal groundwater models in Southwest Kansas

Author
item VESTAL, MALLORY - West Texas A & M University
item GUERRERO, BRIDGET - West Texas A & M University
item GOLDEN, BILL - Kansas State University
item HARKEY, LOGAN - West Texas A & M University

Submitted to: Journal of Water Resource and Protection
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 6/10/2017
Publication Date: 6/13/2017
Citation: Vestal, M.K., Guerrero, B.L., Golden, B.B., Harkey, L.D. 2017. The impact of discount rate and price on intertemporal groundwater models in Southwest Kansas. Journal of Water Resource and Protection. 9(7):745-759. https://doi.org/10.4236/jwarp.2017.97049.
DOI: https://doi.org/10.4236/jwarp.2017.97049

Interpretive Summary: Agriculture plays a vital role in the sustainability of the economy of the High Plains Region of the United States. With the development and adoption of irrigation technology, this region was transformed into one of the most agriculturally productive regions in the world. The primary source of irrigation in this region is the Ogallala Aquifer. Currently, water from the aquifer is being used at a much faster rate than natural recharge can occur, resulting in a high rate of depletion. Not enough is known how this depletion of groundwater will effect regional economic sustainability. Scientists from West Texas A&M University and Kansas State University in the ARS led Ogallala Aquifer Program evaluated the impact alternative prices and discount rates on groundwater policy recommendations. As indicated by results of this study, crop prices, input costs, and discount rates have an impact on the effectiveness of water policies that encourage fewer irrigated acres. These results are of interest to water policy makers in understanding the impact of economic conditions on a groundwater use policy.

Technical Abstract: Agriculture plays a vital role in the growth and development of the High Plains Region of the United States. With the development and adoption of irrigation technology, this region was transformed into one of the most agriculturally productive regions in the world. The primary source of irrigation in this region is the Ogallala Aquifer. Currently, water from the aquifer is being used at a much faster rate than natural recharge can occur, resulting in a high rate of depletion from this finite resource. Depletion of scarce water resources will have a significant economic impact on the long-term sustainability of the region. The objective of this study is to evaluate the impact alternative prices and discount rates have on groundwater policy recommendations. Deterministic models of groundwater withdrawals were developed and used in order to analyze and evaluate the impact of high, average, and low crop prices in a status quo scenario as well as a policy scenario reducing irrigated acreage allocation. Furthermore, this study analyzes the effects and associated consequences of alternative discount rates on net and total revenue. As indicated by results of this study, alternative prices, costs, and discount rates utilized in a model have an effect on policy effectiveness.