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Aligning Economic Returns and
Ecosystem Services for a Spatially
Delineated Farm Landscape Reliant on
Groundwater for Irrigation
Kent Kovacs, Kuatbay Bektemirov
71st SWCS International Annual Conference
July 24‐27, 2016
Louisville, KY
Introduction
What are the possibilities of achieving important
ecosystem service objectives while also generating
reasonable economic returns?
Optimization determines:
‱ economic returns for the landscape given the crop
(rice, soybeans, corn, etc.) and irrigation choices
‱ groundwater supply, surface water purification, and
GHG reductions
‱ maximum economic returns for a given value of the
ecosystem service(s) provided
Greenhouse
gas reduction
Surface water
purification
Groundwater supply
Irrigation storage
reservoir
Tail-water recovery
structure
Aquifer
_ _( 1) _
m
i t i t ik k t ik
AQ AQ p GW nr  
‱ Aquifer stock
_ _ _j ij t i t i t
j
wd L GW RWï‚Ł 
‱ Water balance
_ _ 0ij t ij
j j
L L 
‱ Land balance
Dynamics of land and water use
Economic returns objective
Profit w/o
irrigation
costs
Reservoir
construction
cost
Reservoir
water
pumping
cost
Ground
water
pumping
cost
 _ _ _
_ _ _ _ _
, ,
1 1 1
max :
ij t i t i t
T m n
r rw
t j ij j ij t iR t i t i t i t
L RW GW
t i j
pr y ca L c L c RW GC GW
  
   
 
 
 
 
Ecosystem service objectives
‱ Greenhouse gas reductions
‱ Surface water purification
‱ Groundwater supply from the landscape
  _ _ _, ,
_ _
1
max :
ij t i t i tL RW GW
T
m
c t c i t i ti
t
V p S E

  
 
_ _ _, ,
_ _ 1
1 _
max :
ij t i t i tL RW GW
i t i tT
i k
w t k k
t k i t
i k
EX EX
V hh wtpq
EX





  
  
   
  
  

 

  _ _ _, ,
_ 1 _
1
max :
ij t i t i tL RW GW
T
m
g t bv i t i ti
t
V p AQ AQ 

  
Efficiency frontiers
‱ Optimize the ecosystem services objective without
restriction on economic returns. Optimize
economic returns objective without restriction on
ecosystem services.
‱ Maximize economic returns for given ecosystem
service values to find combinations that rest on the
efficiency frontier.
Results Outline
‱ Ecosystem service and economic return values for points along frontiers
‱ Crop mix patterns along frontiers that show the tradeoff of economic
returns and

- All ecosystem services
- Groundwater supply value
- Water purification value
- Greenhouse gas reduction value
‱ Present value (PV) of ecosystem services and economic returns for
select points along frontiers using

