Reallocation of federal multipurpose reservoirs: principles, policy and practice
McMahon, George F.
Farmer, Michael C.
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Most federal reservoirs placed in operation throughout the United States over the past 50 or 60 years serve multiple objectives, typically flood control, hydropower, navigation, recreation, water quality protection, irrigation and municipal and industrial (M&I) water supply. In the initial reservoir planning and design stage, federal agencies such as the U.S. Army Corps of Engineers (USACE) or the U.S. Bureau of Reclamation (USBR) decide on the scale of the project to be built based on demands for water and storage that prevail at the time and are expected to prevail after construction. A critical step in the planning process is the development of operating rules designed to conjunctively meet these many demands given the scope and scale of the existing project. One of the criteria applied to formulate such operating rules is contribution to National Economic Development (NED). In the decades since their initial construction, relative demands for various services provided by federal reservoirs (expressed as society’s willingness to pay for those services) have changed, in some cases substantially. These changes may prompt reallocation, or modifications to reservoir operating rules that better satisfy the more valuable emerging uses. Needed operational changes sometimes come at the expense of less valuable uses, even though these less valuable uses may constitute originally-authorized purposes of the project. Irrespective of any rights to water and/or to storage conveyed by federal law, significant questions of fairness (equity) and of economic efficiency arise with respect to the distribution of project benefits, costs and environmental impacts that occur if society chooses to reallocate or chooses not to reallocate. Fairness questions center on intergenerational equity and on sustainability while efficiency questions center on net economic surplus, or net benefits, aggregated across project uses. The authors examine as a case study the pronounced shift in public demand from hydropower to M&I water supply in the southeastern United States, to illustrate the potential disparities between the overarching principles that guide federal planning and the policies and procedures historically (and often successfully) used in practice to implement small, incremental reallocations. The normally small differences between objective principles and practical outcomes can accumulate over time to unacceptable proportions, foreclosing options for adaptive management of the nation’s water resources infrastructure and threatening sustainability, equity and efficiency as a consequence.