Kansas lost $1.1 billion on aquifer depletion

Kansas lost about $1.1 billion between 1996 and 2005 in the value of its High Plains groundwater aquifer, a Yale-led research team determined in a study published this year.

The team, led by Eli Fenichel, assistant professor at the Yale School of Forestry and Environment Studies, used the Kansas aquifer as an example in a study looking at setting dollar amounts on “natural capital,” or natural resources such as water, fish and forests.

The purpose, Fenichel said, fits with an international movement by the World Bank, the United Nations and other major economic players to include the natural environment, as well as such things as health and education, in assessing wealth.

A dollar amount also may make it easier to talk about sustainability when the loss or gain of natural resources is presented in a relatable way.

But the question became how you set a price on natural resources, he said.

“Some people would say that’s been contentious, in part because when you talk about something like groundwater or water in general, we know water’s really important, and everybody thinks the price should be really, really high,” he said. “But if we have this sort of gut feeling that we’re not using it as we should, if we have some waste, then our price is actually lower.”

It is the same as a business wasting money, he said. That doesn’t increase its value but rather detracts from it.

“The reason we go through these exercises is we want to be able to track whether or not we’re making progress,” Fenichel said.

The Yale team plowed into the complex mechanisms required to place a value on Kansas water, choosing to use the state in part because it has excellent data on the aquifer levels and water use, he said. They had to determine factors that affect value.

“In the case of a real asset like groundwater, or even your house, the future value or the price changes of those assets depend on how you decide to use them,” he said, adding that a house’s value will change depending on whether you put in new windows or rent it to a bunch of people who destroy it.

“The same thing is true for natural resources,” he said. “When you think about using real assets like an aquifer or a fish population or a forest, how we use it really affects the future value.”

The demand curve and use of Kansas’ aquifer also was impacted by events outside of the water use itself. Fenichel said the effect of water-efficient drop nozzles, used in drip irrigation, was one change that occurred during the period his research explored.

As the number of people using drop nozzles increased from 20 percent to 80 percent, the water aquifer decreased, he said.

The state offered subsidies for irrigation during this time period.

In addition, research has found that drip irrigation actually increases water use, “inducing farmers to irrigate a greater proportion of their acreage and plant more water-intensive crops,” the study said.

The result of their analysis was that Kansas lost about $110 million each year between 1996 and 2005, calculated in 2005 dollars, he said.

The point, Fenichel said, was to at least put the discussion out there with data that can raise the question of whether Kansas — and ultimately other states, as they assess their natural resources — wants to be “spending” its resources in that way.

“Think about this aquifer as an endowment from nature or wherever you want, to the state of Kansas, like a trust fund that Kansas was given,” he said. “It can choose the rate at which it pulls resources out.”

Using a bank account as an example, Fenichel said it might not be bad to pull out resources if they are being reinvested in something that brings more wealth. But if you’re just “throwing lots of parties,” that might not be the best use.

“I don’t know what you should do. I can’t tell you that. I don’t think of it as my resource. But as an analyst, I can say you might want to consider this,” he said. “Really, in the case of Kansas, the water’s not that much different than oil. Wyoming charges royalties on oil withdrawals and coal withdrawals and funds its state that way. I don’t know what the answer is, but I think the idea is you’re not even going to have that conversation until you have some numbers on a spreadsheet.”