Abstract
This report presents a hydro-economic modeling methodology for conducting benefit-cost analysis of water management responses to climate change. Three hydro-economic modeling scenarios are developed. The first estimates the affects of projected climate change water shortages on the basin-wide economic benefit in the Lower Boise River Basin. The next two are representative of typical demand management and supply management responses to climate change; respectively, introduction of new canal lining conservation measures or new reservoir storage. Boise Project groundwater and drain return response zones in the lower basin are identified and marginal demand-price and supply-cost functions are developed for Project canal irrigators and non-Project groundwater and drain water irrigators using river/reservoir and groundwater hydrologic model response data. Flood flow probability and damage functions are used to develop marginal utility functions for new flood control storage. Irrigation and flood control demands are not requirements. All demand functions are developed assuming demand-price elasticity. The base-case equilibrium price-quantity positions and consumer surpluses of Project and non-Project irrigators are calculated using a partial equilibrium (PE) economic model in which all factors of production except for water are held fixed. Subsequent PE model scenarios impose varying climate constraints on irrigation water supplies, along with a progression of new Boise Project canal lining conservation measures, and/or the addition of new Boise River reservoir storage. Rival demand is assumed to exist for new storage, which can be released prior to April 1 to meet demand for flood control, or after April 1 as natural flow to meet demand for irrigation. Preliminary Reclamation and Corp of Engineers construction cost estimates for new Boise Project canal lining and new reservoir storage are used calculate benefit-cost ratios, in which net basin-wide benefits of alternative responses to climate change are derived from hydro-economic modeling.