Agricultural Economics Department

Presentations, Working Papers, and Gray

Literature: Agricultural Economics

University of Nebraska - Lincoln Year 

Economic and State Budget Cost of

Reducing the Consumptive Use of

Irrigation Water in the Platte and

Republican Basins

Ray Supalla∗ Thomas V. Buell†

Brian McMullen‡

∗rsupalla1@unl.edu

†Univeristy of Nebraska - Lincoln

‡University of Nebraska-Lincoln, bmcmullen2@unl.edu

This paper is posted at DigitalCommons@University of Nebraska - Lincoln.

http://digitalcommons.unl.edu/ageconworkpap/42
 

Economic and State Budget Cost of Reducing the Consumptive Use 

of Irrigation Water in the Platte and Republican Basins 

Analysis Prepared by: 

Ray Supalla, Tom Buell and Brian McMullen1

August 21, 2006 

 

1

 Ray Supalla is Professor of Agricultural Economics, Tom Buell is Graduate Research Assistant and Brian 

McMullen is Research Associate, Department of Agricultural Economics, UNL. Analysis was conducted as a public 

service for the Nebraska Department of Natural Resources. 
 

Summary 

The potential costs to irrigators, the state economy and the state budget were estimated 

for different methods of reducing consumptive use (CU) of irrigation water in the Platte and 

Republican Basins. The policy methods considered included: leased retirement of irrigated land 

using a willing buyer-willing seller approach; required land retirement with lease payments equal 

to actual producer losses; retirement of irrigated land by purchasing water rights using a willing 

buyer-willing seller approach; forced retirement of irrigated land with the purchase price equal to 

actual market value; allocation with 100 percent producer compensation; and allocation with 50 

percent producer compensation. Both long and short-term programs were considered with the 

reduced consumptive use occurring at different locations within each basin. The analysis 

assumes that CU must be reduced by 75,000 acre-feet in the Platte Basin west of Elm Creek, and 

by 100,000 acre-feet in the Republican Basin. 

Findings and Conclusions Concerning Economic Costs 

• The land rental and land sales markets provide the best indication of the value of 

irrigation water at the farm level. A comparison of irrigated and dryland market values 

suggests that irrigation water is worth an average of $74 per acre per year in the Platte 

Basin and $82 per acre per year in the Republican Basin, with an average sale value of 

$639 per acre in the Platte and $725 in the Republican. 

• The on-farm cost of reducing consumptive use depends on the per acre value of irrigation 

water and on the level of consumptive use per acre. The on-farm costs were estimated to 

average $69 per acre-foot of CU in the Platte Basin and $98 in the Republican Basin. In 

both basins on-farm costs per acre-foot of consumptive use decreases as one moves from 

east to west. 

• The off-farm costs of reducing consumptive use are initially quite high, but diminish as 

the displaced resources move to alternative uses. Off-farm costs for the first year of a CU 

reduction program were estimated at $180 per acre-foot for the Platte and $193 for the 

Republican when a land retirement approach was assumed, and at $131 for the Platte and 

$176 for the Republican if only allocation was used to reduce consumptive use. All first 

year costs were projected to diminish to about 15 percent of the first year values within10 

years or less. 

• Total statewide economic costs for both the on-farm and off-farm effects were estimated 

for the Platte Basin to range from $185 per acre-foot change in CU for a 10 year program 

to $114 for a 50 year program, if a land retirement approach was used and from $225 to 

$147 if allocation was used to achieve the same level of reduction. The corresponding 

estimates for the Republican Basin were from $160 to $143 for land retirement and from 

$230 to $207 for allocation. 

2
 

• The total economic cost of reducing depletions to the river was found to be substantially 

cheaper if the irrigation reductions occurred on land located close to the river, especially 

if the need was for a short-term program. A 10 year program in the Platte Basin, for 

example, would cost over $20,000 per acre-foot if the reduced pumping occurred five 

miles from the river, which corresponded for this calculation to the 28/40 line, compared 

to $367 for land located one mile from the river. Location was found to be much less 

important for a 50 year program, but still varied from $155 for land one mile from the 

river to $702 per acre-foot for land 5 miles away. 

Findings and Conclusions Concerning Community Impacts 

• The best indication of how community level employment, population and income will be 

affected by irrigation reductions is how such communities were affected when the 

irrigation development occurred. 

• The available empirical evidence suggests that the effects from the expected level of 

change in irrigation will be too small to be problematic at the community level. 

• In the late 1990’s irrigated acreage in the Republican Basin increased by about 15 

percent, which is approximately the level of decrease that may be needed, yet 

employment, population and income was not noticeably effected. 

• The community property tax revenue base is unlikely to be reduced by more than two 

percent in either basin by the expected level of irrigation reductions, unless the irrigation 

reductions are very concentrated in small parts of the basin. 

Findings and Conclusions Concerning State Budget Costs 

• The estimated total annual state budget cost of reducing CU in the Platte Basin by 75 kaf 

ranged from $3.2 million ($42/AF reduction in CU) for a land retirement, water right 

purchase program with compensation equal to market value, to 7.7 million ($103/AF 

reduction in CU) for a voluntary water right leasing program. 

• Total up-front budget costs for a 75 kaf Platte Basin program depend on the planned 

program length. A very long-term 50 year program would have total up-front costs 

ranging from $45.5 million for a water right purchase with market value compensation, to 

$168.1 million if an allocation approach with full compensation is used. Total up-front 

costs for a short-term 10 year program were estimated to range from $31.7 million to 

$68.3 million. 

• The estimated total annual state budget cost of reducing CU in the Republican Basin by 

100 kaf ranged from $4.5 million ($45/AF reduction in CU) for a land retirement, water 

right purchase program with compensation equal to market value, to $15.5 million 

($155/AF reduction in CU) for a voluntary water right leasing program. 

3
 

• Total up-front budget costs for a 100 kaf Republican Basin program followed a pattern 

similar to the Platte and ranged from $64.8 million for a water right purchase with market 

value compensation, to $110.7 million using a voluntary water right leasing approach. 

The range for a 10 year program was $63.0 million to $120.7 million. 

• The per acre-foot cost of reducing depletions to the river will be much higher than the 

cost of reducing depletions to the basin, especially if the reduced irrigation occurs at 

more than one or two miles from the river. 

• The cost differences between water right leasing and purchasing are very large for long 

term programs, because with leasing the costs continue indefinitely, whereas with 

purchasing once the right is paid for there are no further costs. 

Policy Implications 

• Policy makers can minimize the cost of reducing consumptive use from irrigation and 

augmenting stream-flow by purchasing rather than leasing irrigation rights, by using 

regulatory instead of a willing buyer and willing seller approach, and by reducing 

irrigation at locations close to the river 

• Allocation programs, with compensation, rather than irrigated land retirement should be 

seriously considered as administratively easier, although somewhat more expensive, 

approach to reducing CU from irrigation. 

