72nd SWCS International Annual Conference July 30-August 2, 2017 Madison, WI

1. Integrated Assessment of Welfare
and Distributional Effects of the
Bayou Meto Project in Arkansas
Kuatbay Bektemirov and Eric Wailes
University of Arkansas
72nd SWCS Annual Conference
July 30-August 2, 2017, Madison, WI

2. Outline
• Introduction
• Methodology and Data Sources
• Aquifer Protection and Agricultural Water
Supply
• Flood Control
• Waterfowl Management
• Distributional Effects of the Project
• Discussion and Conclusions

3. • Groundwater in eastern
Arkansas is being
seriously depleted by
irrigated agriculture
• US Congress authorized
Bayou Meto Basin flood
control project in the
1950s, and re-
authorized it with a
broadened scope to
include ground water
protection and
conservation,
agricultural water
supply, and waterfowl
management in 1996
• The Basin is designated
as a critical ground
water area in 1998

4. Bayou Meto Project Information
Project Objectives:
• To protect ground water in the Alluvial and Sparta aquifers
• To provide a sustainable water supply for irrigation of about
300,000 acres of cropland and fish farming
• To provide major flood control benefits, and
• To enhance 55,000 acres of wildlife habitat
Project Sponsors & Stakeholders:
• Arkansas Natural Resources Commission (ANRC)
• Bayou Meto Water Management District (BMWMD)
• U. S. Army Corps of Engineers (USACE)
• Natural Resources Conservation Service (NRCS)
• Arkansas Game and Fish Commission (AGFC)
• Farmers, hunters, businesses, landowners, residents, etc.

5. Methodology and Data Sources
• Benefit-cost analysis of the Bayou Meto Basin project to re-
examine and expand upon an economic assessment of the
on-farm analysis conducted by the Corps Engineers
• Kaldor–Hicks tableau format
• integrated assessment of both the economic efficiency and
distributional consequences
• Component analysis
• Aquifer Protection and Agricultural Water Supply
• impact assessment
• stakeholder analysis
• Flood Control
• Waterfowl Management
• Secondary data from various sources
• federal and state agency reports
• publications and publicly available information

6. Welfare Effects of Regulation of
Intertemporal Use of Groundwater
Mississippi River Valley
alluvial aquifer:
• safe yield q0
* =148,565
acre-ft/yr
• recharge rate g = 22%
• discount rate r = 5.125%

7. Impact of the Aquifer Protection
and Agricultural Water Supply
q1 = 649,175 acre-ft/yr (total water demand)
qg = 148,565 acre-ft/yr (aquifer safe/sustainable yield)
qr = 80,051 acre-ft/yr (storage and tailwater recovery)
qi = 323,613 acre-ft/yr (project import)
qc = 96,946 acre-ft/yr (project conservation)
q1 = q* + q2
q2 = qg + qr
q* = qi + qc
Sa=Sg + Ss
Sg= MSCg with control and limit
Ss= supply of project surface water

8. Impacts of Flood Control and
Waterfowl Management
0
D
d
p1
Flood Protection
c
$
p2
a
b
q2
S1 without-project
q1
S2
with-project
Waterfowl ManagementFlood Control
0
p
b
a
Duck Stamps/yearq2q1
S2 with project
D
$/unit S1 without project

9. Investments,
Annual Costs
and Benefits
• Federal funding for the project
cost of 65% provided through
the Corps of Engineers
• Non-Federal funding associated
with the irrigation and flood
control components of the
project provided by ANRC
• BMWMD is responsible for the
non-Federal construction costs
of the waterfowl component
• Private land owners fund the
non-Federal portion of on-farm
work

10. Kaldor-Hicks Tableau Format
• Simultaneous display of the project’s net
benefits and its impact on all stakeholders
• Distinction between financial transfers and
economic variables
• Identify those who will gain and who will lose
• Simulate project alternatives to identify those
which are politically feasible and offer the right
kinds of incentives for stakeholder participation

11. Kaldor-Hicks Tableau of Bayou Meto
Project, Million Dollars (2016)
Hunters/
Watchers
Game
Land
Owners
Floodplain
Land
Owners
Crop Land
Owners/
Farmers
Public
Federal
Govern
ment
Water
District
Other
State
Agencies
Net
- - - - - - - - - - - - - - - - - - - - - - - million dollars - - - - - - - - - - - - - - - - - - - - - -
Benefits
Irrigated Crops’
Value
57.08 57.08
Flood Damage
Reduction
6.91 6.91
Recreational
Benefits* 43.37 43.37
Lower
Environmental
Damage
B4** B4
Costs
On-farm Irrigation -5.91 -5.91
Import System -17.78 -7.70 -27.35
O&M On-farm
Irrigation
-1.14 -1.14
O&M Import
System
-4.12 -4.12

12. Kaldor-Hicks Tableau of Bayou Meto
Project, Million Dollars (2016) (Cont.)
Hunters/
Watchers
Game
Land
Owners
Floodplain
Land
Owners
Crop Land
Owners/
Farmers
Public
Federal
Govern
ment
Water
District
Other
State
Agencies
Net
- - - - - - - - - - - - - - - - - - - - - - - million dollars - - - - - - - - - - - - - - - - - - - - - -
Flood Control
System
-2.34 -0.78 -3.12
O&M Flood Control -0.04 -0.04
Wildlife
Management
System
-2.97 -5.50 -8.47
O&M Wildlife
Management
-1.82 -1.82
Transfers
Water Fees -27.35 17.78 9.57 0
Duck Stamp Fees -1.50 0.90 0.60 0
Property Tax
Surcharge
-0.03 -0.72 0.75 0
Business/Income
Tax
-6.34 3.80 2.54 0
Net 41.87 -10.23 6.85 17.84 B4 -3.44 0.75 1.76 55.38+B4

13. Discussion & Conclusion
• Effective involvement and participation of the beneficiaries
are the instruments for the success of this regional project
• All stakeholders within the project region at least don’t lose,
with the project region net benefits total to $55.38 million
and with lower environmental damage
• Environmental preservation is a common form of public
good, there is a need for the government intervention to
generate non-monetized benefits (B4)
• if the winners gain enough from the project that they could,
hypothetically, reimburse the losers, then the project is
worth undertaking whether there is a reimbursement or not