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11
Economic Consequences of Climate Variability on Water in the West

Kenneth D. Frederick

Resources for the Future

Washington, D.C.

The economic impacts of hydrologic extremes and variability on specific regions depend on the nature of the economy, the slack in the existing water-supply system, and society's ability to anticipate and adapt to hydrologic change. Demand management and water marketing are potentially important tools for responding to drought and long-term reductions in supply.

A case study of the Missouri River basin illustrates the possible impacts of a general warming on the availability of water within one of the West's principal river basins and indicates how management changes and a reallocation of supplies would help the region adapt to a sizable reduction in streamflow.

Hydrologic extremes have long posed risks to settlements in the western United States. A 5-year drought in the twelfth century may have caused the prehistoric Anasazi people to abandon the Colorado plateau (Kneese and Bonem, 1986). Twice within the last century prolonged drought forced tens of thousands of desperate families to flee the semiarid plains in search of more promising economic opportunities. And currently, a multiyear drought extending from southern California to the Missouri River basin is exacting a toll on a variety of water users.

The temporary transformation of the Trinity River in Texas from a small river to a mile-wide flood in the spring of 1990 provided a recent reminder of what can happen when too much water arrives within too short a time. Even though California has about six million acre-feet of flood control storage and 6,000 miles of levees, floods may pose a bigger problem to the state than earthquakes (Hartshorn, 1986). Floods have consistently been the nation's most deadly atmospheric hazard in recent decades; they



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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona 11 Economic Consequences of Climate Variability on Water in the West Kenneth D. Frederick Resources for the Future Washington, D.C. The economic impacts of hydrologic extremes and variability on specific regions depend on the nature of the economy, the slack in the existing water-supply system, and society's ability to anticipate and adapt to hydrologic change. Demand management and water marketing are potentially important tools for responding to drought and long-term reductions in supply. A case study of the Missouri River basin illustrates the possible impacts of a general warming on the availability of water within one of the West's principal river basins and indicates how management changes and a reallocation of supplies would help the region adapt to a sizable reduction in streamflow. Hydrologic extremes have long posed risks to settlements in the western United States. A 5-year drought in the twelfth century may have caused the prehistoric Anasazi people to abandon the Colorado plateau (Kneese and Bonem, 1986). Twice within the last century prolonged drought forced tens of thousands of desperate families to flee the semiarid plains in search of more promising economic opportunities. And currently, a multiyear drought extending from southern California to the Missouri River basin is exacting a toll on a variety of water users. The temporary transformation of the Trinity River in Texas from a small river to a mile-wide flood in the spring of 1990 provided a recent reminder of what can happen when too much water arrives within too short a time. Even though California has about six million acre-feet of flood control storage and 6,000 miles of levees, floods may pose a bigger problem to the state than earthquakes (Hartshorn, 1986). Floods have consistently been the nation's most deadly atmospheric hazard in recent decades; they

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona accounted for 61 percent of all presidential disaster declarations in the decade starting in April 1974 (Riebsame et al., 1986). CHANGES IN VULNERABILITY TO HYDROLOGIC VARIABILITY Factors Tending to Reduce Vulnerability The susceptibility of the West's economy to hydrologic extremes has changed over time. A decline in the economy's dependence on water and an increase in the control over supplies have tended to make the West less sensitive to changes in water supplies. Water's influence on economic development generally weakened during the last century. Development of steam engines, internal combustion motors, and electricity generation and transmission reduced the significance of on-site water power. Expansion of railroads, highways, and air transport diminished the importance of water-based transport. Water intensive industries such as irrigated agriculture declined in relative importance, and industries in general learned to prosper with less water (National Water Commission, 1973). The tremendous expansion of the infrastructure to store and transport water and to tap ground water supplies also has tended to reduce the susceptibility of the nation's economy to climate variability. More than 63,000 dams with 869 million acre-feet of storage are included in the 1982 inventory of the nation's dams. More than three-fourths of these dams and two-thirds of the storage were completed since 1945 (U.S. Army Corps of Engineers, 1982).1 About 47 percent of these dams and 55 percent of the storage are in the 17 western states, giving the region considerable capacity to prevent floods and to supply water during drought. Ground water also provides an important buffer against fluctuations in surface supplies in many areas of the West. Ground water use was essentially limited to areas with low pumping depths or artesian pressure until technological advances in the 1930s made it feasible to pump water from much greater depths. Water stored within deeper aquifers is less susceptible to climate variations, but the economies of some areas have become dependent on the use of nonrenewable ground water supplies. Factors Tending to Increase Vulnerability Countering these changes are several trends tending to make the