• Cost uncertainties are primarily due to unknowns regarding what type of program(s) will 

be used to achieve the desired outcomes. If the political process finds required irrigated 

land retirement with market value compensation, or allocation with perhaps only partial 

compensation acceptable, then state budget costs will be relatively low. On the other 

hand, if Nebraska chooses to use a willing buyer and willing seller land retirement 

program, or a land leasing program, then many may find the costs prohibitively high. 

4
 

Introduction 

Nebraska must reduce the consumptive use (CU) of irrigation water in the Republican 

Basin, as per a legally binding Compact with Kansas and Colorado; in the Platte Basin, as per the 

requirements in a proposed plan developed under the terms of a Cooperative Agreement with 

Colorado, Wyoming and the U. S. Department of Interior; and in any over appropriated basin, as 

per the requirements of LB962. This analysis addresses the economic costs and the potential 

state budget costs of meeting these objectives under alternative policy scenarios. Economic costs 

are estimated for both the on-farm and off-farm consequences, including the statewide effects as 

the changes ripple through the Nebraska economy. 

Factors Affecting Costs 

Both the economic and the budgetary costs depend on the policy characteristics which 

determine how and when consumptive use is reduced. First, these costs depend on whether the 

appropriate policy concern is depletion to the basin or depletion to the river. When the policy 

concern is depletion to the river, depletion reduction costs will be much lower if the policies used 

result in irrigation reductions on lands which are close to the river. Second, CU reduction costs 

depend on whether CU is reduced by decreasing irrigated acres, or by reducing the amount of 

water pumped or diverted (allocations). It is usually less costly to reduce CU by reducing acres, 

compared to reducing allocations, because there is more opportunity for simultaneously reducing 

production and irrigation costs. Third, CU reduction costs depend on factors affecting the 

profitability of irrigation, including rainfall, crop prices, irrigation costs and other production 

costs. All factors affecting the profitability of irrigation, per unit of consumptive use, will 

proportionately change the cost of reducing depletions to both the basin and the river. Finally, 

average CU reduction costs depend on whether the need is for short or long-term reductions. 

This is especially true for off-farm costs which are relatively high initially but diminish 

substantially over the long-term. 

Policy Options Evaluated 

 The policy options considered in this analysis reflect current issues in the Platte and 

Republican Basins. For the Platte Basin the analysis focuses on the potential cost of off-setting 

the increased depletions to the river which have occurred between 1997 and 2005, as determined 

under the terms of the Cooperative Agreement. The cost of off-setting these depletions is 

5
 

estimated for both irrigated land retirement and for allocation programs implemented over 10, 25 

and 50 years, respectively. The specific programs considered include: 

Land retirement via a voluntary annual lease; 

Land retirement via regulations, with annual compensation payments equal to the actual 

average on-farm cost; 

Land retirement via voluntary purchase of water rights; 

Land retirement via regulation with one-time compensation payments equal to market 

value of the water right (difference in land value with and without irrigation); 

Allocation via regulation with no compensation; and 

Allocation via regulation with compensation equal to 100 percent of the calculated 

reduction in farm income. 

 Costs under these policy scenarios were estimated for reducing depletions to the Platte 

Basin, as well as for reducing depletions to the Platte River. Off-setting depletions to the basin 

represent what might be required over the long-term under the requirements of LB962, which 

mandates a water balance at the basin level, but not necessarily a restoration of stream flow. 

The needs in the Republican Basin are slightly different. Under the terms of the 

Republican River Compact any reduction in consumptive use helps Nebraska meet its 

obligations. However, actions which have a relatively quick impact on the river during an 

extended drought are especially useful. Republican Basin costs were accordingly estimated for 

reduced depletions to both the river and the basin, for the same array of policy choices as the 

Platte Basin.

Procedures Used to Estimate On-farm and Off-farm Economic Costs 

Parties involved in the water policy process have expressed an interest in several 

economic effects associated with reducing consumptive use. This analysis addresses the four 

effects which are most often mentioned: the economic cost at the farm level, the economic 

consequences for local communities, the effects on the state economy and the potential state 

budget costs. 

On-farm Costs 

 Farm-level economic costs were defined as the change in net economic returns. The 

change in net returns for irrigation land retirement was estimated as the difference between the 

6
 

net returns per acre of land for irrigation and the returns from the same quality land under 

dryland conditions. The on-farm cost of allocation was assumed to equal the difference in net 

returns due to a reduced water supply, assuming no change in capital costs.2

 All on-farm values 

were estimated for three representative counties in the Platte Basin (Morrill, Lincoln and Phelps) 

and three counties in the Republican Basin (Franklin, Red Willow and Chase). A weighted 

average of county results was used to represent each basin.3

 Water Optimizer, a management 

tool developed by Supalla and Martin, UNL, was used to compute the differences in net returns 

using prices and costs which reflect current conditions.4

 Annual property taxes on agricultural 

land were assumed to be 1.72 percent in the Republican Basin and 1.67 percent in the Platte 

Basin, levied on 80 percent of the market value of the land, as estimated in Johnson, 2006.5

 The 

interest charge was 8.0 percent for operating capital and 6.0 percent for capital costs. General 

overhead was estimated at 10 percent of operating costs. 

Off-farm Costs 

 Total economic costs for the State of Nebraska include both on and off-farm costs. These 

costs could be measured as changes in economic output, value added or household income. 

Change in economic output is a good measure of how business activity is affected, but is a poor 

measure of the effects on Nebraska households. Value added is a better measure because it 

adjusts for intermediate input costs and is therefore an indication of the net contribution made by 

Nebraska resources. It is still not a good measure of how the welfare of Nebraska citizens is 

affected, however, because some of the returns to Nebraska resources may accrue to citizens 

outside the state. The changes in primary payments to Nebraska households which result from 

changes in irrigation are the best measure of total economic cost to the state. Primary payments 

 

2

 This approach assumes that the allocation levels do not result in reduced investment in farm or irrigation 

equipment, either because it is uneconomic to do so or because allocation rules require sustaining the capacity to 

irrigate all acres to maintain the allocation. 

3

 The Republican Basin average was based on certified acres, with Franklin representing the 330,000 certified acres 

in the LRNRD (30.3% of the Basin), Red Willow representing 312,000 acres in the MRNRD (28.6%) and Chase 

representing 448,700 acres in the URNRD (41.1%). The weighted average for the Platte Basin was based on the 

2005 estimates of irrigated acres within the 28/40 area in three reaches, with Morrill County representing 424,900 

acres (53.4%), Lincoln County representing 262,037 acres (33%) and Phelps County representing 108,000 acres 

(13.6%). 

