# Water Resource Economics Cost Effectiveness & Cost Benefit Analysis

### Description

Find a least cost plan to bring water storage levels at Elephant Butte Reservoir back up to 300,000 acre‐feet by the end of 2021. The Butte’s contents were 182,400 acre‐feet on March 1, 2021. With no change in historical release policy, forecast contents are 250,000 acre‐feet by the end of 2021. Consider three policy alternatives for bringing the Butte back:

1. (proportional sharing of shortages) Reducing releases from the Butte by 50,000 acre feet for irrigated agriculture compared to the current plan with a proportional sharing of shortages will increase levels of the Butte to 300,000 acre feet by the end of 2021. However, proportional sharing of shortages takes water out of high valued crops as well as low valued crops. That plan will cost local farmers an average net income loss of \$160 per acre‐foot.

2. (trading water for dollars) Reducing releases to irrigated agriculture by 50,000 acre feet compared to the current plan with market trading allowed will also increase levels of the Butte to 300,000 acre feet. Trading water for dollars will move water out of low valued crops (cattle forage) into higher values ones like pecans. That plan will cost farmers a net income of \$60 per acre foot, since only low income farming incomes will be lost.

3. (reduced releases for urban use) Reducing reservoir supplies to urban water users in El Paso (EP) will also increase levels of the Butte by 50,000 acre feet by year’s end. It will cost urban water users an amount equal to \$320 per acre‐foot lost to EP, since EP will have to find another more expensive source of water.

Use a cost effectiveness analysis to calculate which of these three measures you would use to minimize the cost of bringing back the Butte to 300,000 acre feet by the end of 2021. Be sure to show your calculated cost of each of the three plans and explain your logic, calculations, and policy implications.

For data, see http://waterdatafortexas.org/reservoirs/individual…

For information on a 2015 water banking conference in Las Cruces, see