Insights from Hydroeconomic Modeling

Transcription

1 Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 Insights from Hydroeconomic Modeling James Booker Siena College Loudonville, NY J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 1 / 25

2 Outline 1. Examples of hydroeconomic models. 2. Model estimates, baselines, and benefit-cost analysis. 3. Implicit single factor productivity estimates 4. Towards TFP J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 2 / 25

3 Systems approach focusing on interdependencies source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 3 / 25

4 source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 4 / 25

5 source: Booker & Young, JEEM, 1994 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 5 / 25

6 source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 6 / 25

7 A hydroeconomic model is a system-wide maximization of net benefits J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 7 / 25

8 Water demand functions for each user J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 8 / 25

9 System-wide solution I: allocation by non-economic rule where value V is used to force allocation between users according to purely non-economic priorities. J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 9 / 25

10 System-wide solution I: allocation by maximizing net benefits Objective function based purely on economic benefits net of explicit costs: J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 10 / 25

11 Estimating marginal values of the irrigation water input J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 11 / 25

12 Residual imputation for estimating irrigation water demand J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 12 / 25

13 Deficit irrigation / direct crop response may be added J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 13 / 25

14 Ultimately Use mathematical programming techniques to estimate farm / regional benefits as total irrigation water supply is varied. Fit these results to a convenient functional form, and each regional user then has a water demand function. J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 14 / 25

15 Water demand functions for each user J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 15 / 25

16 source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 16 / 25

17 Model solution maximize selected measure of net benefits subject to hydrologic constraints acreage constraints technology constraints institutional / operations constraints other J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 17 / 25

18 Hydroeconomic model optimization provides accounting of diversions, instream flows, and multisectoral use impacts And implicitly includes water opportunity costs / nonpriced impacts on other users. source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 18 / 25

19 Explicit baseline typically defined source: Cai, McKinney, and Lasdon, JWRPM, 2003 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 19 / 25

20 One interpretation: this a NPV estimate source: Cai, McKinney, and Lasdon, JWRPM, 2003 NPV of moving from standard operating criteria to those maximizing quantified net benefits is = 0.90 billion USD. But unique BCR difficult : treatment of nonpriced opportunity costs? J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 20 / 25

21 A second interpretation: this a crop per drop change Baseline: Crop per drop = (3570*0.74)/51.8 = 51; source: Cai, McKinney, and Lasdon, JWRPM, 2003 Full-optimize: Crop per drop = (3570*0.89)/45.6 = 64; => Increase of 25%. J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 21 / 25

22 Their text: full optimization (FOP) vs. baseline J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 22 / 25

23 Continuing with Cai, McKinney, and Lasdon, 2003: Water delivery efficiency Irrigation efficiency Total change before after before after before after If we look just at local water withdrawal crop per drop, then this increases by 70% to 120% (holding yield impacts constant). c.f. a full basin increase of just 25%. J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 23 / 25

24 Hydroeconomic modeling easily provides single factor productivity Basin wide measures will be very different from local / regional productivity measures Consumptive use versus withdrawals matters: productivity will differ changes in productivity will differ J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 24 / 25

25 Towards TFP measures from hydroeconomic modeling Are there conceptual issues preventing comparison of TFP between scenarios? (e.g. treatment of scarcity costs as an input?) What are the practical challenges? What interpretations add value to our understanding of Hydroeconomic modeling estimates Traditional TFP estimates abstracting from hydrologic and geographic details J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 25 / 25

26 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 26 / 25

27 J. Booker, Siena College Going Beyond Agricultural Water Productivity, World Bank Workshop, 8 Dec., 2014 page 27 / 25