COSTS AND RETURNS TO IRRIGATION UNDER THE CENTRAL ARIZONA PROJECT: ALTERNATIVE FUTURES FOR AGRICULTURE.

Will farmers in Central Arizona be better off or worse off with the Central Arizona Project (CAP)? How much should they be willing to pay for CAP water? These questions are addressed through both long and short term analyses of the potential economic worth of the CAP. In the short term, the marginal cost of groundwater pumping and overdraft is compared to current levels of demand for irrigation water, and to the estimated variable cost of CAP water. In the long term, the potential effect of the CAP on future average total water costs is estimated. The analytical problem associated with these estimates is in integrating facts and assumptions about the many factors bearing on the present and future costs of alternative water supplies. Among these factors are the costs of energy, taxes, and land subsidence; Colorado River flows; changes in groundwater overdraft and pumping depths to lift; water rights; and the various costs associated with the construction, replacement, operation, and maintenance of water production and distribution facilities. Evaluating the trends and potential savings in the costs of future water supplies with and without the CAP is the means used to assess the net benefit of the CAP for irrigated agriculture. The net benefit is a measure of the maximum amount that farmers would rationally pay for the CAP

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