MODELING AGRICULTURAL WATER MARKETS FOR HYDROPOWER PRODUCTION IN THE PACIFIC NORTHWEST
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More than two-thirds of Pacific Northwest electricity is produced from hydropower on the Columbia River system. Irrigated agriculture in the region has a large impact on power supplies by diverting water that could be used for hydropower and using electricity for pumping the water. This paper examines the potential for water markets that would permit sales of water from agriculture to the hydropower sector for energy production. It is shown that both farmers and energy consumers could be made better off by adopting water markets to reallocate water among these competing uses.