4

 The crop production costs incorporated in Water Optimizer are based on 2006 Crop Budgets developed by Roger 

Selley, Nebraska Cooperative Extension Service. Irrigation Costs, excluding a $7.00 per acre capital charge for the 

well, were assumed to be $5.00 per acre inch for all counties except Chase, which was assumed to be $5.50 because 

of greater pumping depth. The crop prices used were corn, $2.40/bu.; grain sorghum, $2.30/bu.; soybeans, $5.50/bu.; 

wheat, $3.50/bu. and hay, $70/T. 

5

 These basin averages are a simple average of the 2005 County Average Rate for the three counties representing 

each basin. 

7
 

to households, often called earned income, are equal to wages and salaries and proprietors 

income. They exclude dividends and most types of transfer income such as social security 

payments. These values were estimated for the various policy scenarios using multipliers 

developed by a recent study by Charles Lamphear (Lamphear, 2005). 

Lamphear found that primary payments to households per one dollar change in output 

from irrigated crops totaled $.796 of which $0.162 was direct payments to on-farm households 

and $0.634 was payments to off-farm households. He also found that household payments from 

dryland crops totaled $0.646 per one dollar change in dryland output, consisting of $0.14 in 

payments to on-farm households and $0.506 in payments to off-farm households. These 

coefficients were used to estimate the off-farm payments to households for both changes in 

irrigated acres and changes in water allocation. 

For policy scenarios involving retirement of irrigated land, the off-farm costs for the first 

year of the program were estimated by multiplying the change in the value of irrigated 

production times 0.634 and then subtracting the off-setting increase in dryland production, which 

was computed as the change in dryland crop value times 0.506. When irrigation is reduced 

through allocation rather than land retirement, however, the off-farm effects per one dollar 

change in irrigated output are much different. In this case, as the value of irrigated crop 

production changes there is no off-setting increase in dryland production. The only production 

inputs which change are irrigation costs and some yield dependent costs such as fertilizer. The 

multiplier for this situation was estimated at $0.466 cents per one dollar change in the value of 

irrigated crop production. It was estimated by modifying Lamphear’s direct and indirect 

requirements matrix to reflect the production input mix when irrigation crop output changes as a 

result of water allocation. 

Duration of Off-farm Costs 

 The off-farm costs, also called secondary costs in the economics literature, are transitory 

because most of the resources involved eventually find alternative employment. This is why the 

principles and guidelines used by federal agencies for evaluating water projects do not allow 

project applicants to count secondary benefits or costs (U.S. Water Resource Council, 1983). The 

federal agencies assume that the labor and other resources which become unemployed as a result 

of some change in irrigation (which is called a secondary effect) will eventually move on to 

alternative employment and earn as much or more than they earned before the change in 

8
 

irrigation. Statewide off-farm costs are indeed zero if the resources which are displaced when 

irrigation is reduced could immediately find comparably productive alternative employment 

within Nebraska. But unfortunately some resources are immobile, and in all cases it may take 

some time before alternative employment can be secured. In addition, some of the resources 

involved may shift to uses outside the community or to another state. When this happens there is 

a long-term economic cost at the community and/or state level. 

The multipliers described above can be used to estimate off-farm costs in the short-run, 

which in this case is probably at least one year, but there is no widely accepted method of 

determining how long these costs are likely to be sustained. Extensive research by the Economic 

Research Service, USDA (Sullivan, et al., 2004) found that retiring irrigated land under the 

Conservation Reserve Program (CRP) had little lasting effect. They found that: 

“In the years immediately after land was enrolled in the CRP, job growth in 

high-CRP counties was significantly lower than in comparable low-CRP 

counties. However, job growth was indistinguishable over the longer term 

(1985-2000).” (Sullivan et al., 2004). 

Although not discussed in this study, sustained state level impacts from reductions in agriculture 

would be even less likely. 

 Most economists contend that secondary benefits and costs should be ignored in 

economic analyses because they are both transitory and difficult to estimate (Anderson and 

Settle, 1977). We disagree. In an agricultural state such as Nebraska there is likely to be some 

lasting effect, if only because some of the people and resources involved may need to leave the 

state to find alternative employment. In this analysis we assume that off-farm costs at the state 

level decrease linearly during the first 10 years from 100 percent of the multiplier effects 

described above in year one to 15 percent in year 10, and then remain at 15 percent for the 

indefinite future. The unknown actual costs may be lower than this because of faster resource 

adjustments, but they are very unlikely to be higher. 

Local Community Impacts 

Community leaders are understandably concerned about the potential effect of irrigation 

reductions on their communities, especially effects on employment, population and tax revenues. 

Like off-farm costs, this issue is hard to address because of the dynamics of resource adjustment. 

Will people who lose irrigation related jobs find others within the community, or move to 

9
 

another community or another state? Will school enrollments decrease? Will public service costs 

increase relative to the tax base? Empirical estimates of these potential consequences were not 

developed for this analysis, but much can be learned from a cursory assessment of the downside 

risk 

 We begin our assessment by reviewing what has happened in the Nebraska communities 

which experienced rapid irrigation growth in the recent past. Our contention is that the effects of 

decreased irrigation should be a mirror image of the effects from irrigation growth, assuming no 

other significant changes to the economic base of the community. And fortunately we have a 

great laboratory in the Republican Basin where the MRNRD and the LRNRD experienced 

irrigation growth of about 150,000 acres, or 15 percent, from 1995 to 2004, with little change in 

other factors affecting their economic base. 

 A plot of employment and irrigation growth in the Republican Basin for the 1995 to 2004 

time period shows no discernible relationship (Figure 1). The fact that employment did not 

noticeably increase as irrigation development occurred does not mean that irrigation had no 

effect, however, because without irrigation development there may have been actual employment 

declines. To address this possibility we compared the growth in Republican Basin employment 

relative to employment in all other rural Nebraska counties for 1995 to 2005 (Table 1 and Figure 

2). We found that the employment growth pattern in the Republican Basin during a period of 

rapid irrigation growth was nearly exactly the same as the pattern for all other rural counties. 

An analysis of the percentage changes in employment, population and sales tax revenues 

from 1995 to 2005, for all non-metropolitan Nebraska counties leads to the same conclusion 

regarding community impacts from irrigation (Figures 3, 4 and 5). No statistically significant 

relationships were found between changes in irrigated acres and employment, population or sales 

tax revenue, for the Republican Basin counties, the Platte Basin counties, or the remainder of 

non-metropolitan Nebraska. 

