Muddy Waters: Case Studies in Dry Land Water Resource Economics

Abstract

Arizona like many other semi-arid regions in the world is facing a suite of policy issues that stem from water scarcity and security of supply issues intersecting with growing and competing water demands. A vexing issue in southern Arizona has been the preservation of riparian habitat. The study of environmental economics provides researchers with techniques to estimate the value of natural resources, such as riparian habitat, to level the playing field in policy discussions on development and water management. In Appendices B-D results from two hedonic property analyses suggest that homebuyers, one of the main consumers of riparian habitat in urban areas, have preferences for greener and higher condition riparian habitat and furthermore that they are willing to pay property premiums to benefit from this resource. There is also some evidence that riparian habitat conservation and restoration can be self-financing. The economics of another water using sector in the state, the recreation sector, specifically winter-based recreation, is assessed in Appendix E. The analysis finds that although ski areas in Arizona are subject to large inter-year variability in terms of snowfall and season length that snowmaking adaptations, a technology that is water-intensive, is financially feasible in the medium term as a climate variability and climate change adaptation. Nevertheless, ski areas in the state are likely to face increased financial pressures if climate change scenarios are realized and will have to implement other adaptation strategies to remain viable. Finally, water competition in the state between Indian and non-Indian users and the techniques used to dispel such tensions, namely water settlements, are discussed in Appendix F. The research finds that settlements offer opportunities for win-win agreements between the settling tribe and other water users in the same watersheds and for the introduction of new water supply management tools that benefit signatory and non-signatory parties alike.