Alternatives for Managing Drought: A Comparative Cost Analysis

Keywords

drought management, conjunctive water use, water marketing

Abstract

The question addressed by this study is how a large urban water district can best respond to a drought. Using a computer model of a representative district, we find that a combination of conjunctive use and water marketing is well over an order of magnitude cheaper than the traditional alternative of constructing new storage capacity. The indicated cost saving can be explained by the intermittent nature of the transfer, corresponding to the intermittent demand. Comparing costs to benefits, the consumer-surplus loss otherwise entailed by raising prices to cut back on consumption in the event of a drought, we find that construction of new storage does not pass a benefit/cost test, but introduction of conjunctive use/water marketing does.

Original Publication Citation

Fisher, Anthony, David Fullerton, Nile Hatch, and Peter Reinelt, “Alternatives for Managing Drought: A Comparative Cost Analysis,” Journal of Environmental Economics and Management, vol. 29, pp. 304-20, November 1995.

Document Type

Peer-Reviewed Article

Publication Date

1995

Publisher

Journal of Environmental Economics and Management

Language

English

College

Marriott School of Business

Department

Marketing

University Standing at Time of Publication

Associate Professor

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