One should not conclude from this assessment that irrigation has had no impact on local 

employment, population or sales taxes, because surely it has. What we can conclude, however, is 

that the effects are so small, even during periods of rapid irrigation growth, that they cannot be 

easily detected or observed. This also means that they are probably small enough to be ignored 

when contemplating reductions in irrigation that are equal to or less than the growth we have 

seen in the last 5 to10 years. 

10
 

Property Tax Impacts 

Another potential community impact that is of concern to policy makers is the potential 

for adversely affecting the property tax base. The property tax base would decline if land values 

declined as a result of irrigation restrictions (allocations), or if irrigated land is retired and taxed 

as dryland. 

 The potential allocation levels being discussed will decrease economic returns to land but 

over the long-term this effect will be small and less than general inflation, thus making it likely 

that land values will continue to increase, rather than decrease, although the rate of increase is 

likely to be slower than would otherwise occur. This expectation is supported by 25 years of 

experience in the URNRD. Despite going from an initial allocation level of 22.5 inches in 1979 

to 13.5 inches in 2005, land values have continued to increase, albeit more slowly than in other 

parts of the state (Figure 6). Over the short- term (2 to 3 years), however, market psychology 

may be more important than economics. If uncertainty and fear leads to pessimism, then some 

decline in land values is certainly possible. This appears to have happened in Southwest 

Nebraska in 2006, with gravity irrigated land values dropping by 1.8 percent in the Southwest 

Crop Reporting District (CRD) and by 4.8 percent in the South CRD. Center pivot irrigated land 

was down by 6.3 percent in the South CRD, but up by 5.1 percent in the Southwest CRD 

(Johnson, 2006). 

The impact of land retirement on the property tax base depends in part on how the 

retirement is implemented. If the right to irrigate is sold in perpetuity, then the value of the 

remaining land asset decreases to a dryland value and taxes are likely to be adjusted accordingly. 

On the other hand, if the right to irrigate is leased as it has been under the EQUIP and CREP 

programs, then the asset value probably hasn’t changed and land taxes will remain at the 

irrigated level. Let us assume for purposes of illustration that enough land is retired to reduce CU 

by 75,000 acre-feet in the Platte Basin (65,800 acres) and by 100,000 acre-feet in the Republican 

Basin (117,600 acres), and that all of these acres are then taxed at dryland values. This would 

reduce assessed values by $46 million in the Platte Basin, which is 0.4 percent of total valuation 

in the Basin, and by $85 million in the Republican Basin, which is 2.0 percent of the total.6

 

 

6

 Tax data is for 2005 and was compiled from Nebraska Department of Property Assessment and Taxation, 

http://pat.nol.org/researchReports/valuation/. The counties included in these calculations for the Platte Basin were 

Adams, Banner, Buffalo, Dawson, Garden, Gosper, Hall, Kearney, Keith, Lincoln, Morrill, Phelps and Scotts Bluff. 

The Republican counties were Chase, Dundy, Franklin, Frontier, Furnas, Harlan, Hayes, Hitchcock, Nucholls, 

11
 

These amounts may be significant in an absolute sense, but the percentage decreases are too 

small to materially disrupt the delivery of public services as long as the retirement program is not 

concentrated in a small part of the basin. 

Estimates of On-Farm Economic Costs 

The on-farm economic costs of reducing consumptive use for irrigation were estimated 

for two types of programs, land retirement and allocation. The on-farm cost of land retirement, 

when expressed on an annual basis is equal to the difference in net income when using the land 

for dryland production instead of irrigation. Three methodologies were used for determining this 

cost: the land rental market, the land sales market and a computed value using Water Optimizer. 

The results from each methodology were averaged to determine a best estimate. 

The cost of retiring irrigated acres was found to average $74 per acre per year in the 

Platte Basin and $82 per acre per year in the Republican Basin (Table 2). The corresponding 

costs when expressed on the basis of a one-time purchase were $639 per acre in the Platte Basin 

and $725 per acre in the Republican Basin. There are significant differences within each basin, 

however, with the Platte ranging from $810 in the eastern part of the critical habitat area to $547 

above Lake McConaughy. Cost for the Republican Basin varied by much less, but again they 

were lowest in the far west. The basin average was lower in the Platte than in the Republican 

primarily because the averages were weighted by the number of impacted acres in each reach, 

and a high proportion of the Platte acres are above McConaughy where retirement costs are 

relatively low. 

The estimated per acre costs of retiring irrigated land were converted to a cost per acrefoot change in CU by dividing through by an estimate of CU per acre (Table 2). Expressed on 

this basis the costs were $69 per acre-foot of reduced consumptive use in the Platte Basin and 

$98 per acre-foot in the Republican Basin. Again, the Platte Basin average is relatively low 

because of the dominating effect of land above McConaughy where CU per acre is the higher 

than anywhere else in either basin. 

The on-farm economic cost of using allocation to reduce consumptive use is equal to the 

difference in annual income that results from applying less water. These costs were estimated for 

 Perkins, Red Willow and Webster. Calculations assume retirement of 97,939 acres in the Platte Basin and 117,647 

acres in the Republican Basin and that retired irrigated land will be taxed at dryland value. Land values taken from 

Johnson, B., Nebraska Farm Real Estate Market Developments, 2005-2006. 

http://agecon.unl.edu/realestate/re2006.pdf. 

12
 

a representative county in each reach using Water Optimizer, which computes the difference in 

net returns when each water supply level is used optimally. In this case the cost per acre-foot 

change in CU depends on how much the water supply (allocation) has to change to produce the 

desired effect, which in turn depends upon how many acres are regulated and on how much 

reduction in CU is needed. For this analysis we assumed a 75,000 acre-foot reduction in the 

Platte Basin proportionately distributed across all acres within the 28/40 zone and west of Elm 

Creek, and a 100,000 acre-foot reduction in the Republican Basin proportionately distributed 

across the certified acres in each NRD (Table 3). Achieving these reductions would reduce net 

returns by an average of $104 per acre-foot of CU reduction in the Platte Basin and by $155 per 

acre-foot in the Republican Basin. Reducing CU by allocation is more costly at the farm level 

than retiring acres, because there is no change in taxes and less opportunity to reduce capital 

costs. 

When the on-farm cost of reducing CU by allocation is expressed on a per affected acre 

basis, instead of a per acre-foot of CU basis, the results look quite different. Costs per affected 

acre were estimated for this case to average only $9 in the Platte Basin and $14 in the Republican 

Basin (Table 3). Costs per affected acre are low because they are spread across the entire land 

area and because the last units of water applied to an acre of land do not add much to net 

economic returns.7

 

It should be noted that if the required reductions in CU from irrigation were higher than 

the values used for these calculations, or if the same level of total reduction was achieved by 

regulating fewer acres, then the on-farm costs could be much different. For example, it was 

estimated that if only one-third as many acres were regulated to achieve the same level of total 

reduction, then the cost per acre-foot change in CU would be about the same, but the cost per 

affected acre would triple. 

