policy drougit: the case of south florida

WATER RESOURCES BULLETINVOL. 30, NO.1 AMERICM'T WATER RESOURCES ASSOCIATION FEBRUARY 1994

POLICY DROUGITfl THE CASE OF SOUTH FLORIDA'

Peter Thompson and Gary D. Lynne2

ABSTRACT: In this paper, we review recent experience withdrought in south Florida, and report some results of a study of thelikely agricultural economic impacts of drought. Our conclusionscan be summarized as follows. (1) Whether a period of low rainfallbecomes a 'drought" in south Florida is determined largely by insti-tutional factors. (2) The impacts of a drought event are dependenton the rules the Water Management District uses to manage theevent. If the rules involve effective reductions in irrigation supply,the financial impacts may be large, but are sensitive to the way inwhich cutbacks are imposed. (3) Current drought management reg-ulations do not appear to minimize the short-run cost of dreught.(4) Current policies which seek to minimize the short-run cost ofdrought are inconsistent with dynamically-optimal policies.(KEY TERMS: drought; water policy; water institutions.)

INTRODUCTION

Although south Florida is not generally associatedwith drought events, it has experienced periods ofwater shortage in five of the last six decades. If weuse the level of water in Lake Okeechobee as an indi-cator, then serious droughts occurred in 193 1-32,1955-56, 1961-62, 1970-71, 1980-81, and 1989-91. AsBlack (1980, p. 227) notes, "public concern aboutwater [in Florida in the 1960s] rose and fell in countermovement to the water level" and it is therefore notsurprising that after the heavy rainfall of summer1991, drought no longer seems to be a topical issue.

Largely, as a result of this inconsistency in publicconcern, there has been remarkably little research onthe economic impacts of drought in south Florida.This paper is intended to be a contribution to thisscarce literature. It is derived from the results of a 12-month project, carried out with Apogee, Inc. for theSouth Florida Water Management District (SFWMD),

on estimating the economic impact of a regionaldrought in the agricultural sector under alternativedrought management policies. The research culminat-ed in the adaptation of an existing crop water usesimulation model (AFSIRS) (Smajstrla, 1990a, 1990b;Thompson and Lynne, 1991b) to model the yieldeffects of water restriction, and the development of abudget generator (Thompson and Lynne, 1991a) tosimulate the financial impacts of reduced yields.

While carrying out drought impact simulations, wewere particularly intrigued by the difficulty we expe-rienced inventing drought scenarios independently ofthe choice of drought management policies. Theimportance of institutional factors was evident atevery stage of the analysis. In retrospect, we shouldnot have been surprised. The importance of institu-tions to drought impacts has been stressed by a num-ber of authors (e.g., Matthai, 1979; Miewald, 1978;Riefler, 1978). Anderson (1983) has been especiallydirect on this matter: there is often only a policydrought, he argues, the point being that drought cansometimes be institutionally eliminated with appro-priate laws, or unnecessarily exacerbated with inap-propriate ones.

In this paper we review recent experience withdrought in south Florida, and report some representa-tive simulations from our earlier study. Our conclu-sions can be summarized as follows. (1) Whether aperiod of low rainfall becomes a "drought" in southFlorida is determined largely by institutional factors.(2) The impacts of a drought event are dependent onthe rules the Water Management District uses tomanage the event. If the rules involve effective reduc-tions in irrigation supply, the financial impacts may

'Paper No. 93032 of the Water Resources Bulletin. Discussions are open until October 1, 1994. (Florida Agricultural Experiment Sta-tion Journal Series No. R-03517.)

2Respectively, Visiting Lecturer, Economics Department, University of Florida, 224 Matherly Hall, Gainesville, Florida 32611-0240; andProfessor, Food and Resource Economics Department, University of Florida, P.O. Box 110240, Gainesville, Florida 32611-0240.

19 WATER RESOURCES BULLETIN

Thompson and Lynne

be large, but are sensitive to the way in which cut-backs are imposed. (3) Current drought managementregulations do not appear to minimize the short-runcost of drought. (4) Current policies which seek tominimize the short-run cost of drought are inconsis-tent with dynamically-optimal policies.

The paper is organized as follows. In the followingsection some recent drought episodes, and the institu-tional response to them, are briefly discussed. In thethird section, we report some results of our simulationstudies of the economic impacts of drought underalternative drought management rules. The last sec-tion concludes.

