Essays on the Efficient Management of Water Resources

Abstract

In the first analysis of this dissertation, I assess the water use savings and cost-effectiveness of the Conservation Reserve Enhancement Program (CREP) in the Upper Arkansas River basin in Kansas, a water rights retirement program aimed at reducing depletion of the High Plains Aquifer. First, I use a fixed effects model with matched samples of farmers to determine the effect of CREP on water use. I find that for every unit of authorized water use retired in CREP, 0.8 units of water are saved per year. Second, I examine how a rights retirement program would perform outside of the policy region and how the existing program design could be improved upon. I estimate a probit regression to determine which factors most influence the probability that a farmer enrolls in CREP. Using the results of the probit regression, I then simulate enrollment decisions outside of the policy region to assess the cost-effectiveness of different incentive designs. I find that programs that pay incentives based on past levels of water extraction save

water more cheaply than programs that pay based on acreage retired. I also find that programs such as CREP that offer higher incentive rates to farmers that enroll later are more efficient than programs that never increase rates.

In the second analysis, coauthors and I assess the household value for stream restoration, a common approach used by local governments to mitigate the water quality impacts of urban stormwater. We conduct a choice experiment in the Baltimore metro region to examine household willingness to pay (WTP) for stream restoration. We vary the land ownership of restoration locations and the distance from households to streams in hypothetical choice scenarios that include changes in several stream restoration attributes. Our results indicate that household WTP for improvements in stream bank stabilization and nutrient reduction are positive and significant on public and private land across all distances. We find significant heterogeneity in WTP across land ownership and proximity to a stream. This heterogeneity in WTP can be of particular interest to policy makers when making decisions about where, and even how, to restore streams.