“Assessing Costs and Benefits of Adaptation: Methods and Data”First Regional Training Workshop – Capacity Building Programme on the Economics of Adaptation

Bangkok, Thailand

11 Mar - 14 Mar 2013

Brian H. Hurd, PhD, ProfessorDept. of Agricultural Economics & Agricultural BusinessNew Mexico State University bhurd @ nmsu.edu http://agecon.nmsu.edu/bhurd

• Case #1: Colorado River• Case #2: Rio Grande

Model Basics

Develop a schematic diagram of the watershed systemDescribes physical structure (tributaries, inflows,

and reservoirsIdentifies and locates watershed services Show diversion points and instream uses

Derive estimates for the model’s objective functionDevelop demand and supply curves for each

service based on water diversion or instream flowDescribe model constraints

Mass balance (upstream to downstream flow)Intertemporal storage in reservoirsInstitutional flow restrictions

Outcomes: Colorado River WatershedProjected

hydrologic and runoff changes

Estimated changes in runoff and allocation in the Lower Colorado watershed

Economic impacts across the watershed

Runoff Agriculture M&I

0%

20%

40%

-20%

-40%

-60%

Pe

rce

nta

ge

Ch

an

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fro

mB

as

elin

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lima

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[+1.5C +15%P]

[+2.5C +7%P]

[+5.0C]

RunoffTotal

AgricultureHydropower

Salinity Damage

0%

50%

100%

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-150%

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lima

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[+1.5C +15%P]

[+2.5C +7%P]

[+5.0C]

Effect of Climate Change on Agricultural Welfare

Colorado Missouri Delaware A-F-C

Modeled Basins

0%

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[+1.5C +15%P]

[+2.5C +7%P]

[+5.0C]

Effect of Climate Change on Value of Hydropower Production

Colorado Missouri Delaware A-F-C

Modeled Basins

0%

20%

40%

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-40%

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lim

ate

[+1.5C +15%P]

[+2.5C +7%P]

[+5.0C]

Effect of Climate Change on Total Welfare

Colorado Missouri Delaware A-F-C

Modeled Basins

0%

5%

-5%

-10%

-15%

-20%

-25%

Pe

rce

nta

ge

Ch

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mB

as

elin

e C

lima

te

[+1.5C +15%P]

[+2.5C +7%P]

[+5.0C]

Objectives:(1) Estimate the impacts of climate change on agricultural diversity of the Upper Rio Grande basin and

(2) Estimate the system’s adaptability to climatic changes through a hydro-economic framework.

Source: Enrigue Vivoni, AZ State Univ.

Agricultural Irrigation BenefitsMiddle Rio Grande Conservancy District Agriculture

Avg. Irrigated Acres (1000s) = 45

-5000

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0 50 100 150 200 250 300 350 400

Water Use (kaf/yr)

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$ Water Use (af/yr)

Middle Rio Grande Conservancy District AgricultureValue Per Acre

Total Benefit

Marginal Benefit (Demand)

Consumptive irrigation requirements rise with increased temperatures

Agricultural water demands are increased

Urban Water BenefitsCity of Albuquerque M&I

Households (1000s) = 107

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50000

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Water Use (kaf/yr)

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0 0.2 0.4 0.6 0.8

$ Water Use (af/yr)

City of Albuquerque M&IValue Per Household

Total Benefit

Marginal Benefit (Demand)

Urban water demands are most directly affected by population changes

Income increases are assumed to have little direct effect on water demand because increased demand for water services is offset by increased water-use efficiency

Reservoir Recreation BenefitsElephant Butte Reservoir

Max. Cap. = 2065 kaf

-1000

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Reservior Storage (kaf/yr)

Climate Scenarios Selected General

Circulation Models (GCMs):

HadCM3 from Hadley Center for Climate Prediction and Research in UK Met Office

CSIRO MK3.0 from Common Wealth Scientific and Industrial Research Organization of Australia

GFDL0 from National Oceanic and Atmospheric Administration’s (NOAA) Geophysical Fluid Dynamics Laboratory

All under A1B emissions storyline

Population Growth Scenarios

Population growth increases water demand Isolate climate change

Hydrologic Modeling Status and Results Distribution of Annual Streamflow

Rio Grande Streamflow Cumulative Probability

0

0.1

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0.9

1

30 80 130 180 230 280 330 380

Total Annual Basin Inflow (kaf)

Pro

ba

bili

ty

Base 2030-Dry 2030-Mid 2030-Wet 2080-Dry 2080-Mid 2080-Wet

Streamflow Changes Streamflows were produced using WATBAL hydrologic model

Conceptual rainfall-runoff model that works with the changes of temperature and precipitation and easy to use model to assess climate change impacts on river basins (Yates, 1996).

Climate Change and Crop Irrigation Productivity

Shifted production function to the right due to higher Consumptive Irrigation Requirement (CIR)

Results

Changes in water allocation:

Crop Mix For San Luis Valley

Crop Mix For MRGCD

Crop Mix for EBID and EPAG

Crop Water Consumption Level

Crop Water Consumption Level

Crop Water Consumption Level

Economic Impacts

Marginal Value of Water

Conclusions

Agriculture can lose big share of its water consumption losing almost a third under 2080 GFDL0 (driest scenario).

At the same time the economic impacts of climate change on the whole economy can sum up to $175 million (12.6% of the total net benefits).

Recreational sector loses 67% (highest percentage-wise) and agricultural sector loses $160 million (highest dollar-wise) under 2080 GFDL0.

In 2030’s small grain hay and corn silage are loser crops losing more than 60% and 50% of their production under 2030 GFDL0, while pecans are the winners.

In 2080’s potato joins the group of loser crops losing 50% of their total production while crops like pecans, green chile and onions are the winner crops losing less than 15% of their production.

Merci’ Beaucoup!GrazieThank YouGracias

Brian H. Hurd, PhDDepartment of Agricultural Economics & Agricultural BusinessGerald Thomas Hall Rm. 350New Mexico State UniversityTel : (575) 646-2674Email: bhurd@nmsu.eduWeb: http://agecon.nmsu.edu/bhurd