- All ecosystem services
- Groundwater supply value
- Water purification value
- Greenhouse gas reduction value
‱ Economic costs resulting from conservation policies that increase
ecosystem services for the landscape with reservoirs
Ecosystem service and economic
return values for points along
efficiency frontiers
Without reservoirs With reservoirs
Frontiers
Present value of
Frontiers
Present value of
economic
returns
ecosystem
services
economic
returns
ecosystem
services
A 1649 1532 F 1649 1532
B 2768 1000 G 3021 1000
C 3021 819 H 3322 819
D 3322 567 I 3656 567
E 4559 -2345 J 4757 -2206
Crop mix patterns along frontiers that
tradeoff all ecosystem services
With reservoirs
Without reservoirs
PV of ecosystem services for frontiers
using all ecosystem service value
Ecosystem
services
Without reservoirs With reservoirs
A C E F H J
Water purification 32 21 -1 32 19 -2
Groundwater
supply
60 27 -68 60 41 -56
Greenhouse
gases
1439 771 -2276 1439 760 -2147
Total ecosystem
services
1532 819 -2345 1532 819 -2206
PV of economic returns for frontiers
using all ecosystem service value
Land cover
Without reservoirs With reservoirs
A C E F H J
Rice 0 0 769 0 0 932
Irrigated soybeans 0 121 674 0 21 698
Non-irrigated crop 0 543 625 0 477 587
Corn 0 1300 1940 0 1953 2081
Cotton 0 54 430 0 21 439
CRP 1649 1003 121 1649 851 20
Total economic
returns
1649 3021 4559 1649 3322 4757
Crop mix patterns along frontiers that
tradeoff groundwater supply value
With reservoirs
Without reservoirs
PV of ecosystem services for frontiers
optimizing groundwater buffer value
‐620
‐672
50
2
885
813
50
22
‐700 ‐500 ‐300 ‐100 100 300 500 700 900
Total ecosystem services
Greenhouse gases
Groundwater supply
Water purification
m$
Without reservoirs L
With reservoirs Q
‐1178
‐1167
‐10
0
‐450
‐442
‐10
2
‐1200 ‐1000 ‐800 ‐600 ‐400 ‐200 0
Total ecosystem services
Greenhouse gases
Groundwater supply
Water purification
m$
Without reservoirs N
With reservoirs S
PV of economic returns for frontiers
optimizing groundwater buffer value
4169
23
386
1952
817
290
702
4638
25
437
2079
646
634
816
2539
1058
16
521
945
0
0
4118
360
423
1959
937
315
125
-50 450 950 1450 1950 2450 2950 3450 3950 4450
Total economic returns
CRP
Cotton
Corn
Non-irrigated crop
Irrigated soybeans
Rice
m$
Without reservoirs N
Without reservoirs L
With reservoirs S
With reservoirs Q
Crop mix patterns along frontiers that
tradeoff water purification value
With reservoirs
Without reservoirs
PV of ecosystem services for frontiers
optimizing water purification value
Ecosystem
services
Without reservoirs With reservoirs
V W X AA BB CC
Greenhouse
gases
-1506 -1671 -1858 -1340 -1509 -1697
Groundwater
supply
-45 -51 -57 -32 -37 -43
Water purification 25 23 19 25 23 19
Total ecosystem
services
-1526 -1699 -1895 -1348 -1524 -1720
PV of economic returns for frontiers
optimizing water purification value
Land cover
Without reservoirs With reservoirs
V W X AA BB CC
Rice 739 746 758 887 904 924
Irrigated soybeans 547 587 625 556 601 635
Non-irrigated crop 347 377 440 319 362 419
Corn 1574 1685 1778 1675 1788 1898
Cotton 233 265 311 228 260 307
CRP 518 443 348 438 346 246
Total economic
returns
3957 4102 4260 4102 4260 4429
Crop mix patterns along frontiers that
tradeoff greenhouse gas reduction
value
With reservoirs
Without reservoirs
PV of ecosystem services for frontiers
optimizing greenhouse gases value
518
478
28
11
516
478
25
13
‐50 50 150 250 350 450 550
Total ecosystem services
Greenhouse gases
Groundwater supply
Water purification
m$
Without reservoirs HH
With reservoirs MM
1276
1200
49
28
1269
1200
41
28
‐50 150 350 550 750 950 1150
Total ecosystem services
Greenhouse gases
Groundwater supply
Water purification
m$
Without reservoirs FF
With reservoirs KK
PV of economic returns for frontiers
optimizing greenhouse gases value
2456
1354
15
1087
0
0
0
3708
628
134
2076
604
266
0
2319
1386
15
853
63
2
0
2961
796
374
0
907
856
28
-50 450 950 1450 1950 2450 2950 3450
Total economic returns
CRP
Cotton
Corn
Non-irrigated crop
Irrigated soybeans
Rice
m$
Without reservoirs HH
Without reservoirs FF
With reservoirs MM
With reservoirs KK
Economic costs of conservation policies
that increase ecosystem services for
the landscape with reservoirs
0
0.1
0.2
0.3
0.4
0.5
0.6
Economic cost per dollar of 
ecosystem service value gained ($)
Conservation policies
Cost‐share reservoir
construction costs
Tax on ground‐
water
Total maximum
daily load
Carbon credits
Conclusions
 Conjunctive water management increases economic
returns up to 10% for any given value of ecosystem
services.
 A compromise among economic return and
ecosystem service objectives usually generates
more social value up to 21% without reservoirs and
30% with reservoirs than directing the landscape
exclusively to one objective.
 All conservation policies increase social value but
some do so at greater economic cost.

