Estimating Irrigation Water Quantity and Quality

The value of water quantity and quality is shown by its demand curve (surface). But because the market for water is imperfect, the demand surface must be derived by other means. This paper shows a theoretical process for determining the derived demand surface for both water quantity and quality, using data for citrus crops in California. The results show that for the relevant price range, the demand for water quantity is relatively inelastic, indicating that pricing is not an attractive mechanism for controlling water distribution; however, the demand for water quality is relatively elastic which makes pricing a possible means for managing water quality. The results also support the claim that the value of water is considerably more than most irrigators pay for it.