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona West more susceptible to hydrologic fluctuations. At least two factors are increasing the costs associated with drought. First, demands on the resource have increased, making water more valuable and the competition for supplies during drought more intense. Nationally, offstream water use rose from about 40 billion gallons per day (bgd) in 1900, to 180 bgd in 1950, to 440 bgd in 1980 (Picton, 1960; Solley, Merk, and Pierce, 1988). Although natural supplies are much more sparse in the West, nearly half of the nation's fresh water withdrawals are now in the 17 western states. Second, the rate of construction of reservoirs to assure water supplies has decreased since 1970 and is likely to continue declining. A basic principle of reservoir planning is that the risk of deficiency increases if the storage period (that is, available reservoir storage divided by average daily withdrawals) is not increased as withdrawals increase. The storage period rose from 204 days in 1960 to 216 days in 1970, and it had increased for at least six consecutive decades prior to 1970. By 1980, however, it had fallen to 201 days (USGS, 1984). Moreover, unless withdrawals continue to decline as they did from 1980 to 1985, the storage period is likely to continue to fall for two reasons: (1) the high economic and environmental costs of developing new supplies with additional storage, and (2) the adverse impacts of sedimentation on existing storage. The costs of water supply projects have increased sharply in recent decades, and continued increases are inevitable for three reasons: (1) the best reservoir sites have already been developed; (2) as storage capacity on a stream increases, the quantity of water that can be supplied with a high degree of probability grows only at a diminishing rate; and (3) the opportunity costs of storing and diverting water rise as society places higher values on instream flows. While the data on sedimentation rates for most dams are poor or nonexistent, one estimate suggests annual sediment losses total about 1.4 to 1.5 million acre-feet (Guldin, 1989). Over a decade, this loss is equivalent to about two percent of the nation's aggregate reservoir storage. Actual flood damages also have been rising over time. Increased development and rising real property values in the flood plains together with upstream developments that increase runoff rates and flood peak frequencies have resulted in greater flood losses despite a growing capacity to regulate intertemporal flows. In the absence of better preventive measures, flood losses are likely to continue rising because urban expansion within the flood plains is increasing at 2 percent per year (Schilling, 1987).

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona Uncertainties of Climate Change Past trends may provide a poor guide to the economic implications of future climate variability in a world undergoing anthropogenically induced climate change. As other papers presented at this colloquium indicate, a greenhouse warming would accelerate the global hydrologic cycle and significantly increase the uncertainty as to the water supplies of specific regions. Regional impacts are likely to include changes in precipitation and runoff patterns, evapotranspiration rates, and the frequency and intensity of storms. Even the direction of precipitation and runoff changes are uncertain. Higher temperatures, however, are likely to have particularly large and adverse impacts on annual runoff in arid areas where changes in precipitation and evaporation have amplified effects on runoff. Seasonal streamflow patterns would also be affected, especially in areas where precipitation currently comes largely in the form of winter snowfall and runoff comes largely from spring and summer snowmelt. These conditions characterize much of the West. ECONOMIC SENSITIVITY Existing water use patterns, infrastructure, and management practices reflect past climate and water availability. The economic consequences of adjusting to any given climate change would depend on the nature of the economy and its dependence on water supplies, the slack in the supply system, and society's ability to anticipate and adapt to hydrologic change. Effective adaptation to drought involves curbing excessive and low-value uses through demand management and transferring scarce supplies to uses for which the losses from inadequate supplies would be greatest. Nature of the Economy Agriculture is one of the most sensitive of human activities to climate conditions and variability. Dryland farming is highly dependent on the timely availability of water. Too much water can make it difficult to plant in the spring or to harvest in the fall. And too little water can reduce or even eliminate yields. Irrigation reduces susceptibility to variations in rainfall unless irrigators depend on fully allocated surface water and must share in any

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona shortfalls. Ground water supplies are less susceptible to drought than surface water, although nonrenewable irrigation supplies might be mined faster under a hotter and drier climate. Agriculture is certainly not the only sector to be affected by drought. A major drought is likely to affect adversely all instream and offstream water users. The impact on particular sectors would depend in part on the institutional arrangements for allocating scarce supplies. Historically, western water law strongly favored offstream users at the expense of instream users. Thus, reservoir and streamflow levels were drawn down to the detriment of recreation, fish and wildlife, and hydropower. The balance has shifted somewhat in recent years as a result of state and federal legislation and judicial decisions protecting environmental interests such as wild and scenic rivers, unique ecological environments such as Mono Lake, and endangered species. Drought may also adversely impact the forests and the economic interests dependent upon them by increasing the risks of fire, disease, and pest damage. The overall losses associated with the 1976-1977 drought in California have been estimated at $2,663 million. Agriculture, with losses estimated at $1,475 million over the two years, accounted for more than half of the total; livestock accounted for more than half of these agricultural losses. Energy costs increased by more than $450 million as a result of the drought. And timber interests lost $280 million to fire and $390 million to insect damage (Association of California Water Agencies, 1989). It is too early to know the extent of the economic impacts of the drought that started in 1987 and is now well into its fourth year in California. Slack in the System A region's vulnerability to climate variability depends in part on the amount of slack between water supplies and demand and the robustness and resilience of the supply system. When supplies are stretched to meet demand under normal hydrologic conditions, even a mild drought requires adjustments in water use. Water resource systems traditionally have been designed to be robust (able to respond to the range of uncertainties associated with future variability) and resilient (able to operate under a range of conditions and to return to designed performance levels quickly in the event of failure). The recent decline in the storage period noted above suggests a decline in the overall robustness of the nation's water supplies. And the rising costs of and prevailing skepticism

