Issues Paper, Central Utah Project

Page 69

ex 8 valuable uses of the water have already been exploited. Those remaining yield lower returns. This difference between the average productivity of water and the productivity of an additional unit of water (the marginal productivity of water) is important. If diminishing returns exist, the former (average value) is always more than the latter (the marginal value). The BR would have discovered part of this if they had calculated the benefits of supplemental water. This would be done by studying an irrigated farm, giving that irrigated farm an additional half acre-foot of water and seeing how much net income increased. The BR did not do this. Instead, it assigned to supplemental users the average benefits de-rived from a typical fully irrigated farm. Although the BR did not bother to study the value of supplemental water in particular, and the value of additional water to a particular agricultural region in general, water economists at the Water Research Laboratory at Utah State University have studied this question since at least 1973.* Their results are consistent with the results found in other arid states such as Arizona and Colorado** and with one of *See, for instance, "The Demand for Agricultural Water in Utah," Mark H. Anderson, PRWG 100-4, Utah Water Research Laboratory, Utah State University, September 1973. See, for instance, Kelso et al., Water Supplies and Economic Grt•o wth in an Arid Environm_e__n__t , University of Arizona, 1973; Marginal Values of Irrigation Water, Technical Bulletin 70, Agricultural Experiment Station, Colorado State University, 1960; Herbert Blank, "Optimal Irrigation Decisions with Limited