PRICE-RESPONSIVENESS OF DEMAND FOR IRRIGATION WATER WITHDRAWALS VS. CONSUMPTIVE USE: ESTIMATES AND POLICY IMPLICATIONS

Of water withdrawn for agricultural crop irrigation, a portion is consumed and the remainder comes back to the hydrologic system as return flows. Previous models of irrigation water demand have mostly focused on the change in withdrawals in response to price changes, even though knowledge of the response of consumptive use is often more significant for river basin planning. This study develops a simulation/mathematical programming model of water demand representing an irrigation company in northeastern Colorado to analyze the effect of hypothetical price increases on both the demand for withdrawals and a derived demand for consumptive use. The results demonstrate that consumptive use demand tends to be significantly less price-responsive than withdrawal demand. Elasticity estimates are shown to be highly dependent on the particular model assumptions.