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 JWARP  Vol.9 No.7 , June 2017
The Impact of Discount Rate and Price on Intertemporal Groundwater Models in Southwest Kansas
Abstract: Agriculture plays a vital role in the growth and development of the High Plains Region of the United States. With the development and adoption of irrigation technology, this region was transformed into one of the most agriculturally productive regions in the world [1]. The primary source of irrigation in this region is the Ogallala Aquifer. Currently, water from the aquifer is being used at a much faster rate than natural recharge can occur, resulting in a high rate of depletion from this finite resource. Depletion of scarce water resources will have a significant economic impact on the long-term sustainability of the region. The objective of this study is to evaluate the impact alternative prices and discount rates have on groundwater policy recommendations. Deterministic models of groundwater withdrawals were developed and used in order to analyze and evaluate the impact of high, average, and low crop prices in a status quo scenario as well as a policy scenario reducing irrigated acreage allocation. Furthermore, this study analyzes the effects and associated consequences of alternative discount rates on net and total revenue. As indicated by results of this study, alternative prices, costs, and discount rates utilized in a model have an effect on policy effectiveness.
Cite this paper: Vestal, M. , Guerrero, B. , Golden, B. and Harkey, L. (2017) The Impact of Discount Rate and Price on Intertemporal Groundwater Models in Southwest Kansas. Journal of Water Resource and Protection, 9, 745-759. doi: 10.4236/jwarp.2017.97049.
References

[1]   Peterson, J.M., Marsh, T.L. and Williams, J.R. (2003) Conserving the Ogallala Aquifer: Efficiency, Equity, and Moral Motives. Choices (First Quarter), 15-18.

[2]   Guru, M.V. and Horne, J.E. (2000) The Ogallala Aquifer. The Kerr Center for Sustainable Agriculture, Inc., Poteau, Oklahoma.

[3]   USDA. United States Department of Agriculture. Cattle on Feed Report. 22 January, 2016.
http://usda.mannlib.cornell.edu/usda/nass/CattOnFe//2010s/2016/CattOnFe-01-22-2016.pdf

[4]   Almas, L.K., Guerrero, B.L., Lust, D.G., Fatima, H., Tewari, R. and Taylor, R. (2017) Extending the Economic Life of the Ogallala Aquifer with Water Conservation Policies in the Texas Panhandle. Journal of water Resource and Protection, 9, 255-270.

[5]   The Water Information Management and Analysis System (WIMAS). Maintained by the Kansas Department of Agriculture, Division of Water Resources.
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[10]   Terrell, B. (1998) Economic Impacts of the Depletion of the Ogallala Aquifer: An Application to the Texas High Plains. M.S. Thesis, Texas Tech University, Lubbock, Texas.

[11]   Johnson, J.W. (2003) Regional Policy Alternatives in Response to Depletion of the Ogallala Aquifer. Ph.D. Dissertation, Texas Tech University, Lubbock, Texas.

[12]   Das, B. (2004) Towards a Comprehensive Regional Water Policy Model for the Texas High Plains. Ph.D. Dissertation, Texas Tech University, Lubbock, Texas.

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[14]   Wheeler, E. (2008) Water Conservation Reserve Program Alternatives for the Southern Ogallala Aquifer. Ph.D. Dissertation, Texas Tech University, Lubbock, Texas.

[15]   The Kansas State University Agricultural Experiment Station and Cooperative Extension Service.
http://www.agmanager.info/farmmgt/fmg/irrigated/default.asp

[16]   The Kansas Geological Survey High Plains Aquifer Section-Level Database.
http://www.kgs.ku.edu/Magellan/WaterLevels/index.html

[17]   Golden, B. and Johnson, J. (2013) Potential Economic Impacts of Water-Use Changes in Southwest Kansas. Journal of Natural Resources Policy Research, 5, 129-145.
https://doi.org/10.1080/19390459.2013.811855

[18]   Amosson, S., Almas, L., Golden, B., Guerrero, B., Johnson, J., Taylor, R. and Wheeler-Cook, E. (2009) Economic Impacts of Selected Water Conservation Policies in the Ogallala Aquifer. Report, Ogallala Aquifer Program.

 
 
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