Book Review of Determining the Economic Value of Water: Concepts and Methods by Robert A. YoungBook Review of Determining the Economic Value of Water: Concepts and Methods by Robert A. Young

Water has been and will continue to be a contentious issue for policy makers, landowners, municipalities, environmentalists, and citizens who feels they have an undeniable right to clean water delivered to their homes (at least in the United States). With so many groups coming into conflict over what, at least in the West and the Great Plains, continues to be a diminishing resource per capita, an understanding of the economic value of this resource is critical. It is important to note, as Robert Young does throughout his book, that the true economic value of water goes beyond what we pay our city services each month, or the cost to farmers or ranchers for pumping and distributing that water on their land. The value of water must take into account the value of the competing uses which are sometimes difficult to price.

Water Rights and Land Values in the West-Central Plains

Irrigation is vital to the economic activity of the west-central Great Plains. The crops grown, the distribution of center-pivot irrigation systems, and the basic transportation infrastructure is the same in northwest Kansas, northeast Colorado, and southwest Nebraska. But buyers of agricultural land face a different price for irrigated cropland in each of the states, even when the production characteristics of the land are similar. After accounting for factors like productivity and local property tax differences, we argue that it is the difference in water marketing rights between the three states that explains the price difference. The link between land values and water marketing rights is statistically developed by using Ordinary Least Squared (OLS) regression techniques. After adjusting for differences in property taxes, the analysis reveals that the implicit value of full water-marketing rights in the region is approximately $1,026 per acre. This valuation is within the range of estimates provided by other comparable studies across the country.