Hydrology

INSTITUTIONAL DROUGHT INSOUTH FLORIDA

The supply of water to south Florida is almostentirely determined by rainfall occurring within theSFWMD (see Figure 1). The hydrology of southeastFlorida is dominated by the productive unconfinedBiscayne aquifer, which underlies all of Dade County,much of Broward County, and a small part of PalmBeach County. Central south Florida receives surficialwater from the Kissimmee basin and Lake Okee-chobee. Areas to the west, southwest, and east ofLake Okeechobee obtain water from the Floridan andlocal aquifers. Although the level of the Biscayneaquifer is naturally sensitive to rainfall levels due toits relative porosity, it is highly controllable by theSFWMD which operates pumping stations and anextensive network of canals linking Lake Okeechobeeand the Biscayne aquifer with three water conserva-tion areas. In periods of adequate or excessive rain-fall, flooding is avoided or reduced by dischargingwater into the ocean, or pumping into the water con-servation areas and the lake. Consumptive extractionfrom the aquifer occurs through an extensive networkof wells sunk in Dade and Broward Counties. Theaquifer meets a salt water front in coastal areas,which is prevented from intruding into the well fieldsby pressure of fresh water in the aquifer.

In normal years, south Florida receives around 59inches of rainfall. However, less than 39 inches of therainfall enters the soil, the remainder being lost toevaporation and surface-water runoff. Only 4 inchesare extracted for urban and industrial consumptiveuses, a further 5 inches are lost to seepage, and 16inches are either extracted for irrigation from privatewells or lost to evapotranspiration. The remaining 15inches are discharged to the ocean. Thus, in normal

years, supply considerably exceeds consumptivedemand. However, the distribution of rainfall is veryuneven; over 70 percent of the annual average fallsbetween May and October, and there is insufficientcapacity to store much of the excess water for use dur-ing the dry season. Thus, during winter, the aquifer ismaintained by releasing water from the conservationareas. The cyclical role of the conservation areas as arecipient of excess water in summer and a source ofwater in winter is managed largely on the basis ofhistorical rainfall data for south Florida, from whichmonthly water-level targets have been derived.

In prolonged periods of deficient rainfall, water lev-els in the conservation areas and Lake Okeechobeemay fall substantially below the targets, such thatthey cannot maintain the Biscayne aquifer at plannedlevels during the winter. If water levels are allowed todecline in the aquifer, however, salt intrusion cancause irreparable damage to the Miami conurbation'swell-fields, leading to extensive capital costs whenwells must be abandoned. The major initial danger ofa drought, then, is not a lack of water per Se, but thepotential capital losses associated with damage topublic supply wells in metropolitan Dade County.

WATER RESOURCES BULLETIN 20

TALLAHASSEE

BASINTAMI

CONSERVATION AREAS

• BISCAYNE AQUIFER

EAALI SFWMD

MIAMI

Figure 1. The South Florida Water Management District.

Policy Drought; The Case of South Florida

Two Recent Droughts

The sensitivity of the salt-water front to aquiferlevels became apparent during the 1970-7 1 drought.The average level of the aquifer declined only 1.5 feet,but this was sufficient to induce migration of the saltwater front a half-mile inland in some areas (Bensonand Gardner, 1974). In view of the high cost of saltwater intrusion, relatively small fluctuations in thelevel of the Biscayne aquifer may lead to a declarationof drought conditions. As Benson and Gardner (1974,p. 44) note, "recurrent fears of drought during each ofthe dry seasons since 1970-71 are based on the real-ization that water needs are increasing rapidly insouth Florida, and that water shortages may occur attimes even though rainfall may be normal for the sea-son."

The drought of 1980-8 1 is not directly comparableto the drought of 1970-7 1. Rainfall was significantlybelow normal on the southeast coast during 1980 and1981, the shortfall having a recurrence interval of lessthan five years (WaIler, 1985, p. 13); this contrastswith the recurrence interval of over 100 years for the1970-71 event. On the other hand, rainfall was seri-ously deficient in the Kissimmee basin during 1980and 1981 (the recurrence interval was greater than300 years, according to the SFWMD Annual Report,1980-82), while in 1970-71 it had been near normal.Thus, in the more recent drought, Lake Okeechobeereached record low levels (July 29, 1981), yet the Bis-cayne aquifer maintained levels somewhat higherthan had been the case in 1970-7 1. Any comparison isfurther clouded by rainfall from tropical storm Dennisat the beginning of August 1981 which "replenishedthe coastal aquifer and filled the water conservationareas to near scheduled levels" (WaIler, 1985, p. 1).Ironically, while south Dade County received 20 inch-es of rainfall in August and a further 24 inches inSeptember, the SFWMD was carrying out cloud seed-ing operations over the Kissimmee River basin.

