The Economics of Water and Land Resource Use

Abstract

Natural resource economics deals with the supply, demand, and the management of the earth’s natural resources. It brings together different broad areas in human economics, earth science, and natural ecosystems to create better understanding of the natural resources in order o develop sustainable ways of managing them to ensure their availability to future generations. Natural resources provide services that respond to market forces, but the right mix of these resources have to be employed in order to optimize the value that they provide. This dissertation focuses on the economics of water and land resources, using economic and biophysical models to show how these resources can be better used to optimize the services that they provide. To do this, this dissertation uses three essays. The first essay uses survey responses from randomly selected anglers in the 2006/2007 recreational fishing season in Alabama in a travel cost model to estimate their consumer surpluses and total willingness to pay for this type of recreation. With some contingent valuation questions in the survey, used with the travel cost model, the study shows that anglers’ willingness to pay for recreational visits will increase if the quality of the recreational fishing sites are improved. This result infers that the owners and managers of recreational fishing sites could improve their possible profits by improving recreational fishing sites. The second essay does an impact analysis of new monies that is brought into the economically depressed Black-Belt region of Alabama and Alabama State by anglers that come to the recreational fishing sites in the State. Using IMPLAN for this analysis, the multiplier effects of the new income shows that new jobs are created; and more could still be created if the quality of the sites are improved. Policies could be used to support the greater use of water resource that is in abundance in the State, particularly in the Black-Belt, as a key to the economic problems in these regions. In the third essay, the economic and environmental impact of land-use change is examined. This study assumes that the demand for bio-ethanol and bio-diesel will continue to increase in United States. Using Kelly Creek watershed in Dale County, Alabama, biophysical and bio-economic models in APEX and GAMS are used to estimate the change of traditional agricultural use of the land to the cultivation of bio-energy crops. The modeling is done using 32 year soil and weather data from 1979 to 2010, under the different ENSO phases to determine the best cropping mix to adopt. The study shows that it is possible to optimize the farmers’ profits using the ideal cropping mix while the agricultural nonpoint source pollutants are greatly reduced or kept minimal.