Estimates of Off-Farm Economic Costs 

Off-farm economic costs were also estimated for both land retirement and allocation. To 

consider off-farm costs, however, one must also consider the length of the program, because off-

 

7

 As more and more water is applied to a crop, the increase in grain yield per unit of water applied gradually 

diminishes to zero because at some point more water does not add to crop yields. As the increase in yield per unit of 

water applied decreases, the net economic gain from applying the water also decreases. Hence, net economic returns 

do not change much as a result of applying less water under allocation programs that reduce the amount of water 

applied by about 20 percent or less. Very low allocations, however, will have a cost per affected acre that is similar 

to the cost of land retirement. 

13
 

farm impacts are transitory, as noted earlier. Although most CU reduction needs are probably 

long-term, there may be a need for policy officials to consider shorter term programs as well. 

Hence, off-farm costs were considered for programs of 10, 25 and 50 years. 

 The off-farm costs of land retirement were estimated at $203 per acre per year for the 

Platte Basin in the short-run (first year), decreasing to an average of $132, $71 and $56 per acre 

per year for programs that continue for 10, 25 and 50 years, respectively (Table 4). The 

corresponding costs for the Republican Basin were somewhat lower at $164 for the first year, 

then averaging $107, $58 and $41 per acre per year for 10, 25 and 50 year programs. Average 

off-farm statewide costs for land retirements, when expressed on a per acre basis, are lower in 

the Republican Basin, because there is less difference between irrigated and dryland agricultural 

output, compared to the average for the Platte Basin west of Elm Creek. However, when off-farm 

costs are expressed in terms of dollars per acre-foot change in CU they are very similar for both 

basins, because average CU per acre is lower in the Republican Basin. First year off-farm land 

retirement costs were estimated for both basins at approximately $185 per acre-foot of CU 

reduction, decreasing to an average of $120, $65 and $46 per year, per acre-foot of CU, for 

programs of 10, 25 and 50 years, respectively (Table 4). 

 The off-farm costs of reducing CU with allocation when compared to land retirement 

were 27 percent lower in the Platte Basin and 9 percent lower in the Republican Basin (Table 5). 

Off-farm effects from allocation are lower than for land retirement, for the same total change in 

CU, because there is less reduction in irrigation input costs. Off-farm costs from allocation in the 

Republican Basin are a little higher than in the Platte because the amount of water applied is 

already regulated in the Republican Basin. Current allocation levels were used as the baseline for 

the Republican Basin, whereas an estimate of current uncontrolled pumping was the baseline 

used for the Platte Basin. Off-farm costs from allocation, expressed as a cost per unit change in 

CU, increase as the allocation level decreases. 

Estimates of Total Economic Costs 

The total economic cost, on-farm and off-farm, of a long-term program (50 years or 

more) that would reduce CU by 100 kaf in the Republican Basin and by 75 kaf in the Platte 

Basin was estimated at $23.2 million per year using land retirement and $31.4 million using 

allocation (Table 7). Estimated total economic costs, per acre-foot change in CU, were about 20 

percent higher in the Platte Basin than in the Republican Basin under a land retirement approach, 

14
 

and about 30 percent higher if allocation was used (Table 6). A long-term 50 year land 

retirement program for the Platte was estimated to cost $114 per acre-foot compared to $147 for 

the Republican. A comparable allocation program was estimated to cost $143 in the Platte and 

$207 in the Republican. 

Cost of Reducing Depletions to the River Compared to Depletions to the Basin 

 Our discussion of costs to this point has been entirely in terms of reduction in 

consumptive use, which is equivalent to reduced depletions to the basin. However, in the Platte 

Basin the central issue is depletions to the river rather than depletions to the basin, and to a lesser 

extent this is also the case in the Republican Basin. It will cost more per unit to reduce depletions 

to the river because not all of the reduction in CU will show up as a reduced depletion at the river 

in the relevant time frame. To examine the sensitivity of the results to this issue we computed 

the cost of reducing depletions to the river when land that is located from one to five miles from 

the river is retired. This was done using the well known Jenkins Equation, as described in Table 

5 and on Figure 6. 

 The total economic cost of reducing depletions to the river using land retirement was 

found to be substantially cheaper if the retired land was located close to the river, especially if 

the need was for a short-term program. A 10 year program in the Platte Basin, for example, 

would cost over $20,000 per acre-foot if the reduced pumping occurred five miles from the river, 

which corresponded for this calculation to the 28/40 line, compared to $367 for land located one 

mile from the river (Table 8). Location was found to be much less important for a 50 year 

program, but still varied from $155 for land one mile from river to $702 per acre-foot for land 5 

miles away. Illustrative results for the Republican Basin were similar, assuming no difference in 

average transmissivity or the aquifer storage coefficient. 

 These calculations illustrate that when the policy concern is depletions to stream flow it is 

very important to consider where irrigation should be reduced to provide for reduced depletions 

at least cost. However, the actual significance of proximity to the river in both basins may be 

quite different than what was calculated here using the Jenkins Equation with assumed 

parameters. Groundwater models are needed to more closely examine this issue. 

Estimated State Budget Costs under Alternative Policy Approaches 

 State budget costs were defined as the amount of money it would take to implement a 

variety of approaches to reducing consumptive use. All estimates are for programs which would 

15
 

reduce consumptive use for irrigation by 75,000 acre-feet in the Platte Basin and by 100,000 

acre-feet in the Republican Basin.8

 Estimates are provided for the annual cost of the programs 

and for the full up-front costs. The up-front costs represent what it would cost if all required 

funds were appropriated in the first year of the program. Estimates are also provided for the unit 

cost of reducing depletions to the basin and to the river. All CU is assumed to be a depletion to 

the basin, but how much of the change in CU actually shows up as a change in depletions to the 

river depends on where the reduced depletions occur (proximity to the river and on the relevant 

time frame. For illustrative purposes costs were calculated for time frames of 10, 25 and 50 

years, with corresponding depletions to the river equal to 2.2, 9.8 and 36.0 percent of the 

changes in CU which occur during each time period. 

 The estimated annualized state budget costs for reducing CU in the Platte Basin by 75 kaf 

ranged from $3.2 million ($103/AF reduction in CU) for a land retirement, water right purchase 

program, with compensation equal to market value, to 7.7 million ($42/AF reduction in CU) for 

a voluntary water right leasing program (Table 9). Total up-front costs depend on the planned 

program length. A very long-term 50 year program would have total up-front costs ranging from 

$45.5 million for a water right purchase with market value compensation to $110.7 million using 

a voluntary water right leasing approach. 

