Economic and Conservation Tradeoffs of Regulatory vs. Incentive-based Water Policy in the Pacific Northwest

In this paper, onfarm water conservation and agricultural economic tradeoffs between selected regulatory and conservation-incentive water-policy choices are evaluated for the Pacific Northwest. Five broad water-policy perspectives are analysed using a total of 37 alternative policy scenarios. Policy analyses use a primal/dual-based, multi-product, normalized restricted-equilibrium model of Pacific Northwest field-crop agriculture. Results demonstrate that conservation-incentive water policy, when integrated within balanced policy reform, can produce upwards of 1.7 million acre-feet of onfarm conserved water for the region, while also significantly increasing economic returns to farmers. Producer willingness to accept water-policy change is lowest for regulatory policy (US$4-$18 per acre-foot of conserved water), but highest for conservation-incentive policy that increases both irrigation efficiency and crop productivity ($67-$208 per acre-foot of conserved water). Conservation-incentive water policy also enhances decision-maker flexibility in meeting multiple regional policy goals (i.e. water for endangered aquatic species, water quality, Native American treaty obligations, and sustainable rural agricultural economies).