Diversify Your Water Buys

By combining three water purchasing approaches -- permanent rights, options and leases -- cities can better manage water supplies to avoid high costs and supply reductions, according to a new study.
January 20, 2010, 9am PST | Nate Berg
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The research was conducted by Patrick Reed, an associate professor of civil engineering at Penn State.

"Reed and his colleagues are trying to understand the benefits and trade-offs associated with buying water using a mix of market instruments in the Lower Rio Grande Valley of southern Texas. Those models incorporated the various purchasing options, along with variables such as cost, amount of surplus water and the probability of water shortages.

The researchers found that when cities in the region rely solely on permanent rights, they could incur high costs -- $13 million a year -- and require lots of surplus water yet still face significant supply failures in drought years. Alternatively, a careful mix of permanent rights, options and leases can dramatically lower costs -- $10 million a year -- increase water available to the environment and avoid supply failures during droughts."

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Published on Monday, January 18, 2010 in Penn State Live
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