 Estimated costs for a Republican Basin program are slightly higher per unit change in 

consumptive use, but the cost differences by policy option follow a similar pattern. The only 

significant difference is that further use of allocation in the Republican Basin to achieve 

additional reductions in CU would be relatively more expensive compared to land retirement. 

This is because one is starting from a baseline which already includes allocation limits. 

 Although allocation would not be the least cost method of reducing consumptive use, it 

may still be an attractive policy option. Using allocation to reduce CU by 75 kaf in the Platte 

Basin, for example, would have a budget cost of $7.8 million per year if producers are 

compensated in full and $ 3.9 million with 50 percent compensation (compared to $3.2 million 

for a land retirement purchase approach with market value compensation). With allocation any 

uncompensated costs are spread across all irrigators in the impact area, whereas with land 

 

8

 The 75 kaf for the Platte is based on the amount of irrigation development which occurred in the basin from 1997 

to 2005 and is a rough approximation of the reduction which may be required under the terms of the Cooperative 

Agreement. The 100 kaf estimate is simply an illustrative value for the Republican and may be significantly more 

or less than what is ultimately required given uncertain weather and future groundwater modeling results. 

16
 

retirement uncompensated costs accrue only to those whose land is retired. As a result, policy 

makers may find it acceptable to implement an allocation approach with only partial producer 

compensation, in contrast to land retirement which may require compensation in excess of actual 

producer losses, especially if a willing buyer and willing seller approach is used. Another 

advantage of allocation is that it is administratively simpler than land retirement, especially if 

land retirement is involuntary. 

 The total state budget costs associated with reducing consumptive use by the required 

amounts in both the Platte and Republican Basins depends primarily on the type of program 

which the state chooses to use to achieve the desired results. If the state chooses to use a 

voluntary leasing approach, the combined costs for long-term 50 year programs could be as 

much as $486 million, $166 million for the Platte program and $320 million for the Republican 

program. On an amortized annual basis these costs are equivalent to $22.6 million per year, $7.7 

million for the Platte and $14.9 million for the Republican. However, if a land retirement water 

right purchase approach with compensation equal to actual losses is used, then total costs for 

both basins for a long-term program could be as little as $110 million, consisting of $45 million 

for the Platte and $65 million for the Republican. The equivalent amortized annual costs are $7.7 

million total, $3.2 million for the Platte and $4.5 million for the Republican. Of course, these 

estimates would change proportionately if it turns out that the required reductions in 

consumptive use are more or less than the estimates used in this analysis. 

17
 

Figures and Tables 

Figure 1. Annual Employment and Cumulative Irrigated Acres, 1995 to 2005, Middle 

and Lower Republican NRD’s. 

Figure 2. Employment in the Lower and Middle Republican NRD’s Compared 

 To Employment in all other Rural Counties. 

Figure 3. Relationship between Growth in Irrigated Acres and Employment, 1995-2005. 

Figure 4. Relationship between Growth in Irrigated Acres and Sales Taxes, 1995-2005. 

Figure 5. Relationship between Growth in Irrigated Acres and Population Growth, 

1995-2005. 

Figure 6. Irrigated Land Value Trends. 

Figure 7. Cumulative Depletions to River as a Function of Time and Distance. 

Table 1. Changes in Irrigated Acres, Employment, Sales Taxes and Population, 

 1995-2005. 

Table 2. On-Farm Economic Cost of Retiring Irrigated Acres 

Table 3. On-farm Economic Cost of Using Allocation to Reduce Consumptive Use 

Table 4. Off-Farm Statewide Economic Cost of Retiring Irrigated Acres 

Table 5. Off-farm Economic Cost of Using Allocations to Reduce Consumptive Use 

Table 6. Combined On and Off-Farm Economic Cost of Reducing Consumptive Use 

 (Depletions to Basin) 

Table 7. Total Economic Cost of Reducing Consumptive Use: Acreage Retirement vs. 

Allocation 

Tabl 8. Total Economic Cost of Retiring Irrigated Acres, per Acre-Foot of Depletion to 

River 

Table 9. State Budget Costs Under Alternative Policies, Excluding Administrative Costs 

18
 

Figure 1. Annual Employment and Cumulative Irrigated 

Acres, 1995-2004, Lower and Middle Republican NRDs

23,000

23,500

24,000

24,500

25,000

25,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Employment

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Additional Irrigated Acres

Republican Employment Irrigated acres cummulative total 

Figure 2. Employment in the Lower and Middle Republican 

NRD and Employment Compared to All Other Rural Counties

23,000

23,500

24,000

24,500

25,000

25,500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

LRNRD and MRNRD Employment

255,000

260,000

265,000

270,000

275,000

280,000 All Other Rural County Employment

Republican Employment Total Rural Employment*

*Excludes Douglas, Sarpy, Lancaster, Madison, Hall, Buffalo, Scotts Bluff, Lincoln, Platte, Dodge, and Adams

19
 

Figure 3. Relationship between Growth in Irrigated Acres 

And Employment, 1995 - 2005

-15

-10

-5

0

5

10

15

20

25

30

0 10 20 30 40 50 60 70

Percent Change in Employment

No Statistically significant correlation between 

irrigation development and employment change.

Percent Change in Irrigated Acres

Linear (Rest of NE) Linear (Republican) Linear (Platte)

Rest of NE Republican Platte

Figure 4. Relationship between Growth in Irrigated Acres

and Sales Taxes, 1995 - 2005

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90

Percent Change in Irrigated Acres

Percent Change in Sales Tax

Rest of NE Republican Platte

Linear (Rest of NE) Linear (Republican) Linear (Platte)

No statistically significant correlation between 

irrigation development and sales tax.

Saunders County

20
 

Figure 5. Relationship between Growth in Irrigated Acres 

and Population Growth, 1995 - 2005

-15

-10

-5

0

5

10

15

0 10 20 30 40 50 60 70 80 90

Percent Change in Irrigated Acres

Percent Change in Population Growth

Rest of NE Republican Platte

Linear (Rest of NE) Linear (Republican) Linear (Platte)

No statistically significant correlation between irrigation 

development and population change.

