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<br />APPENDIX A: FORECASTING MODELS AND METHODOLOGY USED IN THE HIGH PLAINS STUDY <br /> <br />THE PROBLEM <br /> <br />To provide a comprehensive analysis of different policy choices for the <br />High Plains Region over a forty-year period, the Study required an approach <br />which would accommodate inevitable change in a wide range of variables during <br />this period, yet provide an objective estimate of different water management <br />strategies. Because of the pervasive influence of agriculture in the Region <br />and because of the interrelation between water supply and agricultural pro- <br />duction, the analytic approach selected must simulate the decisions which a <br />farmer will make with regard to different conditions of water supply. The <br />water use decisions must be accounted for in estimates of the remaining <br />supply of .water in the Aquifer. <br /> <br />Crop production resulting from these decisions at the farm level has a <br />ripple effect in many sectors of the regional economy which use farm products <br />or provide farm inputs. At the same time, the regional economy is driven by <br />a variety of factors outside agriculture, notably the production of energy <br />resources, so regional estimates of economic growth must be based on the full <br />range of economic activities, not just those dependent on agriculture. The <br />study required a method to aggregate the results of these diverse regional <br />economic forces. <br /> <br />Because High Plains agriculture is a significant portion of national <br />production in the major field crops, it was necessary to estimate the <br />national effects of the different levels of production resulting from dif- <br />ferent water management strategies. A method for predicting changes in <br />national crop prices, consumer food prices, and available export surplus was <br />required. <br /> <br />More important than the absolute amounts of regional production, <br />regional economic activity, or national prices, were the differences in these <br />values between strategies. The analysis is basically an impact analysis, <br />measuring the change in certain key variables in order to evaluate different <br /> <br />A-I <br />