Human Dimensions: Current Research
Market Adaptation to Climate Change: Water/Power Trade-offs in Idaho
- Don Reading, UW Climate Impacts Group and Ben Johnson & Assoc.
The law establishing the Public Utilities Regulatory Policies Act (PURPA) was born out of the energy crises of the 1970's when the price of a barrel of oil rose under $2.00 (nominal) in 1972 to over $30.00 in 1981. It was in this environment that the Idaho Public Utilities Commission set QF rates at 6.5 cents per kWh.
Today the PURPA QF rate per kWh is 6.8 cents per kWh. In 1981, the rental price for water in the upper Snake Plain was $1.60 an acre foot for a water year. Currently the Bureau of Reclamation is leasing annual water for salmon recovery for over $50 per acre foot. Therefore, while the avoided cost of producing electricity power is essentially the same as it was 25 years ago, the price of water for other uses has increased over 30 fold. As the value of resources change relative to one another, the beneficial use of resources can also change. Water whose highest value was in the value of hydro power production now has a higher value in aquifer recharge, which can ease pressures on groundwater users, even out the annual flow of the river, and reduce the river's temperature.
The work will discuss the win-win of market tradeoffs for resources where there have been relative price changes and it is beneficial for both parties to engage a market transaction. The work will demonstrate how this tradeoff –moving water to higher value uses – is occurring in Idaho where water is becoming increasingly important in relation to its historic uses in power production. This is an example of how society can adjust (and is adjusting) to stresses on water supplies caused by climate change.
For publications on the societal dimensions of climate impacts and adaptation in the PNW, please see CIG Publications.