The impact of these two droughts on agriculturalusers of water was surprisingly mild. Nonetheless,the experiences of farmers during these events high-lights the institutional nature of agricultural droughtin south Florida.

Agricultural production in south Florida is domi-nated by citrus, sugar cane, vegetables, and pastures.Nearly 310,000 acres were devoted to citrus produc-tion in 1988 (these figures are from the Florida Agri-cultural Statistics Service), 42 percent in Saint Lucieand Martin Counties at the northeastern limit of theSFWMD, and 44 percent in counties west of LakeOkeechobee. Sugar cane was planted on over 400,000acres, virtually all in the Everglades Agricultural

Area (EAA) or other land adjacent to Lake Okee-chobee. Approximately 300,000 acres were devoted tovegetable production, mostly in the EAA, west PalmBeach, and south Dade Counties. Pastures coveredover 200,000 acres in 1988, principally west andnorthwest of Lake Okeechobee.

Most agriculture in south Florida is irrigated. Inthe EAA, supplementary water is supplied to farmersby canal water pumped from Lake Okeechobee. Incontrast, other areas obtain supplemental water fromground water sources. The different sources lead tocontrasting approaches to consumption restriction. Inareas outside of the EAA, restriction implies controlby ordinance: limiting pumping volumes, placing pro-hibitions on certain types of irrigators, or prohibitingpumping during certain periods. The EAA is con-trolled by limiting supply: quantities and frequency ofreleased from the lake can be reduced in periods ofdrought, with equitable distribution among farmersbeing ensured by insisting on a day's wait betweenrelease and commencement of extraction by farmers.

Agricultural drought in south Florida is thereforeuniquely determined by the institutional arrange-ments relating to water management. Paradoxically,in view of the high expected capital costs of salt waterintrusion, restrictions on agricultural consumptionduring the 1970-7 1 drought were "for the most part inthe form of voluntary curtailment of water use ratherthan the application of mandatory restrictions" (Ben-son and Gardner, 1974, p. 42). Management of thedrought in 1980-82 included some mandatory restric-tions, but Dade County farmers, for example, appearto have been largely exempted. Indeed, the SFWMD(Annual Report, 1980-82) complained that each coun-ty, and even municipality, designed its own variant onthe regional restrictions, and consequently it washard to judge their extent and effectiveness.

Farmers in the EAA, however, were faced with aninsufficient supply in Lake Okeechobee (WaIler, 1985,p. 28). Even so, it was not until October 1981, threemonths after the lake had hit record low levels, thatthe SFWMD introduced a supply management plan.As the drought began to ease early in 1982, supplyrestrictions were lifted prior to the critical harvestseason. There is no evidence that there was any sig-nificant impact to agriculture.

Current Drought Rules

Largely in response to the piecemeal approach thathad been employed in dealing with earlier droughts,the district began to develop a coordinated WaterShortage Plan in the spring of 1982. Revised in 1984and 1986, the Plan defines five phases of drought "as


Thompson and Lynne

a function of the estimated percent reduction in over-all demand required to reduce the estimated presentand anticipated demand to estimated present andanticipated available water supply" (SFWMD, 1986,p. 2 1-5). There is no specific minimum required reduc-tion in order for the SF'WMD to declare a water short-age, and the Plan allows for the declared watershortage to vary with the source of the water.

The Plan was first implemented during thedrought of 1989-9 1, which arose from consistentlydeficient rainfall from 1988 through mid-1990 in allareas under the control of the SFW1vID. The severityof the drought, if measured in terms of changes instored water quantities, was broadly comparable tothose of 1970-71 and 1980-81. Indeed, water levels inLake Okeechobee fell in May 1990 to their secondlowest level on record, leaving available storage atunder 30 percent of target. It was the extremely lowlevel of the lake that prompted the SFWMD board todeclare a phase III shortage for agricultural userswithin the EAA in October 1989 (SFWMD RegularMinutes, 12 October 1989, p. 11), implying that, bythe District's calculations, demand needed to bereduced by 30 to 45 percent. Outside the EAA, farm-ers suffered only Phase I or Phase II restrictions(requiring reductions in demand of up to 15 percentand up to 30 percent, respectively).

