Economic Effects of Reservoir Re-operation Policies

Economic Effects of Reservoir Re-operation policies

by Samuel Sandoval Solis and Jose Pablo Ortiz Partida



 A common believe is that by implementing environmental flows (e-flows) the water allocation for other elements would be reduced. This assumption has been proved wrong for the Big Bend Reach (Sandoval-Solis & McKinney, 2014) (Lane, Sandoval-Solis, & Porse, 2014) (Ai, Sandoval-Solis, Dahlke, & Lane, 2013). Given that there is enough water availability in time and volume, and the required infrastructure to re-operate this system exists (i.e. Luis L. Leon reservoir), the economic impacts of this reservoir re-operation policy remains the major limiting factor to policy change.

 To analyze the economic effects of reservoir re-operation policies, three steps are needed:

  1. Estimate the economic benefits and costs under the current policy (baseline policy).

  2. Estimate the economic benefits and cost under the proposed new policy (e-flow policy, in this research)

  3. Determine which policy provides the most economic net benefits.


 The main objective is to perform a cost benefit analysis using four water-related economic factors: 1) water supply, 2) flood control, 3) recreation, and 4) environment. The main hypothesis is that the e-flows will provide larger economic benefits than the baseline scenario. If this hypothesis is true, the reservoir re-operation policy is not only hydrologically feasible but also economically desirable. These results can support a balanced water policy for two seemingly conflicting water management objectives.

Why I’m preforming this study for the Big Bend Reach of the Rio Grand/Bravo?

  • The water in this transboundary (United States-Mexico) Rio Grande/Bravo (RGB) basin is over-appropriated, and demand for water continues to grow as supplies are constrained by drought and climate change.

  • Streamflow regulation (dams) has degraded the unique aquatic and riparian ecosystems of the Big Bend (BB) reach of the RGB Basin, a region of bi-nationally recognized importance for conservation.

  • For this basin it has been proven that it is possible to improve the health of aquatic and riparian ecosystems by implementing e-flows through reservoir re-operation while meeting human water management objectives.

  • A reach-scale water allocation model with both the baseline and the proposed e-flow policy is available for this river system.   

How the economic analysis is performed?

The methods are divided for the economic factors identified.

Water Supply Activities (Agriculture)

In Mexico there are three agriculture areas that uses water from Luis L. Leon reservoir (LLL): 1) The Irrigation District 90 (DR-90), 2) Coyame Irrigation Unit (below LLL), and 3) Irrigation Unit above Amistad Dam. The data of volume of water used and harvest value was retrieved from the Irrigation Districts Reports produced by the National Water Commission of Mexico (CONAGUA, 1998-2013). The average harvest value from DR-90 was also use to estimate the annual production income for the Irrigation Units. This assumption is valid because the crops and the agricultural conditions are similar.

Using that information it is possible to determine the gross economic income from the agriculture in Mexico. The estimates for the agriculture in United States are part of the incoming task of this research.

Flood Control

Although a major objective of Luis L. Leon reservoir is flood control, since its construction in 1968 there have been a series of floods in the Ojinaga-Presidio valley that over-topped the levee. Flood damage information was obtained from the Binational Flood Control Project for Presidio-Ojinaga Valley (IBWC, 1971). One of the outputs of the project were correlations curves of peak discharge and economic affects. This correlation curves used in combination with the water allocation model to reproduce the flood peak discharges and estimate the economic losses under the baseline and the e-flow policy.


The economic data of the river recreation was retrieved from the Visitor Use Statistics of the National Park Service (NPS, 2014), and by personal communication with rafting operations (personal communications, Lane 2013). The average annual economic profit is mainly based on the estimated number of river user-days per year (a user-day is defined as one person using the river for one day) and an estimate of the trip expenses for each individual.


A cost avoidance approach is used to estimate the economic effects of implementing e-flow in comparison with the baseline policy. This approach determines the money that can be saved by reducing or eliminating some of the tasks in the restoration projects. The environmental element has two main economic factors: 1) the silvery minnow, a fish endangered species; and 2) tamarisk, an invasive specie of tree that consume big amounts of water from the river.

For the silvery minnow recovery plan there is a proposed budget of $167.7 million for a period of 25 years, representing in average $6.7 million per year. Data was obtained from the Rio Grande Silvery Minnow Recovery Plan (USFWS, 2010). The detailed costs of this study were analyzed to identify the actions that could be stopped by providing environmental flows and thereby reducing the average annual costs for environmental objectives.

For the tamarisk, the cost to remove a unit area of tamarisk was obtained from Zavaleta’s research (2000). The estimated cost is $7,420 per hectare. This cost considers a comprehensive extermination and restoration within a 20-year program of planning, eradication, re-vegetation, and monitoring.

Due to the lack of information on area covered with tamarisk, it was estimated for a first approach for this study. Future research involve a remote sensing analysis to determine the area of tamarisk along the river and how this area was changed by peak discharges within the river.


So far, the results show that the e-flow policy would provide a higher profit from water supply and recreational activities, and reduce cost from flood damage and environmental restoration. The study shows that in addition to supporting ecological objectives, the proposed environmental flow policy improves water supply provisions, reduces average annual flood risk, and maintains historical treaty provisions while increasing the economic benefits of water management objectives.

Works Cited

  • Ai, X. S., Sandoval-Solis, S., Dahlke, H. E., & Lane, B. A. (2013). Reconciling Hydropower and Enviromental Water Uses in The Leishui River Basin. River Research and Applications .

  • CONAGUA. (1998-2013). Estadísticas Agrícolas del los Distritos de Riego. Comision Nacional del Agua, Mexico.

  • IBWC. (1971). Report: Proposed Flood Control Project Rio Grande, Presidio Valley, Texas. International Boundary Water Commission.

  • Lane, B. A., Sandoval-Solis, S., & Porse, E. C. (2014). Enviromental Flows in a Human-Dominated System: Integrated Water Management Strategies for the Rio Grande/Bravo Basin. River Research and Applications .

  • NPS. (2014). NPS Stats. Retrieved from National Park Service:

  • Sandoval-Solis, S., & McKinney, D. C. (2014). Integrated Water Management for Enviromental Flows in the Rio Grande. Journal of Water Resources Planning and Management , 355-364.

  • USFWS. (2010). Rio Grande Silvery Minnow Recovery Plan. United States Fish and Wildlife Service.

  • Zavaleta, E. (2000). The Economic Value of Controlling an Invasive Shrub. AMBIO: A Journal of the Human Enviroment , 464.