Water Resources Research Act Program

Details for Project ID 2007UT83B

Economic and Fiscal Impacts of the Groundwater Management Plan in the Beryl-Enterprise Area

Institute: Utah
Year Established: 2007 Start Date: 2007-03-01 End Date: 2008-02-29
Total Federal Funds: $20,068 Total Non-Federal Funds: $36,599

Principal Investigators: John Keith

Project Summary: On March 16, 2006, Governor Jon Huntsman, Jr. signed House Bill 228 (Groundwater Management Plan). Among other provisions, HB 228 authorizes the state engineer to design a management plan for groundwater resources. Each plan will be based on the prior appropriations principle yet can limit withdrawals of groundwater in a critical management area. HB 228 defines a critical management area to be a groundwater basin in which the groundwater withdrawals consistently exceed the safe yield. HB 228 further defines a safe yield as the amount of groundwater that can be withdrawn from a groundwater basin over a period of time without exceeding the long-term recharge of the basin or unreasonably affecting the basins physical and chemical integrity.

The Division of Water Rights in the Utah Department of Natural Resources has identified basins of concern throughout the state. According to statistics compiled by the state engineer and hydrologists, from 1993 to 2003 in the Beryl-Enterprise Area 83,000 acre-feet of groundwater were pumped on average each year. However, it was estimated the recharge rate was 33,000 acre-feet in this groundwater basin. With demand out-pacing supply, the groundwater supplies will continue to be depleted.

With authorization from HB 228, a groundwater management plan will be designed and implemented to match available groundwater supplies with the demands of water users (i.e., irrigators, businesses, and households) in the area. As expected, limiting withdrawals of groundwater will impact the community in complex ways. The purpose of this study is to estimate the economic and fiscal impacts of the groundwater management plan in the Beryl-Enterprise Area. Toward that end, the specific tasks of the project include:

1. Collect data on the regional economy. This is a rural community that uses groundwater supplies to irrigate various crops. Acreage, crop production and farming methods and technologies will be identified. Households and businesses use groundwater supplies as well so those economic units must also be identified. Sales, value-added, income and employment will be tracked by industry and sector.

2. Collect data on water right holders. The Utah Legislature began issuing groundwater rights after 1935. The distribution of senior and junior water rights across user groups will be identified.

3. Build and validate the regional economic model. Given the accounting stance or geographic footprint of the Beryl-Enterprise region being modeled, an input-output regional economic will be used to estimate the economic and fiscal impacts associated with limiting groundwater withdrawals under the groundwater management plan. The input-output model will capture not only the direct impact of the groundwater withdrawal limitations (i.e., reduction in foregone sales of crops and subsequent reductions in value-added, income and employment) but also ripple effects as well. Ripple effects include the impacts on suppliers (i.e., farm equipment dealers) as well as impacts to businesses servicing the community (i.e., grocers, banks, etc). Fiscal impacts, such as shortfalls in taxes collected, will also be estimated.

4. Ascertain any changes to the economic value of water and value of land. As access to groundwater resources is limited, remaining water rights will likely rise in value. These values will be estimated. Limitations in groundwater withdrawals may result in firms exiting the market and hence retiring land from production. Since the present value of streams of future earnings associated with the water rights are likely capitalized into the value of the land, any limitations in groundwater withdrawals will likely result in falling land prices. These values will be estimated.