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona toward new water projects suggests that the tradition of building large redundancy into water supply and control projects may be a thing of the past. Moreover, the existing systems were designed and are operated assuming future levels and patterns of precipitation and runoff will be similar to those experienced in the past. The prospect of long-term climate change poses new risks and challenges for managing these systems and raises questions about their vulnerability to climate change. Gleick (1990) uses five indicators of a region's vulnerability to climate change. These include the ratios of storage capacity and consumptive use to renewable supplies, measures of a region's dependence on hydroelectricity and ground water overdrafts, and a measure of streamflow variability. The critical values that Gleick designates as indicating vulnerability as well as the values of the indicators for the nine principal water resource basins in the western United States are presented in Table 11.1. All nine basins are vulnerable on at least two of the five indicators. The Great Basin exceeds the critical limits on all five criteria and California and the Missouri River basin are vulnerable on four counts. The Missouri, for example, appears to have plentiful storage (equivalent to 112 percent of its mean annual renewable supply). But a relatively high ratio of consumptive use to renewable supplies, a high degree of reliance on hydroelectric power, high rates of ground water overdraft, and high streamflow variability all suggest the region is vulnerable to the hydrologic uncertainties associated with climate change. Improved Management2 Seeking ways to improve management of the existing infrastructure is always prudent; management improvements assume greater importance in view of the vulnerability of water resource systems, the limitations on structural responses, and the prospect of climate change. The economic impacts of future hydrologic change are likely to depend even more than in the past on the ability to anticipate and adapt to these changes. Joint management of water supply systems that are currently managed independently with separate operating rules and objectives may make it possible to improve significantly the supply capabilities of each system. Integration of the three principal water supply agencies in the Washington, D.C. area illustrates the potential advantages of joint operation of facilities. The combined

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.1 Indicators of Vulnerability to Climatic Conditions. Measure of: Water Resource Region Storage1 Demand2 Hydro3 Overdraft4 Variability5 Missouri 1.12 .29 .25 .25 4.22 Arkansas-White-Red 0.45 .17 .10 .62 5.59 Texas-Gulf 0.61 0.23 0.01 0.77 9.90 Rio Grande 1.89 0.64 0.09 0.28 22.00 Upper Colorado 2.61 0.33 0.04 0.00 4.00 Lower Colorado 4.22 0.96 0.27 0.48 1.42 Great Basin 0.35 0.49 0.25 0.42 3.92 Pacific Northwest 0.19 0.04 0.93 0.08 1.92 California 0.42 0.29 0.30 0.12 4.48 Critical values 0.6 0.2 0.25 0.25 3 1 Measure of storage. Ratio of maximum basin storage volume to total basin annual mean renewable supply as of 1985. Regions with values below 0.6 have small relative reservoir storage volumes. Large reservoir storage volumes provide protection from floods and act as a buffer against shortages. 2 Measure of demand. Ratio of basin consumptive depletions (including consumptive use, water transfers, evaporation, and ground water overdraft) to total basin annual mean renewable supply as of 1985. Water is considered a decisive factor for economic development in regions with values above 0.20. 3 Measure of dependence on hydroelectricity. Ratio of electricity supplied by hydroelectric facilities to total basin electricity production as of 1975. Regions with values 0.25 or above have a high dependence on hydroelectricity. 4 Measure of groundwater vulnerability. Ratio of annual ground water overdraft to total ground water withdrawals as of 1975. Regions with values of 0.25 or above already have ground water supply problems. 5 Measure of streamflow variability. Ratio of 5 percent exceedance flow to 95 percent exceedance flow. Values of 3 or above suggest high streamflow variability. SOURCE: Gleick, 1990. drought condition water yield of the three systems was increased more than 30 percent at a cost saving of between $200 million to $1 billion compared to the proposed structural alternatives. Although the specific circumstances in this case are unique, Sheer's