However, the distinctions between the variousshortage phases is more apparent than real, at leastas far as demand management is concerned. Low vol-ume irrigation, for example, is not restricted in any ofthe first four phases of water shortage. Overhead irri-gation is restricted to between 2 p.m. and 10 a.m. inPhases I and II, and to between 7 p.m. and 7 a.m. inPhases III and IV. All phases require "voluntary useof water conservation techniques" (SFWMD, 1986,Fig. 2 1-1), whatever that might mean to a farmer.Reductions in livestock use are voluntary in all phas-es, and freeze protection is allowed "only when freezesare predicted." All in all, drought restrictions do notappear to be excessive.

These regulations are currently under review. Thepurpose of the review is to match demand controlmeasures more closely with the estimated requiredreductions in consumption. Any revisions that aremade, however, could induce significant changes inthe expected impacts of drought. In the remainder ofthis paper, we propose to highlight the importance ofthe SF'WMD's policies to drought impact assessmentthrough a case study of four crops in southwest Flori-da (Thompson and Lynne, 1991c). The region was cho-sen because a basic review of water managementpolicies for the area is under way. The crops —oranges, grapefruit, tomatoes, and peppers — are themost important in the region.


ECONOMIC IMPACTS OF ALTERNATIVEDROUGHT PLANS

Methodology

Despite the declaration of several severe droughtsover the last few decades, agricultural users of waterhave never been faced with serious restriction ontheir consumption. Thus, to estimate the impacts ofrestricting water supply, we must resort to simula-tions. Our approach was two-fold. First, we adapted acrop water requirement model (AFSIRS) (Smajstrla,1990a, 1990b; Thompson and Lynne, 1991b) to allowfor water stress-induced yield reductions in order togenerate yield-water response functions. Second, weused these response functions in a budget generator(Thompson and Lynne, 1991a) to simulate the conse-quent changes in income and employment.

The Agricultural Field Scale Irrigation Require-ment Simulator (AFSIRS), as its name suggests, sim-ulates supplementary water requirements in order forcrop growth to proceed without stress. Using daily cli-mate data, the soil water content is tracked for eachday of the growing season; when it falls below a cer-tain level, these levels being defined for each crop asthe maximum soil water depletion allowable so as notto induce stress, supplementary water is supplied toraise the soil water content to capacity. AFSIRStracks the quantity of water applied, and generatesoutput on the monthly irrigation schedules under var-ious rainfall scenarios.

Our innovation is rather simple. We force cropstress in the model by restricting the proportion ofunconstrained evapotranspiration (ET) allowed eachday of the growing season, and link the reduction inET to reductions in yield with the well-known Stew-art equation

where 'max and aCt are the unconstrained, maxi-mum yield and the actual yield, respectively. ETmand ETa are maximum and actual ET, and is thecrop sensitivity coefficient. The J3 coefficients wereobtained primarily from experimental data summa-rized by Doorenbos and Kassam (1979).

AFSIRS is then run repeatedly to generate a suffi-cient number of observations of yield and supplemen-tary water supply. A second-order polynomial wasfitted to the simulation data to generate a yield-response function. Our modifications to AFSIRS werechecked against crop simulators developed at the Uni-versity of Florida for modeling soybeans and peanuts

actmax)

ETET


(SOYGRO and PNUTGRO), and which have beenextensively tested in the field. The results from oursimulator and these two programs were consistent.

The budget generator is an accounting tool. Farmbudgets developed at the University of Florida pro-vide information on input requirements. These areseparated into fixed costs, costs which vary only withthe acreage planted (mainly cultivation costs), costswhich vary with the yield (especially harvesting,packaging, and transport costs), and irrigation costs.In combination with the yield-water response func-tions, the budget generator produces estimates ofchanges in production costs, income, and employmentfor representative farms. It should be noted that thebudget generator is not an optimizing program; it isassumed that the farmer is unable to respond to ashort-term drought with major technical innovations.