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Aligning Farm Returns and Ecosystem Services with Spatially-Managed Groundwater

  • 1. Aligning Economic Returns and Ecosystem Services for a Spatially Delineated Farm Landscape Reliant on Groundwater for Irrigation Kent Kovacs, Kuatbay Bektemirov 71st SWCS International Annual Conference July 24‐27, 2016 Louisville, KY
  • 2. Introduction What are the possibilities of achieving important ecosystem service objectives while also generating reasonable economic returns? Optimization determines: ‱ economic returns for the landscape given the crop (rice, soybeans, corn, etc.) and irrigation choices ‱ groundwater supply, surface water purification, and GHG reductions ‱ maximum economic returns for a given value of the ecosystem service(s) provided
  • 3.
  • 6.
  • 7. _ _( 1) _ m i t i t ik k t ik AQ AQ p GW nr   ‱ Aquifer stock _ _ _j ij t i t i t j wd L GW RWï‚Ł  ‱ Water balance _ _ 0ij t ij j j L L  ‱ Land balance Dynamics of land and water use
  • 8. Economic returns objective Profit w/o irrigation costs Reservoir construction cost Reservoir water pumping cost Ground water pumping cost  _ _ _ _ _ _ _ _ , , 1 1 1 max : ij t i t i t T m n r rw t j ij j ij t iR t i t i t i t L RW GW t i j pr y ca L c L c RW GC GW               
  • 9. Ecosystem service objectives ‱ Greenhouse gas reductions ‱ Surface water purification ‱ Groundwater supply from the landscape   _ _ _, , _ _ 1 max : ij t i t i tL RW GW T m c t c i t i ti t V p S E       _ _ _, , _ _ 1 1 _ max : ij t i t i tL RW GW i t i tT i k w t k k t k i t i k EX EX V hh wtpq EX                            _ _ _, , _ 1 _ 1 max : ij t i t i tL RW GW T m g t bv i t i ti t V p AQ AQ     
  • 10. Efficiency frontiers ‱ Optimize the ecosystem services objective without restriction on economic returns. Optimize economic returns objective without restriction on ecosystem services. ‱ Maximize economic returns for given ecosystem service values to find combinations that rest on the efficiency frontier.
  • 11. Results Outline ‱ Ecosystem service and economic return values for points along frontiers ‱ Crop mix patterns along frontiers that show the tradeoff of economic returns and
 - All ecosystem services - Groundwater supply value - Water purification value - Greenhouse gas reduction value ‱ Present value (PV) of ecosystem services and economic returns for select points along frontiers using
 - All ecosystem services - Groundwater supply value - Water purification value - Greenhouse gas reduction value ‱ Economic costs resulting from conservation policies that increase ecosystem services for the landscape with reservoirs
  • 12. Ecosystem service and economic return values for points along efficiency frontiers Without reservoirs With reservoirs Frontiers Present value of Frontiers Present value of economic returns ecosystem services economic returns ecosystem services A 1649 1532 F 1649 1532 B 2768 1000 G 3021 1000 C 3021 819 H 3322 819 D 3322 567 I 3656 567 E 4559 -2345 J 4757 -2206
  • 13. Crop mix patterns along frontiers that tradeoff all ecosystem services With reservoirs Without reservoirs
  • 14. PV of ecosystem services for frontiers using all ecosystem service value Ecosystem services Without reservoirs With reservoirs A C E F H J Water purification 32 21 -1 32 19 -2 Groundwater supply 60 27 -68 60 41 -56 Greenhouse gases 1439 771 -2276 1439 760 -2147 Total ecosystem services 1532 819 -2345 1532 819 -2206
  • 15. PV of economic returns for frontiers using all ecosystem service value Land cover Without reservoirs With reservoirs A C E F H J Rice 0 0 769 0 0 932 Irrigated soybeans 0 121 674 0 21 698 Non-irrigated crop 0 543 625 0 477 587 Corn 0 1300 1940 0 1953 2081 Cotton 0 54 430 0 21 439 CRP 1649 1003 121 1649 851 20 Total economic returns 1649 3021 4559 1649 3322 4757
