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In 2001, an extreme drought tightened water supply in the Upper Klamath
Basin (basin) while earlier increases in Endangered Species Act (ESA) water
requirements for basin fish species that same year elevated demands. The Bureau of
Reclamation (Reclamation), which manages irrigation water in parts of the basin
located near the Oregon-California border, responded to ESA Section 7 obligations by
severely curtailing water allocations to Reclamation Project irrigators for the 2001
growing season, costing irrigators an estimated $35 million in farm income. This event
has directed attention to several important factors that may further undermine effective
water management in the basin. These include higher ESA flow requirements due to a
recent Ninth Circuit Court ruling and a ten-fold energy rate increase to irrigators
resulting from a mid-2006 contract expiration with the regional energy provider.
The overall objective of this research is to assess the impact of changes in ESA
flow requirements and energy prices on the Upper Klamath Basin farm economy
given variable levels of water trading flexibility and groundwater availability. A
mathematical programming and Geographic Information System (GIS) framework is
used in which farm decisions are assumed to maximize net revenue subject to
hydrological, institutional, economic, and agronomic constraints. The results suggest
that greater development of basin groundwater resources and the institution of a
flexible water bank may be sufficient to mitigate the majority of costs related to
increased ESA flow requirements in future years. |
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