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona (1986) studies suggest major benefits from improved management are also possible in areas with very different characteristics. The obstacles to integrated management are largely institutional. Separate ownership of water supply systems, multistate jurisdictions, and state laws and administrative practices all hinder reform. Officials in the principal federal water construction agencies have at least begun to talk about the need for change. The Bureau of Reclamation's Assessment 1987 (DOI, 1987) concludes that ''the Bureau's mission must change from one based on federally supported construction to one based on effective and environmentally sensitive resource management.'' A recent paper by three senior members of the U.S. Army Institute for Water Resources advocates greater emphasis on management measures to meet the problems caused by extreme events and the uncertainties stemming from the prospect of climate change (Hanchey et al., 1987). Demand Management Traditionally, water planners adopted a supply-side approach to provide for growing water demands. Offstream water use was projected to grow approximately in step with population and economic growth. These projections were treated as virtual requirements to be supplied with little regard for cost. This approach may have approximated an efficient strategy when the costs of supplies were low and streamflows were sufficient to meet all demands. When large quantities of water can be developed at relatively low cost and when withdrawing water from a stream does not significantly alter its availability for other users, it may be reasonable to assume that the benefits of a water-supply project exceed its costs. These conditions, however, no longer characterize the situation in the West or even in the rest of the nation. The need to manage the demand for water has gained much wider acceptance within the last decade or so, but there is less agreement as to how it should be done. Regulatory measures such as restrictions on watering lawns and washing cars and sidewalks are common means of reducing water use during drought. Less common and more controversial is the use of regulations such as imposing water conservation standards for toilets, showerheads, and water-using appliances to curb the long-term growth of demand. Some local and state governments have already mandated water conservation measures, and legislation under consideration in the Congress calls for national standards designed to reduce water use.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona Water prices also influence use. Planners, however, have traditionally assumed that the demand for water is unresponsive to price (that is, perfectly inelastic with respect to price). Prices rarely reflect the full cost of water use. Indeed, water has been treated as a free resource for which there has been no charge for withdrawing water from or for discharging pollutants into a lake or stream. Water prices are set to cover the costs of delivery and treatment, but even these costs are sometimes subsidized. Wahl (1989) estimates that federally-supplied irrigation water receives a subsidy equivalent to 80 percent of the economic costs of developing supplies and delivering them to an irrigation district. The urban water supply industry usually sets rates just high enough to cover average costs including a return to capital. Average cost pricing in a rising cost industry such as water results in prices below marginal costs. These low prices encourage consumption in excess of socially efficient levels. Efficient pricing would set price equal to marginal social cost to limit use to the point where the benefits derived from use of the last unit are equal to the costs of producing that unit. Water Marketing Water is a scarce resource in the United States, and it is almost certain to become scarcer as the supply and demand for the resource continue to change over time. Making the best use of the West's water requires an efficient way to reallocate scarce supplies in response to changing supply and demand conditions. In the United States, markets are the usual mechanism for allocating scarce resources. Well functioning markets allocate scarce resources to their highest-value uses and they provide incentives to conserve and develop new supplies. Water markets, however, are generally crude and are relatively uncommon. The nature of the resource as well as government regulations pose problems for developing efficient water markets. Efficient markets must satisfy two conditions, both of which may be difficult to meet for water resources. There must be well-defined, transferable property rights and the buyer and seller must bear the full costs of the transaction. It can be difficult to establish property rights over ground and surface waters that are fugitive in time and space. Supplies may be common property resources that belong to no one until they are extracted for use. When ownership is only established by extraction, the individual does not pay the

