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How Much Is That Water In The Window? - Valuing The Unused Water Resource

Congress: 2015
Author(s): Keith Weatherhead, Catarina Henriques
Cranfield University1

Keyword(s): Sub-theme 9: Water allocation among competing uses and users,
AbstractHow much is that water in the window? - valuing the unused water resource

Introduction
Many researchers have investigated the costs and benefits of using water. Fewer have investigated the value of the water resource that has not yet been used. This knowledge can be critical in making short-term operational decisions on whether, when and how to use the limited and valuable resource, and whether or not to trade water. A farmer, for example, has to decide each week whether to irrigate. If ample water is available, he/she can compare the yield and crop quality benefits of each application to the costs of applying the water, and see if the irrigation is worthwhile. Under water shortage constraints however, for example when using water from a reservoir or from an abstraction licence with a fixed maximum volume, the farmer must also consider the risk and cost of running out of water later in the season. Should he/she irrigate a low value crop now or save the water in case it is needed by a higher value crop later? Without reliable weather forecasts, and for a farm with multiple crops, soil types and water sources, the decision can become highly complex, particularly if the farmer also has the option of trading water with others. Similar issues arise with all water uses where the future demands are weather dependent. A simple method of valuing the remaining (unused) water in farm reservoirs, originally developed to help simulate farmer behaviour within an agent--based water allocation and trading model, is described here.

Methods/Materials
A probabilistic approach was developed which values the remaining resource by considering weather probabilities over the rest of the season. Weekly irrigation need is assessed by modelling 40 years of daily weather data, producing probability functions of the future need at each point in the season. The value of the water on each crop is assessed from farm data and/or crop modelling. For any given level of remaining resource, the total likely benefit (£) and hence marginal value (£/m3) of that water can then be assessed. The farmer can then compare its marginal value as unused water against the benefits of using it immediately for irrigation and/or trading the water.

Results and Discussion
The results highlight how the value of the unused water changes through the season. The larger the remaining resource, the lower the marginal value of the remaining water, since it is less likely to all be needed. Then, for any given remaining volume, the marginal value drops as the season progresses. However if the water is being used up too fast, the value will start rising again. By the end of the irrigation season, any remaining water has no value at all (other than saving the cost of refilling the reservoir in the winter). In wet years the value drops quickly, while in dry years it tends to rise. The rise and fall of marginal value over the weeks depends on the initial reservoir size and the crops grown, as well as the weather that year. Hence one farmer may have a low or declining value while a neighbour has a high or increasing value. The values obtained can then be used by the farmer to re-allocate water between crops and between immediate and later use, and for evaluating any options to buy or sell water to others.

Conclusion
The simple model developed provides a probabilistic indication of the value of the water still remaining in the reservoir. The methodology can also be applied to an abstraction licensed with a limited annual abstraction volume, though the risks of supply failure, such as a hands-off flow constraint, then also have to be considered. Within irrigation, the modelling has highlighted a number of issues and uncertainties, for example around water values for individual applications on partially irrigated crops, crops where full irrigation is essential (e.g. salads), constraints introduced by crop production contracts and farmers' attitudes to risk. The approach can also be applied to other water uses where the future demand is weather dependent.

Feedback on the methodology developed, and suggestions of how to extend the model to include other options, will be welcomed.

Acknowledgements
The authors gratefully acknowledge funding from the Engineering and Physical Science Research Council (EPSRC) as part of the Transforming Water Scarcity Through Trading (TWSTT)) project EP/J005274/1.

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