Abstract:
The Colorado River Compact of 1922 requires that Wyoming and the three other states
of Colorado, New Mexico, and Utah (together called the Upper Division states) ensure
that flows downstream from Lake Powell not be depleted below 75 million acre-feet
over a ten-year period (SEO 2016). In large part due to the dry hydrology in the Colorado
River Basin (CRB) over the past 20 years, and the expectation that this dry hydrology
will continue, the Upper Basin states may have to act to meet this compact obligation.
A “curtailment” could be triggered, meaning that Wyoming and the other three Upper
Division States would be required to regulate post-compact rights to reduce consumptive
water use in proportion to their historical consumptive use. Wyoming would meet this
obligation by regulating off water rights in the Wyoming portion of the CRB in reverse
priority (starting with the most junior and working backwards by priority date) until
its obligation was met.
This fall, the U.S. Bureau of Reclamation announced an increased likelihood of curtailment
occurring in the next five years, increasing the urgency of understanding curtailment
impacts and exploring proactive solutions. A curtailment event (or multiple curtailment
events in successive years) could create significant economic challenges for Wyoming
water users. Junior rights holders most at risk of being curtailed could hedge against
that risk by entering into advance agreements with any senior rights holders willing
to forego their water use for a price. Storage capacity in Fontenelle Reservoir could
be used to help replace curtailed water in the short-term.
Policymakers in the region are also considering a multi-year Demand Management (DM)
program as another way to reduce or avoid entirely the risk of curtailment. Under
a DM program, water users would be compensated for reducing their consumptive use
of water on a temporary and voluntary basis. The Upper Basin states would store the
conserved water in certain Upper Basin reservoirs (including Flaming Gorge), to provide
a “savings account” that could help them assure continued compliance with the 1922
Compact.
We propose to estimate the economic impacts of curtailment and DM to the Wyoming
portion of the CRB. Consumptive use of water in Wyoming would be reduced as a result
of either curtailment or DM. The economic analysis would evaluate which sectors of
the economy— agricultural, municipal, and industrial—would see reductions in consumptive
water use under curtailment versus DM, given existing tools for curtailment mitigation
(for example permanent and temporary transfers, exchange agreements) and DM program
design options. This evaluation will require coordinating with the SEO on estimating
the consumptive use of water rights.
We perform the analysis under alternative precipitation/streamflow profiles, to better
understand the implications of wet and dry “water years” on curtailment and the ability
of Fontenelle Reservoir storage water to mitigate curtailment impacts under different
assumptions regarding precipitation pattern and curtailment frequency. We also propose
to compare regional economic impacts of curtailment and DM—for example, the indirect
impacts in jobs and spending that ripple through the regional economy, as junior right
holders try to quickly secure supplies under curtailment, or as irrigated hay production
and user fees to municipalities drop under a DM program.
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