Table 1 shows the estimated acreage in southeastFlorida of each crop by irrigation type. Oranges andgrapefruit are grown on nearly 86,000 acres in theregion, while tomatoes and peppers cover 17,810 and6,850 acres. For citrus, the dominant mode of irriga-tion is micro jet, accounting for 70 percent of theacreage planted. Vegetable production, in contrast, ispredominantly irrigated with seepage systems, thistechnology being employed on about 80 percent of theplanted area. The different crops and irrigation tech-nologies account for a wide disparity in irrigationrequirements. The optimum use of supplementarywater was estimated to be 26.7 inches and 18.0 inchesfor citrus under seepage and micro jet, respectively.For tomatoes, the supplementary water requirementwas estimated to be 9.7 and 6.8 inches for seepageand micro drip, respectively; the corresponding fig-ures for peppers were 9.4 and 6.3 inches.

TABLE 1. Base Acreages by Crop and System.

Oranges Grapefruit Tomatoes Peppers

Micro Jet 36,263 24,175 — —

Micro Drip — — 3,562 1,370Seepage 15,105 10,070 14,248 5,480

Minimizing Short-Run Costs

The shadow price of water is estimated in the shortrun as the implicit farmer's willingness to pay toavoid restrictions, assuming no technical change inproduction. This measure reflects the net effect ofreduced yields on revenue and production costs (prin-cipally harvest costs). Table 2 reports the estimates.There is a clear divergence of shadow prices betweencrops. The final acre-inch of water used by citrus pro-ducers has an estimated shadow price of between $38and $40. Vegetable producers give a higher value towater. Tomato producers with seepage irrigation sys-tems would be willing to pay as much as $300 to keepthe last acre-inch of water, while pepper producerswould pay a little over $400. This difference resultsfrom the fact that vegetable producers use much lesswater and have a shorter growing season.

The rankings of the losses incurred by citrus andvegetable producers are reversed if we considerinstead equal proportionate reductions in supplemen-tary water supply. Our estimates of citrus producers'implicit marginal valuation of water are $7.16 (microjet) and $10.43 (seepage) per acre for a 1 percentreduction in supply. Tomato producers' valuation is$24.38 (micro drip) and $29.08 (seepage); and, for pep-per producers, we estimate $33.14 (micro drip) and

TABLE 2. Farmers' Shadow Prices of Water ($Iacre-inch).5

Irrigatioiu Inches Per Acre Below Optimum1 2 3 4 6 6 7

MICRO

Oranges 39.21 44.70 50.20 55.72 61.26 66.82 72.41

Grapefruit 40.03 45.70 51.39 57.09 62.81 68.55 74.32Tomato 358.57 396.65 434.76 472.89 511.05 549.24 579.82

Peppers 526.06 577.98 629.93 681.90 733.90 785.93 801.55

SEEPAGE

Oranges 38.51 40.26 42.02 43.77 45.54 47.30 49.07

Grapefruit 39.68 41.49 43.30 45.11 46.92 48.74 50.56

Tomato 299.87 310.47 321.08 331.70 342.31 352.93 363.55

Peppers 405.61 421.20 436.79 452.39 467.99 483.59 499.20

*CaJlated as the loss in net income per acre induced by each acre-inch reduction of supplementary water.


Thompson and Irnne

$38.13 (seepage). We conclude that percentage reduc-tions in water supply affect seepage producers morethan micro drip producers. The reason for this rever-sal of impacts is straightforward: equal proportionatereductions in water supply imply greater absolutereductions for citrus producers than for vegetable pro-ducers.

Which reduction strategy is appropriate in times ofdrought? Consider three possible scenarios that mightbe considered by a water management district (thesestrategies are, in fact, among those under considera-tion by the SFW1'ID).

(1) All producers must reduce water use by anequal amount per acre.

(2) All producers must reduce water use by anequal proportionate amount per acre.

(3) Only producers with seepage irrigation mustreduce water use, by an equal absolute amount peracre.

As Table 3 shows, losses in producer surplus (theregional sum of the estimated per acre willingness topay measures) for any given level of water diversionfrom agriculture to everywhere minimized for Strate-gy (2). For a 2-billion gallon reduction in water con-sumption by the region's farmers, Strategy (2) induceson-farm losses of $2.9 million, while Strategies (1)and (3) would lead to direct losses of $9.3 million and$13.1 million, respectively. For drought stages Ithrough IV, the SFWMD has adopted a policy similarto Strategy (3) above. Our simulations suggest thatthis strategy would induce financial losses consider-ably in excess of those which would prevail wereStrategy (2) adopted. Short-run losses from a singledrought event are minimized by extracting an equalproportionate reduction in water use by all producers,irrespective of irrigation system.

