Proportional water sharing vs. seniority-based allocation in the Bow River basin of Southern Alberta

We analyze the implications of switching from existing seniority-based allocations to proportional water sharing policies in times of water shortage in the Bow River Sub-Basin in Southern Alberta. In particular, we simulate three variations of the proportional water sharing concept: (1) irrigation districts' permissible diversions are reduced in proportion to each district's licenced allocations; (2) the diversions are reduced in proportion with each district's past five-year average diversions; and (3) the diversions are reduced proportionately with each district's diversion in a single prior year. Compared to the seniority-based allocations, all three alternative policies produce unambiguously better results. With trades, the prospect of overall economic gain improves further. However, the distribution of potential monetary gains varies across scenarios. (C) 2011 Elsevier B.V. All rights reserved.