Extending the Economic Life of the Ogallala Aquifer with Water Conservation Policies in the Texas Panhandle

Abstract

The continued decline in the availability of water from the Ogallala Aquifer in the Texas Panhandle has led to an increased interest in conservation policies designed to extend the life of the aquifer and sustain rural economies. Four counties were chosen for evaluation. This study evaluates the effectiveness of five policies in terms of changes in the saturated thickness, crop mix, water use per acre, and the net present value of farm profits over a 60-year planning horizon. The dynamic optimization models were developed using GAMS for the baseline as well as one for all five of the policy alternatives for each county. Results indicate that the policy scenarios of biotechnology adoption and a water use restriction will conserve the most water among the policies analyzed. In terms of economic returns, the biotechnology adoption policy by far provides the greatest benefit to producers due to yield increases that are estimated with current annual growth rates in new seed varieties. The water use restriction policy, on the other hand, has the lowest net present value of returns, indicating that conservation is accompanied with significant costs to producers. The irrigation adoption technology scenario is the next best policy in terms of net present value of returns (following biotechnology); however, it ranks last in terms of reducing aquifer depletion. It is important to note that while the models do not perfectly predict the factors being evaluated, it is the basis for comparison between the policy scenarios which are important. These comparisons will aid policy makers in determining the most effective strategy to conserve water while simultaneously considering the economic costs to producers. In addition, the results of this study can be applied to other areas facing similar conditions, either currently or in the future, throughout the Texas Panhandle.