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona full costs of that use and there is an incentive to overuse the resource. Transferring water from one use or location to another is likely to affect third parties by altering the quantity, quality, timing, or location of water available to others. Another obstacle to the development of efficient water markets is that some of the services provided by water, such as the amenities of a free-flowing stream, are public goods that are usually not marketed. Furthermore, water utilities tend to be natural monopolies that have their prices set by regulatory agencies and utility managers rather than by the interaction of supply and demand (Frederick and Kneese, 1990). In spite of these difficulties, water marketing does occur in the West, and with more appropriate state and federal policies marketing could play a much greater role in allocating supplies and encouraging conservation. Transaction costs are often unnecessarily high because of long delays, uncertainties, and legal fees. And the introduction of marginal cost pricing by utilities would curb use and provide investment funds to repair inefficient supply systems. IMPLICATIONS OF A HOTTER AND DRIER CLIMATE: A CASE STUDY OF THE MISSOURI RIVER BASIN The following case study of the Missouri River basin illustrates the possible impacts of a general warming on the availability of water within one of the West's principal river basins and indicates how management changes and a reallocation of supplies among alternative uses would help the region adapt to such hydrologic changes. Although the impacts of a global warming on the Missouri River basin are unknown, global climate model results suggest that the basin might become hotter and drier. The decade starting in 1931 was such a period within the basin. Superimposing the climate of that decade on the basin as it exists today provides some idea of the water issues that might arise under such a climate. If the climate of the 1931-1940 analog period became the norm, runoff and evaporation rates would differ from those of the current climate. Estimates of the impact of these differences on the basin's renewable water supplies are presented in Table 11.2.3 The mean assessed total streamflow represents the renewable supply available before consumptive use. Renewable supplies under the analog climate are only 69 percent of the long-term mean at the outflow point of the basin (subregion 1011), and they range from 64 to 99 percent measured at the outflow points of the various water resource subregions.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.2 Adjustments in 1985 mean assessed total streamflows of the Missouri River basin under the 1931-1940 analog climate. Subregion 1985 mean assessed total streamflow with control climate1 Reductions in streamflows under the analog climate2 Assessed total streamflow with the analog climate Analog as a percent of control flows (in percent) Reductions in runoff Increased evaporation   (----------------------millions of gallons per day---------------------) 1001 7,632 1,829 49 5,754 75 02 6,071 1,370 15 4,686 77 03 6,961 1,686 48 5,227 75 04 9,806 2,179 8 7,619 78 05 18,204 4,706 185 13,313 73 06 20,692 5,822 190 14,680 71 07 3,963 20 19 3,924 99 08 9,746 2,926 26 6,794 70 09 34,969 10,940 216 23,813 68 10 6,099 2,169 39 3,891 64 11 56,634 17,129 304 39,201 69 1 Total assessed streamflow is the flow at the outflow point of the subbas in that would be available if (a) consumption were eliminated, (b) estimated 1985 water transfer and reservoir practices were continued, and (c) ground water mining were discontinued. This measure takes account of average evaporation under long-term climatic conditions. 2 These reductions in streamflows are the result of decreased runoff (or increased evaporation) within the hydrologic unit and within all upstream hydrologic units.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona The analog climate would also affect water demand. The demand for irrigation and domestic water, especially for lawn watering, would probably rise as a result of the hotter and drier conditions. Quantification of the changes in water demand would be highly speculative, and the subsequent analysis assumes that consumptive uses are unchanged by the analog climate.4 To the extent that this omission understates the competition for water, the analysis may understate the water problems likely to emerge under the analog climate. Water is a scarce resource in the Missouri basin even in the absence of any anthropogenically-induced climate change. Society has placed increasing values on instream water uses such as recreation and protection of fish and wildlife habitats in recent decades. The rising demand for these very water-intensive uses in combination with the recent drought within the region have contributed to growing conflicts over water use in the basin. Streamflows during the 1988-1989 drought, which has aggravated water conflicts in the region, exceeded the mean flows during the analog period by 16 to 23 percent at the gauging stations used to reconstruct the analog flows. These conflicts have been particularly evident in the management of the main stem of the river and in the opposition to several water projects proposed for the basin. The U.S. Army Corps of Engineers is under pressure from the upper basin states of North and South Dakota, Wyoming, and Montana to give greater weight to the economic, recreational, and environmental values within the upper basin that are affected by management of the main stem reservoirs. Several proposed water projects including Two Forks Dam in Colorado, Deer Creek Dam in Wyoming, and Catherland irrigation project in Nebraska have encountered strong opposition from environmentalists. Table 11.3 provides an indication of the adequacy of mean assessed total streamflows to supply 1985 consumptive uses and "desired" instream flows under the current and analog climates.5 Total use, defined as the sum of cumulative consumptive use and "desired" instream flows, exceeds the mean assessed total streamflow under the current climate in two of the eleven subregions. Under the analog climate, total use exceeds these streamflows by at least seven percent in eight of the subregions; even in the other three subregions, total use is 94 percent or higher of mean assessed total streamflow. When total use exceeds mean assessed total streamflow, then ground water supplies are being mined and/or desired instream flows are not being met. The amount of water actually available to meet instream uses is derived by subtracting consumptive use and adding ground water

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.3 Water use as a percent of mean assessed total streamflow in the Missouri River basin under the current and analog climate.   Current Climate Analog Climate Subregion Cumulative Consumptive Use Desired Instream Flow Total Use Cumulative Consumptive Use Desired Instream Flow Total Use 1001 13 60 73 18 79 96 02 12 60 72 16 78 94 03 12 60 72 16 80 96 04 18 75 93 23 97 119 05 18 61 78 24 83 107 06 16 61 77 23 85 109 07 76 55 130 77 55 132 08 52 34 86 74 48 123 09 25 60 85 37 88 125 10 50 61 111 79 95 174 11 21 60 81 31 87 117   SOURCE: Frederick, 1990. overdrafts to assessed total streamflow. This quantity is the current streamflow. Table 11.4 shows desired instream flows as a percentage of current streamflow under the current and the analog climates. Under the analog climate, instream flows are generally well below desired levels as estimated in the Second National Water Assessment. The desired flows would exceed the actual flows by 25 percent or more for sustained periods in five subregions under the analog climate. The values that would be lost are not easily estimated, but they are likely to be high. Moreover, conflicts as to the preferred timing of flows for aquatic habitat, navigation, hydropower, and other uses increase as the resource becomes scarcer. Preliminary results from an ongoing study by the U.S. Army Corps of Engineers (1990) indicate opportunities for mitigating the overall costs of low-flow conditions within the Missouri basin. A repeat of the 1931-1940 climate would have major impacts on water users in the Missouri. Under current operating criteria for the 6 main stem reservoirs operated by the U.S. Army Corps of Engineers, the navigation season would be reduced from its normal of eight months to about five months during six of the ten years despite the relatively high priority navigation receives in the management of the river. Hydroelectric power production would decline to about half

