d. Dam lasts for only 50 years, Salmon are valued at $7 mallion (the avoided cos
ID: 1148087 • Letter: D
Question
d. Dam lasts for only 50 years, Salmon are valued at $7 mallion (the avoided cost of building an alternative temperature device), interest rate is 5% See excel files for details. GW and Valuation of surface water 11. The dam will make 41,000 additional acre-feet of water available to farmers (on average), worth $18.9 million, or $461 per acre-foot. Many of the farmers using this water have access to groundwater, and they are able to pump as much as they need for their crops. They of course must pay for energy to pump, which depends on how far the water is below the surface. For a depth-to-groundwater map of CA, see https/gis water.ca.gosxlapp/gicimaL Links.to.an and select the "Contours" box. To pump one acre-foot one foot up, it takes about 2 kwh. If farmers pay-$15/kwh, how much would a typical farmer around Fresno pay per acre-foot given the depth of water? How does this amount compare to $461? Would you expect a farmer to be willing to buy surface water at $461? Explain.Explanation / Answer
If the average cost of pumping energy is more than $461 then the farmers are better off paying for the surface water. This depends on how deep the groundwater is and how much energy it would require to pump up averagely on all farmers within the vicinity.
Cost of surface water = $461
Cost of pumping groundwater till one-acre foot = 2 x 15 = $30
For the farmers to buy the surface water, as per the map the average or typical depth of groundwater in Fresno should be more than 461 / 30 = 15.37 acre foot.
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