More Reservoirs or Transfers? A Computable General Equilibrium Analysis of Projected Water Shortages in the Arkansas River Basin

• Main Author: D. Jay Goodman
• Format: Article
• Language: English
• Published: Western Agricultural Economics Association 2000-12-01
• Series: Journal of Agricultural and Resource Economics
• Subjects: arkansas river basin; computable general equilibrium; drought leasing; economic analysis; temporary water transfers; water shortages
• Online Access: https://ageconsearch.umn.edu/record/30903

A computable general equilibrium model of the southeastern Colorado economy is used to compare the economic impacts of a proposed increase in reservoir storage to an alternative: temporary water transfers. While both provide municipalities with reliable water supply during droughts and are shown to benefit both rural and urban communities, temporary transfers are accomplished at a much lower economic and environmental cost. This analysis illustrates how computable general equilibrium models provide a more realistic portrayal of the impact of policy changes than input-output analysis by allowing substitution in response to economic conditions.