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.4 Desired instream flow as a percent of current streamflow in the Missouri River basin under the current and control climates.   Current Climate Analog Climate 1001 69   02 68 92 03 68 95 04 91 125 05 74 109 06 72 111 07 156 160 08 59 125 09 77 131 10 80 153 11 72 114   SOURCE: Frederick, 1990. its normal level and the reservoirs would contain less than half their normal quantities of water during these years. These outcomes implyprofound negative implications for the recreational services as well as the fish and wildlife habitat provided by these reservoirs. Table 11.5 presents preliminary estimates of the average annual benefits by principal use categories derived from the operations of the Missouri main stem system under existing operating criteria and historical streamflows. The large water flows required to support navigation and the high priority navigation receives in the current operating scheme are in striking contrast to the relatively small contribution navigation makes to the overall benefits from the system. Missouri River navigation accounts for less than 2 percent of total system benefits. Even when the contribution to traffic on the Mississippi River is included, navigation accounts for less than 3 percent of total annual benefits. In contrast, hydropower provides 58 percent; flood control a total of 16 percent; water supplies within the lower basin states of Iowa, Kansas, Missouri, and Nebraska 11 percent; and upper basin reservoir recreation 8 percent of the overall benefits. Even during periods of average or above-average flow, conflicts may emerge among alternative operating criteria. For instance, maintaining navigation flows may conflict with the interests of the upper basin in maintaining high and relatively stable lake levels and with power production at Gavins Point, where releases in support of navigation may exceed the capacity of the power plants. As more space

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.5 Estimated Annual Benefits of Missouri Main Stem System Operations.   Millions of dollars Percent of totals Hydropower 470 58 Flood control (Missouri River) 95 12 Flood control (Mississippi River) 36 4 Water supply (downstream) 93 11 Water supply (reservoir) N/E2 — Recreation (reservoir) 67 8 Recreation (downstream) 3 a3 Navigation (Missouri River) 14 2 Navigation (Mississippi River) 6 1 Other1 30 4 Total 814 100 1 The U.S. Army Corps of Engineers lists total benefits of system operations at $814 million but they itemize only $784 million of these. 2 N/E indicates no estimate available. 3 a indicates less than 0.5 percent. SOURCE: U.S. Army Corps of Engineers, 1990. is devoted to flood control, reservoir levels may be subjected to wider seasonal fluctuations and less storage is available for protection against drought. Nevertheless, these conflicts pale in comparison to those that emerge under drought conditions. The guidelines for managing the main stem reservoirs have come under attack during the recent drought and are currently under review. Table 11.6 compares the differences between the preliminary average annual benefits for the various users (power, reservoir recreation, downstream recreation, water supply, navigation on the Missouri, navigation on the Mississippi, and flood control on the Mississippi) when selected operating criteria are varied from the base case reflecting current policy. These preliminary results provide strong

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona TABLE 11.6 Comparative analysis of annual incremental benefits for alternative operating criteria for the main stem of the Missouri River1 (millions of dollars). Alternative Power Recreation Reservoir Downstream Water Supply Navigation Missouri Mississippi Flood Control Mississippi Total Base Case 0 0 0 0 0 0 0 0 A 2.35 0.20 -0.03 70.31 -0.18 2.91 0.08 75.65 B 4.80 3.41 -0.03 70.10 -0.44 3.55 0.11 81.51 C 14.57 3.40 -0.26 70.31 -0.51 1.07 0.09 88.67 D 23.01 3.45 -0.23 70.28 -0.54 -0.63 0.13 95.47 E 34.56 3.91 -0.27 57.31 -1.17 -3.80 0.21 90.75 F 42.79 3.91 -0.32 54.48 -1.70 -2.51 0.39 97.04 1 The dollar values represent the differences in the average annual benefits or costs when each alternative is compared to the base case. The annual averages are derived by simulating the hydrologic record from 1898 to 1989 with the existing infrastructure and water demands. SOURCE: U.S. Army Corps of Engineers, 1990.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona NOTES TO TABLE 11.6: Explanation of Alternative Operating Criteria Base Case: (1) System storage is divided such that: -the first 18.3 maf is for the permanent pool -the next 39.3 maf is for carry over multiple use -the next 11.6 maf is for annual flood control and multiple use -the top 4.7 maf is for exclusive flood control. (2) Length of navigation season: the current rules for determining the length of the navigation season are in effect. The navigation season is curtailed if system storage on July 1 is less than 41 maf. (3) Minimum winter season release rate is 6,000 cfs. (4) Minimum summer release rate is 6,000 cfs. Variations from the Base Case incorporated in the alternatives. Alternative A (3) Minimum winter releases 12,000 cfs. (4) Minimum summer releases 18,000 cfs. Alternative B (1) Permanent pool storage increased to 31.0 maf. (2) Changes in navigation rule curve with the season curtailed if storage is less than 41 maf on July 1. (3) Same as A. (4) Minimum summer releases 12,000 cfs.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona Alternative C (1) Same as B. (2) Changes in navigation rule curve with the season curtailed if storage is less than 54 maf on July 1. (3) Same as A. (4) Same as A. Alternative D (1) Same as B. (2) Changes in navigation rule curve from Alternative C with the season curtailed if storage is less than 54 maf on July 1. (3) Same as A. (4) Same as A. Alternative E (1) Permanent pool storage is increased to 44 maf. (2) Changes in navigation rule curve with the season curtailed if storage is less than 58 maf on July 1. (3) Minimum summer releases of 9,000 cfs. (4) Same as B. Alternative F (1) Same as E. (2) Changes in navigation rule curve from Alternative E with the season curtailed if storage is less than 58 maf on July 1. (3) Same as E. (4) Same as A.

