Evaluating economic efficiency of a water buyback program: The Klamath irrigation project

Increasing scarcity of water resources in many regions is likely to give rise to disputes similar to those observed in the Klamath region of Oregon and California where irrigation water buyback programs have been implemented to reduce irrigation diversions with the purpose of securing required instream flow for aquatic habitat. In this study using a mathematical programming approach we compare a direct water buyback program with an indirect, land idling based, program for securing required amount of water. We show that land idling based programs can be costlier than direct water buyback programs. Compensation for water idling directly, unlike land idling based programs, ensures that marginal water units with the lowest derived demand values are removed from production first.