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Current WRP Projects: Project 50

Economic Assessment of Alternative Groundwater Management Strategies in Laramie County

  • Project Number:  50
  • PIs: Kristiana Hansen and Dannele Peck, Professor, Dept. of Agricultural & Applied Economics, UW and Scott Miller, Dept. of Ecosystem Science and Management, UW
  • Period: 03/01/2016 - 02/28/2019

 

Abstract:

The Laramie County Control Area (LCCA) was established in 1981 in response to local concerns about declining aquifer levels. Groundwater levels continued to decline in the LCCA, leading the State Engineer to issue an Order that requires: (1) adjudication of all unadjudicated groundwater rights on non-stock/domestic wells in the LCCA by 2017; (2) installation of flow meters on non-stock/domestic wells in the LCCA by 2017; and (3) implementation of well-spacing requirements for new wells. Furthermore, the State Engineer has encouraged groundwater users in the LCCA to develop their own groundwater management plan for the region. The Laramie County Control Area Steering Committee has since been formed and is meeting twice monthly to develop creative and effective options for reducing groundwater use in the LCCA. Throughout these discussions, questions have been raised about the potential economic impacts of alternative strategies on subareas within the LCCA and Laramie County more broadly.

We propose to estimate the economic impacts, both direct and indirect, of four alternative management strategies: the status quo (LCCA irrigators continue to pump at current rates), strict enforcement of prior appropriation (likely unrealistic due to high transaction costs), allocation (irrigators reduce pumping on all acres to a specified number of acre-inches over a specified number of years), and buyout (irrigators are paid to retire land from irrigation). We will analyze these four strategies under two alternative hydrologic scenarios: a baseline scenario based on a hydrogeologic study of the LCCA (March 2014 AMEC Study) and a second scenario that assumes for the sake of argument greater connectivity between the western and eastern portions of Laramie County than is assumed in the AMEC Study.

The proposed study would inform the Steering Committee’s on-going planning efforts by estimating the economic impacts, both direct and indirect, of four alternative groundwater management strategies. Results would provide the Steering Committee and State Engineer with insights about potential benefits, costs, and uncertainties of proposed groundwater management plans. The study would also generate farm-level budgets and management insights that agricultural producers could use to quantify tradeoffs of applying more water today at the risk of having less water in the future, or applying less water today to increase the chances of having more water in the future.


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