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona signals as to the types of changes in operating criteria that would increase the benefits the nation derives from the Missouri River main stem reservoirs. Some of the more promising changes are: Increasing minimum winter and summer releases (Alternative A) adds nearly $76 million to the average annual system benefits. Most of these benefits accrue to lower basin communities that would have greater security in their water supplies. Increasing the size of the permanent pool (the minimum level of water that is maintained in the reservoirs for fish and wildlife, recreation, operation of hydropower generating units, and municipal, industrial, and agricultural water-supply intakes) and curtailing navigation flows sooner when reservoir levels are low (Alternatives B through F) increase the benefits from hydropower production and reservoir recreation in the upper basin. The dollar value of the adverse effects on navigation of increasing the permanent pool and altering other operating criteria that currently favor navigation are overwhelmed by the positive impacts on power, water supplies, and reservoir recreation. The results summarized in Table 11.6, which are based on simulations for the entire hydrologic record from 1898 to 1989, suggest the potential benefits of alternative management criteria even in the absence of climate change. The alternative operating criteria are designed to deal with conflicts that emerge during relatively low-flow periods, and the largest gains in annual benefits occur during such periods. Consequently, under a scenario in which the climate of the 1931-1940 decade becomes the norm, the annual incremental benefits of the alternative operating criteria would be much higher than the values presented in Table 11.6. NOTES 1.   The inventory only includes dams that were at least 6 feet in height with a storage capacity of at least 25 acre-feet or at least 25 feet in height with a capacity of 15 acre-feet. 2.   The next two sections draw on Frederick and Gleick, 1989. 3.   The methodology underlying these estimates is described in Frederick (1990). In brief, the estimates start from data in the Second National Water Assessment (U.S. Water Resources Council,

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona     1978) for mean natural streamflows (flows in the absence of any diversions, man-made reservoirs, and consumptive use) and total assessed streamflows as of 1985 (equal to natural flow minus net evaporation from manmade reservoirs and net exports) for the eleven water resource subregions within the Missouri basin. The adjustments to runoff are based on the differences between observed flows in the 1951-1980 control period and the 1931-1940 analog period at specified gaging stations. Streamflow data going back to 1931 are available for hundreds of gaging stations in the Missouri basin. At most of these stations, however, measured flows are not a reflection of natural streamflows; they have been altered by diversions, dams, or other human impacts. Consequently, flows at seven gaging stations within the basin that were unaffected by human impacts are used as proxies to estimate the changes in natural streamflows attributable to the analog climate. The differences between the reconstructed flows during the 1931-1940 analog and the 1951-1980 control periods capture the effects of changes in precipitation and evaporation from land surfaces. The impacts of temperature and other climatic changes on reservoir evaporation are based on estimates of net evaporation from the six large reservoirs in the main stem of the Missouri during the two periods. The estimated average change in net evaporation rates from these reservoirs is used to estimate evaporation from reservoirs throughout the basin. 4.   The impacts of the analog climate on water withdrawals and consumptive use are examined in Frederick (1990). 5.   The estimates of ''desired'' instream flows are from the Second National Water Assessment. The assessment suggests that desired instream flows are "that amount of water flowing through a natural stream channel needed to sustain the instream values at an acceptable level. Values of instream flows relate to uses made of water in the stream channel that include fish and wildlife population maintenance, outdoor recreation activities, navigation, hydroelectric generation, waste assimilation (sometimes termed water quality), conveyance to downstream points of diversion, and ecosystem maintenance that includes freshwater recruitment to the estuaries and riparian vegetation and flood-plain wetlands" (U.S. Water Resources Council, 1987). Fish and wildlife were determined to be the dominant use because the flows that would ensure full fish and wildlife benefits would also provide for all other instream values. The desired instream flows in the assess-

