Modeling Resource Use Responses to Macroeconomic Changes: Water in the US Southern Great Plains *

This study addressed the impacts of the 2008 US recession on water extraction rates from the Ogallala Aquifer in the Southern High Plains of Texas by examining the differences in projected macroeconomic variables and how they impact agricultural production and irrigation water use. The approach used pre- and post-recession FAPRI-based projections of commodity markets and an economic optimization model formulated for the Ogallala Aquifer to simulate water use adjustments. Results indicate that, based on the projections used, the 2008 recession decreased, then increased water use slightly in the representative counties, ceteris paribus, with minimal cumulative effect, and water use responsiveness to economic forces within the region was variable. This analysis also demonstrates that relating policy and economic changes to resource use changes is possible.