TABLE 3. Regional Loss in Producer Surplus byDrought Management Strategy ($).

Water Diverted Away FroAgriculture (BGALS)

m

2 4 6 8

Strategy 1* 9,258,362 17,984,628 26,187,106 34,937,024Strategy 2 2,883,754 7,994,223 13,453,730 17,251,093Strategy 3 13,096,411 26,029,653 36,563,910 54,182,719

*S text for descriptions of the strategies.


Minimizing Long-Run Losses

Many farmers, having invested heavily in efficientirrigation systems such as micro drip, would justifi-ably object to a policy which forces them to bear theburden of drought to the same extent as farmers whohad avoided this investment and continued with lessefficient systems. After all, given its institutionalnature, drought would be less frequent in south Flori-da if all farmers were to invest in efficient irrigationsystems. However, short-run, static, drought impactassessment cannot acknowledge the sunk costs ofsuch investments and the distributional issues theyraise. Some substantive economic issues emerge whenone considers the dynamic consequences of droughtevents and the policies used to manage them.

Although an increase in the frequency of agricul-tural droughts, which may occur because of higherdemand (population increases and economic develop-ment) or because of institutional change (a decision torequire agricultural producers to shoulder more of theburden of water shortages), might be expected toencourage a shift toward water-saving technologies,this is not necessarily the case. It is optimal, otherthings being equal, to minimize the shadow value ofwater. This implies, paradoxically, that seepage irri-gation would be preferable unless the drought man-agement rules were designed so as to make waterrestrictions a more frequent problem for producerswith seepage systems than for producers with micro-irrigation systems. Consequently, the strategy whichminimizes short-term economic losses is inappropri-ate if long-term reductions in water use is also adesirable objective.

Consider the net income estimates in Table 4.Seepage systems lead to higher levels of average netincome per acre than do micro systems when neithergroups of farmers are ever subject to water restric-tions. It follows that, unless drought managementpolicies distinguish between the two irrigation sys-tems, farmers will be induced to expand productionwith seepage irrigation at the expense of more effi-cient alternatives. But, if only seepage systems facerestrictions in times of water shortage, investment inmicro systems will be encouraged. The example inTable 4 shows the changes in average annual netincome for various frequencies of a 10 percent reduc-tion in water use. For citrus, this reduction must beimposed at least three years in ten in order for microirrigation systems to be more profitable. For veg-etable producers, a frequency of at least two years inten is required. The required frequency is reduced ifseverity is increased. These are but arbitrary exam-ples, but the point they make should be readily appar-ent: investment in more efficient irrigation systems,


TABLE 4. Per Acre Net Income Under Various Drought Scenarios.

Average Annual Net Income Per AcreScenario Oranges Grapefruit Tomatoes Peppers

NO RESTRICTIONS IMPOSED ON WATER SUPPLY

Micro Spray 357.16 308.77 —

MicroDrip — — 250.23Seepage 420.16 367.95 306.17

—

689.37745.02

10 PERCENT RESTRICTIONS ON WATER SUPPLY ARE IMPOSEDAT RANDOM INTERVALS ON SEEPAGE SYSTEMS

(1) 1 Year in 10* — Seepage 398.36 345.43 268.76 700.14

(2)2 Years in 10— Seepage 376.56 322.91 231.42 655.27

(3) 3 Years in 10— Seepage 354.75 300.39 193.93 610.39

Expected frequency with which the 10 percent cutback is imposed on seepage irrigators.

which would reduce average demand for supplemen-tary water and hence the frequency with which theSFWMD declares a drought, is encouraged by adopt-ing a drought management policy which fails to mini-mize the short-run costs of drought. The divergencebetween the optimal policy to minimize short-runlosses from drought, and the dynamically optimalpolicies to reduce drought frequency, is an issue whichhas to date been absent from the debate on water pol-icy in south Florida.

CONCLUSIONS

Although the results of the drought simulationsmust be viewed as relatively crude approximations tothe expected economic impacts, they have served tohighlight some important issues in drought manage-ment. We will simply summarize those findings here.