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona     ment are (conservative on the side of identifying more water for instream uses than further study might reveal to be justified" (Bayha, 1978). REFERENCES Association of California Water Agencies. 1989. Coping With Future Water Shortages: Lessons From California's Drought. Sacramento Association of California Water Agencies. Bayha, K. 1978. Instream flow methodologies for Regional and National Assessments. Instream Flow Information Paper No. 7. FWS/OBS-78/61. Washington, D.C.: U.S. Fish and Wildlife Service. P. 4. Frederick, K. D. 1990. Working Paper IV-Water Resources. Report prepared for the project Processes for Identifying Regional Influences of and Responses to Increasing CO2 and Climate Change--the MINK Project. Washington, D.C.: Resources for the Future. Frederick, K. D., and P. H. Gleick. 1989. Water resources and climate change. In N. J. Rosenberg, W. E. Easterling, III, P. R. Crosson, and J. Darmstadter, eds., Greenhouse Warming: Abatement and Adaptation. Washington, D.C.: Resources for the Future. Frederick, K. D., and A. V. Kneese. 1990. Reallocation by markets and prices. In P. E. Waggoner, ed., Climate Change and U.S Water Resources. New York: John Wiley & Sons. Gleick, P. H. 1990. Vulnerability of Water Systems. In P. E. Waggoner, ed., Climate Change and U.S. Water Resources. New York: John Wiley & Sons. Guldin, R. W. 1989. An Analysis of the Water Situation in the United States: 1989-2040. USDA Forest Service General Technical Report RM-177. Fort Collins, Colo.: U.S. Forest Service. Hanchey, J. R., K. E. Schilling, and E. Z. Stakhiv. 1987. Water resources planning under climate uncertainty. In Proceedings of the First North American Conference on Preparing for Climate Change: A Cooperative Approach, Washington, D.C., October 27-29. Hartshorn, J. K. 1986. Drought . . . for flood? Western Water (January/February). The Water Education Foundation, Sacramento, California. Pp. 4-10. Kneese, A. V., and G. Bonem. 1986. Hypothetical shocks to water allocation institutions in the Colorado basin. In G. D. Weatherford and F. L. Brown, eds., New Courses for the Colorado

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Managing Water Resources in the West Under Conditions of Climate Uncertainty: Proceedings of a Colloquium November 14–16, 1990 Scottsdale, Arizona River: Major Issues for the Next Century. Albuquerque: University of New Mexico Press. National Water Commission. 1973. Water Policies for the Future. Final Report to the President and to the Congress of the United States. Washington, D.C.: U.S. Government Printing Office. Picton, W. L. 1960. Water Use in the United States 1900-1980. Report for Business and Defense Services Administration, U.S. Department of Commerce. Washington, D.C.: U.S. Government Printing Office. Riebsame, W. E., H. F. Diaz, T. Moses, and M. Price. 1986. The social burden of weather and climate hazards. Bulletin of the American Meteorological Society 67(11):1378-1388. Schilling, K. E. 1987. Water Resources: The State of the Infrastructure. Report to the National Council on Public Works Improvement. Washington, D.C.: The Council. Sheer, D. P. 1986. Managing water supplies to increase water availability. In U.S. Geological Survey, National Water Summary 1985: Hydrologic Events and Surface-Water Resources. Water Supply Paper 2300. Washington, D.C.: U.S. Government Printing Office. Solley, W. B., C. F. Merk, and R. R. Pierce. 1988. Estimated Use of Water in the United States in 1985. U.S. Geological Survey Circular 1004. Washington, D.C.: U.S. Government Printing Office. U.S. Army Corps of Engineers. 1982. National Program of Inspection of Non-Federal Dams: Final Report to Congress. Washington, D.C.: U.S. Department of the Army. U.S. Army Corps of Engineers. 1990. Draft Phase I Report for the Review and Update of the Missouri River Main Stem Master Water Control Manual. Omaha, Nebraska: Missouri River Division. P. 11; 128. U.S. Department of the Interior (DOI), Bureau of Reclamation. 1987. Assessment 1987 . . . A New Direction for the Bureau of Reclamation. Washington, D.C.: The Bureau. U.S. Geological Survey (USGS). 1984. National Water Summary 1983: Hydrologic Events and Issues. Water Supply Paper 2250. Washington, D.C.: U.S. Government Printing Office. U.S. Water Resources Council. 1978. The Nation's Water Resources 1975-2000, Second National Water Assessment, Vol. 1. P. 42. Washington, D.C.: U.S. Government Printing Office. Wahl, R. W. 1989. Markets for Federal Water: Subsidies, Property Rights, and the Bureau of Reclamation. Washington, D.C.: Resources for the Future.