Agricultural response to changing water prices in Arizona

Abstract

Water management strategies are currently being developed in Arizona. Arguments exist over which strategies are most effective and efficient to supply future growth of Arizona's population and economy. Some strategies rely on importation of new water supplies, while other strategies propose reducing total water demanded so existing supplies will be adequate in the future. Agricultural water use has been determined the primary target for demand management strategies since it accounts for 89% of all water depletions and is a relatively economically inefficent use. No comprehensive management of Arizona's agricultural water use has been attempted. However, economic projections have indicated that changing variable prices for water will cause water use changes in the agricultural sector. Reviewing these projections in light of historical data shows that manipulating the variable price of water to affect use changes may be too unpredictable for effective water management and control in the agricultural sector.