  • 16. Crop mix patterns along frontiers that tradeoff groundwater supply value With reservoirs Without reservoirs
  • 17. PV of ecosystem services for frontiers optimizing groundwater buffer value ‐620 ‐672 50 2 885 813 50 22 ‐700 ‐500 ‐300 ‐100 100 300 500 700 900 Total ecosystem services Greenhouse gases Groundwater supply Water purification m$ Without reservoirs L With reservoirs Q ‐1178 ‐1167 ‐10 0 ‐450 ‐442 ‐10 2 ‐1200 ‐1000 ‐800 ‐600 ‐400 ‐200 0 Total ecosystem services Greenhouse gases Groundwater supply Water purification m$ Without reservoirs N With reservoirs S
  • 18. PV of economic returns for frontiers optimizing groundwater buffer value 4169 23 386 1952 817 290 702 4638 25 437 2079 646 634 816 2539 1058 16 521 945 0 0 4118 360 423 1959 937 315 125 -50 450 950 1450 1950 2450 2950 3450 3950 4450 Total economic returns CRP Cotton Corn Non-irrigated crop Irrigated soybeans Rice m$ Without reservoirs N Without reservoirs L With reservoirs S With reservoirs Q
  • 19. Crop mix patterns along frontiers that tradeoff water purification value With reservoirs Without reservoirs
  • 20. PV of ecosystem services for frontiers optimizing water purification value Ecosystem services Without reservoirs With reservoirs V W X AA BB CC Greenhouse gases -1506 -1671 -1858 -1340 -1509 -1697 Groundwater supply -45 -51 -57 -32 -37 -43 Water purification 25 23 19 25 23 19 Total ecosystem services -1526 -1699 -1895 -1348 -1524 -1720
  • 21. PV of economic returns for frontiers optimizing water purification value Land cover Without reservoirs With reservoirs V W X AA BB CC Rice 739 746 758 887 904 924 Irrigated soybeans 547 587 625 556 601 635 Non-irrigated crop 347 377 440 319 362 419 Corn 1574 1685 1778 1675 1788 1898 Cotton 233 265 311 228 260 307 CRP 518 443 348 438 346 246 Total economic returns 3957 4102 4260 4102 4260 4429
  • 22. Crop mix patterns along frontiers that tradeoff greenhouse gas reduction value With reservoirs Without reservoirs
  • 23. PV of ecosystem services for frontiers optimizing greenhouse gases value 518 478 28 11 516 478 25 13 ‐50 50 150 250 350 450 550 Total ecosystem services Greenhouse gases Groundwater supply Water purification m$ Without reservoirs HH With reservoirs MM 1276 1200 49 28 1269 1200 41 28 ‐50 150 350 550 750 950 1150 Total ecosystem services Greenhouse gases Groundwater supply Water purification m$ Without reservoirs FF With reservoirs KK
  • 24. PV of economic returns for frontiers optimizing greenhouse gases value 2456 1354 15 1087 0 0 0 3708 628 134 2076 604 266 0 2319 1386 15 853 63 2 0 2961 796 374 0 907 856 28 -50 450 950 1450 1950 2450 2950 3450 Total economic returns CRP Cotton Corn Non-irrigated crop Irrigated soybeans Rice m$ Without reservoirs HH Without reservoirs FF With reservoirs MM With reservoirs KK
  • 25. Economic costs of conservation policies that increase ecosystem services for the landscape with reservoirs 0 0.1 0.2 0.3 0.4 0.5 0.6 Economic cost per dollar of  ecosystem service value gained ($) Conservation policies Cost‐share reservoir construction costs Tax on ground‐ water Total maximum daily load Carbon credits
  • 26. Conclusions  Conjunctive water management increases economic returns up to 10% for any given value of ecosystem services.  A compromise among economic return and ecosystem service objectives usually generates more social value up to 21% without reservoirs and 30% with reservoirs than directing the landscape exclusively to one objective.  All conservation policies increase social value but some do so at greater economic cost.