PUB00041

• Year: 1998
• Title: Western Irrigation Economic Benfits Review
• CWCB Section: Finance
• Author: Family Farm Alliance
• Description: White paper on the role of irrigated agriculture in the 21st century.
• Publications - Doc Type: Tech Report

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The irngaOon subSIdIes have fostered OJ mISallocation of
water resources affectlng tne development of ottter
economtC sectors and the protection of enVIronmental
resources

The federal money sp-ent on past irngation proJec~ ,$ a
sunk cost the prOjects largely represer.t an Irrevocable
comm,tment of financial resources The economiC
question now;5 the marginal benefit of .va~er tral'1sfers
betvveen sectors From an economic perspectrve. water
for IrrigatJon should not be transferred 10 environmental
resources If the resulting economic value is not
equIValent to irngabon benefits

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Observations and Comments

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The existing federal irrigation projects largely consist of sunk expenditures by the federal government. and such
prOjects hold sImilar types of subsides common to other transportation. energy, recreatIOn, and Infrastructure
developments From an economic perspectIVe. the project policies and repayment actIOns are sunk costs the
deCISIOns to build and sel finanCial structures for the facillttes have already been and the water resources committed
10 a specific economic use. thai also involves privately generated capital

The real ISsue IS how water reallocatIOn could affect marginal economIC benefits and trade-offs. lhat IS. Changes 10
direct net social welfare (economic value). Actions 10 reallocate water away from irrigation can have substanhal
negative economic trade-ofts, producing few economIC or enVlfonmental beneflts From a prudent resource
management perspectIVe, these trade-offs need to be carefully assessed pnor to makIng water reallocation deciSions.

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Principal Sources

Christensen. K. and Hutchinson 1997 A Closer look at Western Irrigation Subsidies. A Response to the 1996 GAQ
Report. Unpublished manuscnpt February 26, 1998

Gardner. B. Delworth. 1997 Some Implicatlonsof Federal GrazIng, Timber.lrngation, and RecreatIOn Suosidles
CHOICES 3.97.

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Peacock. Deborah. 1985 Bureau of ReclamatIOn IrngatlOn Subsidies: Legislative History and Congressional
Knowledge Law Seminar Report. Waler Law and Policy. Washington State University, 1985

Heanng before the Committee on Agnculture, House of Representatives 101st Congress. on the IrngatlOn SubSidies
Reform Act of 1989. March 19. 1990. USGPO publication 33-831. 1991

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Northwestern School of Law. LeWIS and Clark College. Northwest Water Law and POlicy ProJect. Water Policy and
Sustalnabillty in the ColumbIa RIVer BaSin, 1995 Water Policy Conference Proceedings. May 19.1995 Portland.
Oregon.

VillareJo. Donald 1986. Federal Water Subsidies and Agriculture in California's Central Valley. California Institute for
Rural Studies University of California Davis, California

Losos. Elizabeth, et al.. 1993. Taxpayers' Double Burden. Federal Resource Subsidies and Endangered Species.
The Wilderness SoclE!tyfEnvironmental Defense Fund. Washington. D.C

GAO Report. 1996 Bureau of Reclamation' Information on Allocation and Repayment of Costs of Constructing Water
Projects GAOfRCED-96-109. Washington. D C

Wahl. Richard 1989 Markets for Federal Water. Subsidies. Property RlQhlS. and the Bureau of Reclamation.
Washington, DC Resources for the Fulure

PacrflC Northwest Project. KennewlCk, WA. 1998

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