Removing irrigated acres could have a significant impact on our economy...Two years ago, the Dawson Public Power board and management conducted a strategic planning effort to help the District identify threats and opportunities as we looked into the future. One of the threats identified was the current practice of water management entities in the state buying up water rights, thereby reducing irrigated acres for the purpose of enhancing stream flow.
‘Significant impact’
This practice is being widely used on the Republican River Basin and now more recently on the Platte River in the areas that have been identified by the Department of Natural Resources as over or fully appropriated. These parcels of land in essence become dryland and obviously produce less crop. Our first inclination was to look at impacts on the District for stranded investment -- electric lines which were built to serve irrigation load that would be no longer used. But as we examined the issue further we realized that the loss of crop production really has a huge impact on the rural agriculture economy in the areas affected. This particular water management practice has significant impact on our farmers, agri-businesses, banks, counties, schools, and small towns in our service area.
Looking at the numbers
The District wanted to examine this issue further and commissioned an Economic Impact study to be done by the Bureau of Business Research of the University of Nebraska Lincoln. We have just received the preliminary results of the study and I will share with you some of the highlights.
The study area is Lincoln, Dawson, and Buffalo counties within the District service area. Two scenarios were developed. The first was a reduction of irrigated acres of 3,500 and the second was a reduction of 18,600 acres, both feasible objectives under current water management policy in place. 2010 average yields and pricing from the 2009 Agricultural Outlook were used in the model.
The direct annual impact of a reduction of crop sales, impact on business receipts, impacts on workers and wages along with loss of tax revenues were examined.
| | Annual change in dollars per... | |
| Economic Measure | 3,500 acres removed | 18,600 acres removed |
| Business receipts | -$2,229,000 | -$11,847,000 |
| Labor income | -$694,000 | -$3,690,000 |
| Employment | -26 | -138 |
So what does this all mean?
In my opinion, because of multi-state compacts and endangered species demands, water managers in the state of Nebraska are very focused on maintaining stream flows and have enacted regulations, such as irrigation reduction, to meet their objectives. In that process, sufficient economic analysis was not done to develop understanding of the consequences that this type of regulation has on the local economy. Maybe a cost benefit analysis should be required to enact such regulation in the future. At the very least both environmental and economic benefits of changing water consumption need to be considered to help identify policies which yield the highest net benefit for all Nebraska residents.
Nebraska has been blessed with world class water resources. Instead of fighting over who gets the water in the streams and rivers which are the remnants of the hydrological cycle, efforts need to be made to refocus on the complete water cycle and study the opportunities a water balance consumption model can bring. Maybe it’s time for the next evolution of water policy development in Nebraska?
Until next time…
Robert Heinz, General Manager
