Academic journal article Journal of Agricultural and Applied Economics

Optimal Spatial-Dynamic Management of Groundwater Conservation and Surface Water Quality with On-Farm Reservoirs

Academic journal article Journal of Agricultural and Applied Economics

Optimal Spatial-Dynamic Management of Groundwater Conservation and Surface Water Quality with On-Farm Reservoirs

Article excerpt

We examine how much on-farm reservoirs can increase groundwater quantity and improve surface water quality using a spatial-dynamic model of farm profit maximization in the Arkansas Delta. Sensitivity analysis of the farm profit objective by including the value of surface water quality and the groundwater buffer value evaluates how accounting for environmental value affects the optimal crop mix, water use, and farm profits. The best policy for a critical water resource area is to have the government cost share construction of on-farm reservoirs because groundwater conservation and surface water quality goals are achieved efficiently for a modest redistribution of income.

Key Words: groundwater, on-farm reservoirs, spatial-dynamic optimization, water quality

JEL Classifications: Q15, Q24, Q25, Q28

(ProQuest: ... denotes formulae omitted.)

Existing economic studies related to groundwater management and water quality focus on how salinity affects the production of crops (Knapp and Baerenklau, 2006; Roseta-Palma, 2002). A broader societal concern is how the contamination of surface water lowers the value of water to recreationists, industries, and municipalities. The social value of water depends as much on the quantity available for farming as the quality for the public, and both aspects should be considered simultaneously for adequate management. Another reason for joint management is that groundwater pumping and the amount of water applied to the surface depend on the types of crops grown, and this governs the contaminated runoff that reaches water bodies.

One way to increase groundwater quantity and improve surface water quality while maximizing farm profits is to use on-farm reservoirs with tail-water recovery that capture runoff leaving the field to provide irrigation later in the season and reduce pollutants that leave the farm by trapping the nutrients in the tail-water (Wailes et ah, 2004). We develop a spatial-dynamic model of an agricultural landscape with on-farm reservoir to examine the tradeoffs of farm profitability, surface water quality, and groundwater conservation. Scenarios of the model that include the value of surface water quality (e.g., recreation and drinking water value) and buffer value of groundwater (i.e., the value groundwater has to buffer against surface water shortages) along with farm profits in the objective can help a planner determine how stringent policies for conservation should be. Policies to reduce groundwater withdrawals (i.e., cost-share on reservoir construction, subsidy of reservoir water use, and tax on groundwater use) and lower nonpoint agricultural pollution (i.e., total maximum loads and taxes on pollutant loadings) in combination with on-farm reservoirs are compared for their ability to achieve both conservation goals.

The application of the model is the farming region of the Arkansas Delta, which had more than four million acres of irrigated cropland in 2007, principally based on groundwater pump- ing that has significantly depleted the Mississippi River Valley Alluvial Aquifer (Schaible and Aillery, 2012). The current rate of pumping in this aquifer is unsustainable if not curtailed or if no recharge mechanism for the groundwater is created (Arkansas National Resources Com- mission [ANRC], 2012a). Tail-water recovery is one of the suggested ways to manage overdraft of water from this aquifer (Czamecki, Hayes, and McKee, 2002). Spatial variation is incor- porated into the model for the saturated thick- ness of the aquifer, groundwater flow in the aquifer, the contaminated surface water flow downstream, the yield of crops, and the costs of groundwater pumping. Spatial groundwater flow occurs between sites in response to the distance from cones of depression formed by the well pumping. Brozovic, Sunding, and Zilberman (2010) show the underground flow of groundwater from pumping influences the optimal groundwater management. The water quality model determines pollutant loading by calculating the contaminated water leaving each site and routing this downstream where some of the pollutant may be filtered or additional pollutant added. …

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