Saunders 

 County

0

500

1000

1500

2000

2500

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

$ per Acre

Southwest Nebraska State Average

Figure 6. Irrigated Land Value Trends

21
 

Figure 7. Depletions to River as a Function of Depletion to 

Basin, Time and Distance

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

1 8 15 22 29 36 43 50 57 64 71 78 85 92 99

Years

Depletions, % of Pumped

1 Mile

2 Mile

3 Mile

4 Mile

5 Mile

22
 

Table 1. Changes in Irrigated Acres, Employment, Sales Taxes and Population, 1995-2005 

Percent Change 1995-2005 

Irrigated Acres Employment Sales Tax Population 

Republican 17.6 1.9 24.7 -8.9 

Platte 10.7 4.4 39.7 3.7 

Rest of Nebraska* 15.3 1.9 35.2 -1.8 

* Does not include urban counties (Douglas, Sarpy, Lancaster, Madison, Hall, Buffalo, Scotts Bluff, Lincoln, Platte, Dodge and 

Adams) and counties in the Platte or Republican Basins. 

Table 2. On-Farm Economic Cost of Retiring Irrigated Acres 

Representative 

Counties 

Calculated 

Cost 

$/Acre/Yr 

Cash Rent 

Market 

$/Acre/Yr 

Land 

Market 

$/Acre 

Best 

Estimate 

$/Acre/Yr 

Cu 

Inches/Acre 

$/AF of 

Depletion 

to Basin 

Morrill $65 $76 $547 $70 15.4 $55 

Lincoln $73 $80 $719 $76 12.8 $71 

Phelps $98 $75 $810 $86 8.8 $118 

 Platte Wtd. Avg. $72 $77 $639 $74 13.7 $69 

Chase $78 $80 $719 $79 10.4 $91 

Red Willow $94 $80 $719 $87 11.8 $88 

Franklin $80 $83 $739 $81 8.4 $116 

 Repub. Wtd. Avg. $83 $80 $725 $82 10.2 $98 

Notes: 

1. Cash rent and land market values are from the 2006 land market survey by Bruce Johnson, averaged for 

center pivot and gravity irrigated land. 

2. Republican Basin calculations based on irrigation returns given current allocation levels. 

3. Basin averages are weighted by the number of acres in each reach. For the Platte Basin, Morrill represents the 

reach above McConaughy, Lincoln represents the area from McConaughy to Lexington, and Phelps 

represents the area from Lexington to Elm Creek. For the Republican Basin, Chase represents the URNRD, 

Red Willow the MRNRD and Franklin the LRNRD. 

23
 

24

Table 3. On-farm Economic Cost of Using Allocation to Reduce Consumptive Use 

Cost of CU Reduction 

Sub-Basins 

Required CU 

Reduction 

Regulated 

Acres 

Base 

Allocation 

(Inches) 

New 

Allocation 

(Inches) 

$/AF 

of CU Total Cost 

$/Affected 

Acre 

Above Kingsley 40,085.724 424,906 25.1 22.4 $66 $2,645,658 $6 

Kingsley to 

Lexington 24,720.627 262,037 18.6 15.7 $132 $3,263,123 $13 

Lexington to HW 

183 10,194 $108,052 15 13 $188 $1,916,406 $18 

 Platte Basin 75,000 $794,995 $104 $7,825,187 $9 

URNRD 41,140 $448,717 14 12 $121 $4,977,896 $11 

MRNRD 28,605 $312,000 13 11 $163 $4,662,621 $15 

LRNRD 30,255 $330,000 11 9 $195 $5,899,789 $18 

 Republican Basin 100,000 $1,090,717 $155 $15, 540,306 $14 

Notes: 

1. If the allocation program focused on part of the acres, such as those nearest the river, on-farm costs per AF of CU would 

change very little, but cost per regulated acre would increase nearly proportionately, e.g., if the same amount of CU was 

reduced by regulating 1/3 as many acres then cost per regulated acre would increase three-fold. 
Table 4. Off-Farm Statewide Economic Cost of Retiring Irrigated Acres 

Off-farm Costs Based on Estimated Changes in Crop Revenue 

Representative Crop Revenue In Short Run In LoCounties Dryland Irrigated Difference 10 Years 25 Year

$/Acre/Yr $/Acre/Yr $/Acre/Yr 

$/AF 

CU/Yr $/Acre/Yr 

$/AF 

Depletion $/Acre/Yr 

$/AF 

Depletion $/Acre/Y

to Basin to Basin 

Morrill $106 $437 $331 $257 $223 $174 $145 $113 $78 Lincoln $208 $473 $265 $248 $195 $182 $127 $118 $68 Phelps $285 $455 $169 $232 $144 $197 $94 $128 $50  Platte Avg. $164 $451 $287 $251 $203 $180 $132 $117 $71 Chase $151 $417 $266 $271 $188 $192 $122 $125 $66 Red Willow $219 $427 $208 $298 $160 $229 $104 $149 $56 Franklin $278 $438 $160 $188 $137 $161 $89 $105 $48  Repub. Avg. $209 $426 $217 $254 $164 $193 $107 $125 $58 Notes:  1. Short run values assume that all of the resources which are displaced because of reduced irrigation remain unemployed, which is probably true during the in

represent an annual average for next 25 years. This estimate assumes that 85 percent of the displaced resources find alternative employment in the state during that the lost productivity from the remaining 15 percent continues indefinitely. 

3. Basin averages are weighted by the number of acres in each reach. For the Platte Basin, Morrill represents the reach above McConaughy, Lincoln represent

and Phelps represents the area from Lexington to Elm Creek. For the Republican Basin, Chase represents the URNRD, Red Willow the MRNRD and Franklin 

25 
Table 5. Off-farm Economic Cost of Using Allocations to Reduce Consumptive Use

 Long Run Costs 

Required 

CU Reduction 

Regulated

Acres 

Reduced 

Ag Output 

$/Acre 

Short Run 

Cost 

50 Year 

10 Year 

$/AF CU 

25 Year 

$/AF CU $/AF CU 

$/AF 

CU 

Above Kingsley 40,086 424,906 $26 $131 $56 $42 $38 

Kingsley to Lexington 24,721 262,037 $28 $137 $58 $44 $40 

Lexington to HW 183 10,194 108,052 $24 $117 $50 $38 $34 

 Platte Basin 75,000 794,995 $27 $131 $56 $42 $38 

URNRD 41,140 448,717 $27 $139 $59 $45 $41 

MRNRD 28,605 312,000 $41 $208 $88 $67 $61 

LRNRD 30,255 330,000 $38 $196 $83 $63 $57 

 Republican Basin 100,000 1,090,717 $35 $176 $75 $56 $52 

Note: 

1. Off-farm costs for the short-run were calculated using a multiplier derived from Lamphear (2005), as follows: Lamphear’s estimate of 

Primary Payments to HH (on crop farm) was 0.162 per dollar change in irrigated output. This value was increased to 0.33 to represent 

impacts due to allocation. Subtracting 0.33 from .796 equals 0.466 which is an estimate of the off-farm costs under allocation. 

