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Valuing Ground Water: Economic Concepts and Approaches
FIGURE 6.1 Estimated annual cost of water to retail producers: With or without ground water basin.
resources, and Arizona and Nevada are looking to increase their allotment of Colorado River water. Access to Orange County's valuable local ground water resource decreases the district's dependence on this more costly, less reliable imported water supply.
Ground water is generally less expensive than imported water, primarily because of the development and transmission costs of the imported supplies. As seen in Figure 6.1, it is projected that the value of Orange County's ground water over a 20-year period will be approximately $1.39 billion, and the value of imported water will be as high as $4.80 billion. Figure 6.1 shows the annual cost of water for the district with and without a ground water basin and indicates that the present value difference of the two scenarios is approximately $3.41 billion; this is one measure of the value of the ground water basin although it presumably represents a lower bound estimate of the true value.
Under current conditions with the ground water basin, retail producers within the district are able to meet approximately 75 percent of their demands by pumping from the ground water basin. The price of this water is estimated at $138 per acre-foot. Which includes a pumping assessment of $85 per acre-foot and an energy cost of $53 per acre-foot.
In 1995 approximately 300,000 acre-foot of water was pumped from the ground water basin. Approximately 130,000 acre-foot of imported water was purchased from MWD. Of the water purchased from MWD, approximately 100,000 acre-foot was noninterruptible treated water at a price of $426 per acre-foot. The remaining 30,000 was purchased as seasonal shift water at a price of $286 per acre-foot. By having access to a ground water basin, retail producers are able to participate in the MWD seasonal shift program, which allows them to purchase imported water at a discount during the winter months.