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Spotlight on Economics: Does the Way We Manage Water Change as Needs Change?

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Robert Hearne, Associate Professor, NDSU Department of Agribusiness and Applied Economics Robert Hearne, Associate Professor, NDSU Department of Agribusiness and Applied Economics
The rules for managing water often are complex and subject to court cases.

By Robert Hearne, Associate Professor

NDSU Department of Agribusiness and Applied Economics

North Dakota’s principle water resources are shared through interstate and international waterways. We are familiar with the vagaries of wet- and dry-year water cycles and the importance of infrastructure to help us manage these water resources.

The rules for managing water often are complex and subject to court cases. These disputes are reminiscent of the famous quote often attributed to Mark Twain: “Whiskey is for drinking and water is for fighting over.”

Part of my research program is to assess how the rules for managing water have changed as the demands for the use of water have changed. This is what economists call institutional evolution. As society’s needs for water change, the rules for managing water also should evolve to accommodate changing demands.

This past year, I have investigated the rules and institutions that have managed the Missouri River. The Missouri River is the nation’s longest river and is unique because it flows from the predominantly arid western states to the relatively moist central states. Because the Missouri is a navigable river, the U.S. Army Corps of Engineers has authority to manage water flows, which it accomplishes through releases from the series of six large dams and reservoirs on the river. These include North Dakota’s Garrison Dam and Lake Sakakawea, the nation’s third largest constructed reservoir.

Through its control of these dams and reservoir storage, the Corps has retained the role of de-facto river master. The Corps’ management of the river has been necessary due to the inability of political processes to form alternative management structures such as a Missouri River Authority or a Missouri River Compact. In short, the states have not been able to agree to a management system; therefore, the federal government must manage the river.

Historically, the Corps has maintained the need to manage the Missouri River for its legislatively mandated priorities of flood control and navigation. The priority given to maintain water flows to ensure a deep and wide navigation channel between Sioux City, Iowa, and the Mississippi River has been maintained, despite the very low volume of barge traffic using the channel. And the value of the water for recreation and habitat maintenance in Lake Sakakawea and other upper basin reservoirs is substantially greater than the value of the same water supporting downstream navigation.

However, in the last few years, the Corps has revised its priorities and its reservoir management to incorporate ecosystem protection as mandated by the Endangered Species Act. With its embrace of adaptive management and the need to incorporate biological variables into its management decisions, the Corps has evolved and changed with the times. These changes include a three-year rotation of annual drawdowns from the three large upper-basin reservoirs: Fort Peck Lake, Lake Sakakawea and Lake Oahe. This release schedule is designed to improve vegetative habitat along the reservoir banks and support recreational fishing in these reservoirs.

The Corps’ adoption of adaptive management and its embrace of the need to manage water resources to maintain ecosystem services demonstrates a gradual shift away from the early 20th century goals of providing cheap barge transportation to the more valuable goals of maintaining habitat for biodiversity and recreation.

This is called institutional evolution, but more evolution is needed. Water rights for Native American tribal lands have not been granted. Water-quality programs have not been effective. New mechanisms, technological and institutional, need to be developed to protect the regions from the increased extreme climate events that will accompany global climate change.

The use of economic incentives to allocate water efficiently should increase. Also, the Missouri River basin states need to develop a mechanism to ensure their participation in river management.

Efforts should be made to address these needs in the upcoming decades.


NDSU Agriculture Communication – Jan. 13, 2014

Source:Robert Hearne, (701) 231-6494, robert.hearne@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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