2. Short-term values assume that all of the resources which are displaced because of reduced irrigation remain unemployed, which is 

probably true during the initial year of the program. Long-term values represent the expected annual average.. This estimate assumes that 85 

percent of the displaced resources find alternative employment in the state during the next 10 years (linear adjustment), but that the 

productivity from the remaining 15 percent is lost to the state indefinitely. 

26 
 

27

Table 6. Combined On and Off-Farm Economic Cost of Reducing Consumptive Use 

 (Depletions to Basin) 

Long Run Costs 

Location and 

Method of Reduction 

Short Run 

Costs 

10-Year 

Program 

25-Year 

Program 

50-Year 

Program 

***** Average Cost, $ per AF Reduction in Consumptive Use ***** 

Land Retirement 

Above Kingsley $228 $167 $115 $98 

Kingsley to 

Lexington $253 $189 $135 $117 

Lexington to HW 183 $315 $246 $187 $168 

 Platte Basin $248 $185 $132 $114 

URNRD $280 $213 $155 $136 

MRNRD $345 $265 $196 $174 

LRNRD $259 $202 $154 $138 

 Republican Basin $292 $225 $167 $147 

Allocation 

Above Kingsley $197 $122 $108 $104 

Kingsley to 

Lexington $269 $190 $176 $172 

Lexington to HW 183 $305 $238 $226 $222 

 Platte Basin $235 $160 $146 $143 

 

URNRD $260 $180 $166 $162 

MRNRD $371 $251 $230 $224 

LRNRD $391 $278 $258 $252 

 Republican Basin $331 $230 $212 $207 

Notes: 

1. Short-term values assume that all of the resources which are displaced because of reduced irrigation remain unemployed, which is 

probably true during the initial year of the program. Long-term values represent the expected annual average. This estimate assumes 

that 85 percent of the displaced resources find alternative employment in the state during the next years (linear adjustment), but that 

the productivity from the remaining 15 percent is lost to the state indefinitely. 

2. Basin averages are weighted by the number of acres in each reach. For the Platte Basin, Morrill represents the reach above 

McConaughy, Lincoln represents the area from McConaughy to Lexington and Phelps represents the area from Lexington to Elm 

Creek. For the Republican Basin, Chase represents the URNRD, Red Willow the MRNRD and Franklin the LRNRD. 
Table 7. Total Economic Cost of Reducing Consumptive Use: Acreage Retirement vs. Allocation 

 Cost / AF of Reduction Total Cost, 50 Year Progra

Average Annual Cost Pr

Basin 

Proposed 

CU Reduction 

Acre-Feet Retire Acres Allocation Retire Acres Allocation Retire A

Platte 75,000 $114 $143 $8,550,000 $10,725,000 $183,67Republican 100,000 $147 $207 $14,700,000 $20,700,000 $315,78 Total Both Basins 175,000 $23,250,000 $31,425,000 $499,46

28 
Table 8. Total Economic Cost of Retiring Irrigated Acres, per Acre-Foot of Depletion to River 

Length of Program 

10 Years 25 Years 50 Years 

 Cost in $/AF of Reduced Depletion to River 

Platte Basin 

 1 Mile from River $367 $204 $155 

 2 Miles from River $853 $337 $218 

 3 Miles from River $2,236 $582 $315 

 4 Miles from River $6,671 $1,059 $464 

 5 Miles from River $22,842 $2,026 $702 

Republican Basin 

 1 Mile from River $445 $258 $201 

 2 Miles from River $1,034 $427 $284 

 3 Miles from River $2,709 $738 $409 

 4 Miles from River $8,084 $1,342 $603 

 5 Miles from River $27,679 $2,569 $912 

 Cost in $/AF of Reduced Depletions to Basin 

Platte Basin $185 $132 $114 

Republican Basin $225 $167 $147 

Note: These values were estimated using the Jenkins Equation (Jenkins, 1968) to determine how much of 

what is pumped shows up as reduced stream flow after 10, 25 and 50 years, assuming the pumping occurs 

at a given distance from the stream. This simplified approach assumes that Qs = Qw (erfc(U)) where U = 

(d^2S/4Tt)^.5, where: 

 Values 

Qs = Stream flow depletions, AF 

Qw = pumping rate of well, AF/day 2 

d= distance from stream (feet) variable 

S = storage coefficient (decimal) 0.2 

T = transmissivity, ft^2/day 4000 

t= time in days variable 

29 
Table 9. State Budget Costs Under Alternative Policies, Excluding Administrative Costs 

State Budget 

10 Year Program 

10 Year Program

25 Year Progr

Reduction 

in CU 

(AcreFeet) 

$/AF 

Reduction 

in CU 

Total 

Annual 

Cost 

$/AF 

Depletion 

to River, 

2 Mile 

Total Up 

Front 

Cost 

$/AF 

Depletion 

to River, 

2 Mile 

Total 

Fron

Cos

Platte Basin  Land Retirement, Annual Lease, Voluntary 75,000 $103 $7,733,113 $474 $62,722,476 264 $120,80 Land Retirement, Annual Lease, Required  with Compensation Equal to on-farm Cost 75,000 $69 $5,155,409 $316 $41,814,984 176 $80,538 Land Retirement, Water Right Purchase, Voluntary 75,000 $64 $4,778,924 $293 $68,270,344# 163 $68,270 Land Retirement, Water Right Purchase, Required,  with Compensation Equal to Market Value. 75,000 $42 $3,185,949 $195 $45,513,562 109 $45,513 Allocation, Regulation with Compensation  Equal to 100% of Reduced Farm Income 75,000 $104 $7,825,187 $480 $63,469,273 267 $122,24 Allocation, Regulation with Compensation  Equal to 50% of Reduced Farm Income 75,000 $52 $3,912,593 $240 $31,734,636 133 $61,122Republican Basin  Land Retirement, Annual Lease, Voluntary 100,000 $149 $14,887,563 $685 $120,751,468 381 $232,57 Land Retirement, Annual Lease, Required  with Compensation Equal to On-farm Cost 100,000 $99 $9,925,042 $457 $80,500,979 254 $155,04 Land Retirement, Water Right Purchase, Voluntary 100,000 $68 $6,803,345 $313 $97,190,648 174 $97,190 Land Retirement, Water Right Purchase, Required,  with Compensation Equal to Market Value. 100,000 $45 $4,535,564 $209 $64,793,766 116 $64,793 Allocation, Regulation with Compensation  Equal to 100% of Reduced Farm Income 100,000 $155 $15,540,306 $715 $126,045,801 398 $242,77 Allocation, Regulation with Compensation  Equal to 50% of Reduced Farm Income 100,000 $78 $7,770,153 $357 $63,022,900 199 $121,38

30 
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31