First, the existence of a state of drought in southFlorida is defined only by the rules of the SFWMD.The manner in which water shortage phases aredeclared and suspended suggests that "drought" isquite subjective and does not necessarily have a con-sistent meaning. Second, if drought management poli-cies effectively reduce the supply of water to farmers,the economic impacts are considerable; this has notbeen shown before in Florida. Third, the droughtmanagement strategy chosen by the SFWMD caninduce significant changes in the magnitude ofimpacts. Fourth, the minimization of short-run lossesand the long-run reduction of water consumption areincompatible objectives.

However, one final comment is called for. Our anal-ysis of drought strategies is limited to those options

under consideration by SFWMD. We do not believethat any of these strategies is truly optimal. As is wellknown, the optimal strategy would arise where insti-tutional rules permit farmers to equate the marginalvalue products of scarce water across alternativeuses. This is more likely to arise in an environment ofwater marketing, than it is through micro-manage-ment of water consumption on the part of theSFWMD. However, allowing the transfer of water per-mits in times of shortage is not an option that theSFWMD appears willing to consider.

ACKNOWLEDGMENTS

This paper is based on research conducted for the South FloridaWater Management District between 1990 and 1991 under contractwith Apogee Research, Inc., Bethesda, Maryland. We are alsograteful to Professor Jim Jones, Department of Agricultural Engi-neering, University of Florida, for useful advice.

LiTERATURE CiTED

Anderson, Terry L., 1983. Water Crisis: Ending the Policy Drought.John Hopkins University, Baltimore, Maryland.

Benson, M. A. and R. A. Gardner, 1974. The 1971 Drought in SouthFlorida and Its Effect on the Hydrologic System. U.S. GeologicalSurvey Water Resources Investigation Report, pp. 12-74.

Blake, Nelson M., 1980. Land Into Water, Water Into Land. A His-tory of Water Management in Florida. University Presses ofFlorida, Tallahassee, Florida.

Doorenbos, J. and A. H. Kassam, 1979. Yield Response to Water.FAO Drainage and Irrigation Paper, 33, Food and AgricultureOrganization, Rome, Italy.

Matthai, Howard F., 1979. Hydrologic and Human Aspects of the1976-77 Drought. U.S. Geological Survey, Professional paper No.1130, Washington, D.C.

Miewald, Robert D., 1978. Social and Political Impacts of Drought.In: North American Droughts, Norman J. Rosenberg (Editor).Westview Press, Boulder, Colorado, pp. 79-102.


Thompson and Lynne

Riefler, Roger F., 1978. Drought: An Economic Perspective. In:North American Droughts, Norman J. Rosenberg (Editor). West-view Press, Boulder, Colorado, pp. 63-78.

SFWMD, 1986. Water Shortage Plan. South Florida Water Manage-ment District (January).

Smajstrla, A. G., 1990a. Technical Manual. Agricultural Field-ScaleIrrigation Requirements Simulation (AFSLRS) Model, Version5.5. Agricultural Engineering Department, University of Flori-da, Gainesville, Florida.

Smajstrla, A. G., 1990b. User's Manual. Agricultural Field-ScaleIrrigation Requirements Simulation (AFSIRS) Model, Version5.5. Agricultural Engineering Department, University of Flori-da, Gainesville, Florida.

Thompson, P. and Gary D. Lynne, 1991a. Drought Impact BudgetGenerator: Technical and User's Manual. Food and ResourceEconomics Department, University of Florida, Gainesville,Florida (mimeo).

Thompson, P. and Gary D. Lynne, 1991b. Agricultural Field-ScaleIrrigation Requirements Model: The Modified AFSIRS forDrought Impact Analysis. Technical and User's Manual. Foodand Resource Economics Department, University of Florida,Gainesville, Florida (mimeo).

Thompson, P. and Gary D. Lynne, 1991c. Economic Impacts ofWater Restrictions on Selected Citrus and Vegetable Productionin Southwest Florida. Food and Resource Economics Depart-ment, University of Florida, Gainesville, Florida (mimeo).

Wailer, B. G., 1985. Drought of 1980-82 in Southeast Florida withComparison to the 1961-62 and 1970-71 Droughts. U.S. Geologi-cal Survey Water Resources Investigation Report.


policy drougit: the case of south florida

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