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Comparative assessment of risk mitigation options for irrigated agriculture




Gollehon, Noel, author
Roberts, Michael, author
Aillery, Marcel, author
U.S. Committee on Irrigation and Drainage, publisher

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The impact of reallocating water from historical agricultural uses to expanding non-agricultural uses depends crucially on how reallocation occurs. This paper examines the water reallocation problem from a Federal perspective, focusing on alternative instruments to indemnify or compensate irrigators in the event of reallocation. These include insurance strategies (crop insurance, direct payments, and new financial instruments such as tradable bonds), conservation initiatives, and market-based measures (buyouts, contingent markets, and water banks). Policy mechanisms differ in the level of compensation provided, capacity to address concerns of stakeholders, and reliance on Federal outlays. No clear "winner" emerges among the potential mechanisms to mitigate foregone irrigation returns. The merits of alternative mechanisms depend on the evaluation criteria considered, site-specific conditions, and current water institutions.


Presented during the USCID water management conference held on October 13-16, 2004 in Salt Lake City, Utah. The theme of the conference was "Water rights and related water supply issues."

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