Integrated Economic, Hydrologic, and Institutional Analysis of Policy Responses to Mitigate Drought Impacts in Rio Grande Basin

Abstract

In the Rio Grande Basin of North America, water is overappropriated and demand for water grows while supplies are constrained by drought and climate change. The Basin is currently in its seventh year of drought, and reservoirs are at historically low levels. Thus agricultural and municipal river diversions have been sharply curtailed, and low flows threaten endangered species. A central policy challenge is the design and implementation of plans that efficiently and fairly allocate the Basin’s water supplies. Such plans are complicated by the demands of existing water users, potential new users, three state governments, and two sovereign nations. To address these issues, an integrated basinwide nonlinear programming model was designed and constructed for the purpose of optimizing water allocations and use levels for the Basin. The model tests whether institutional adjustments can limit damages caused by drought and identifies changes in water uses and allocations that result from those adjustments. Compared to existing rules governing the river system’s water use, future drought damages could be reduced by one-fifth to one-third per year from intrastate and interstate water markets, respectively, that permit water transfers across jurisdictions. Results show hydrologic and economic trade-offs among water uses, regions, and drought control programs.