Bonnie G Colby

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Courses

Scholarly Contributions

Books

• Colby, B., & Frisvold, G. (2011). Risk and Resilience: The Economics of Climate-Water-Energy, Challenges in the Arid Southwest. Resources for the Future Press.

Chapters

• Bark, R., & Colby, B. (2011). Climate, Changing Snowpack and the Economics of Winter Recreation. In Risk and Resilience: The Economics Of Climate-Water-Energy Challenges In The Arid Southwest,. Resource for the Future Press.
• Colby, B., & Tanimoto, P. (2011). Using Climate Information to Improve Electric Utility Load Forecasting. In Risk and Resilience: The Economics Of Climate-Water-Energy Challenges In The Arid Southwest. Resource for the Future Press.
• Colby, B., Basta, E., & Pittenger, K. (2011). Temporary Water, Transactions and Climate Change Adaptation. In Risk and Resilience: The Economics of Climate-Water-Energy Challenges in the Arid Southwest. Resources for the Future Press.
• Colby, B., Jones, L., & Pittenger, K. (2011). Economic Tools for Climate Resilience. In Risk and Resilience: The Economics of Climate-Water-Energy Challenges in the Arid Southwest. Resources for the Future Press.

Journals/Publications

• Duval, D. F., & Colby, B. G. (2016). The influence of Colorado River flows on the upper Gulf of California fisheries economy. Ecological Engineering.
• Kerna, A., Colby, B. G., & Zamora, F. (2016). Cultural and Recreational Values for Environmental Flows in Mexico's Colorado River Delta.. Water Economics and Policy.
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  http://www.worldscientific.com/doi/abs/10.1142/S2382624X16500351
• Chandrasekharan, B., & Colby, B. (2013). Medium-term electricity load forecasting and climate change in arid cities. Journal of Natural Resources Policy Research, 5(2-3), 163-181.
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  Abstract: Electric utilities need to consider how potential changes in climate patterns will affect their peak loads. This study incorporates weather and socio-economic variables into a medium-term load forecasting model to consider potential climate change effects on the challenging summer peak season for utilities in the arid southwestern US. Our 'average hourly load by month' model shows marked improvement over a purely autoregressive approach to load forecasting used by some electric utilities. In light of climate change, electric utilities and society can benefit from minimizing inaccuracies in load predictions. Decision-making based on more climate-sensitive forecasts will reduce the water and carbon footprint of electric utilities and improve their investment strategies for renewable energy technologies. © 2013 Copyright Taylor and Francis Group, LLC.
• Bark, R. H., Osgood, D. E., Colby, B. G., & Halper, E. B. (2011). How do homebuyers value different types of green space?. Journal of Agricultural and Resource Economics, 36(2), 395-415.
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  Abstract: It is important to understand tradeoffs in preferences for natural and constructed green space in semi-arid urban areas because these lands compete for scarce water resources. We perform a hedonic study using high resolution, remotely-sensed vegetation indices and house sales records. We find that homebuyers in the study area prefer greener lots, greener neighborhoods, and greener nearby riparian corridors, and they pay premiums for proximity to green space amenities. The findings have fundamental implications for the efficient allocation of limited water supplies between different types of green space and for native vegetation conservation in semi-arid metropolitan areas. Copyright 2011 Western Agricultural Economics Association.
• Jones, L., & Colby, B. (2010). Weather, climate, and environmental water transactions. Weather, Climate, and Society, 2(3), 210-223.
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  Abstract: Obtaining water for environmental purposes, such as habitat restoration or water quality improvements, has become an important objective in many parts of the world. Such water acquisitions are likely to become more challenging as regional water demand and supply patterns are altered by climate change. In regions where water supplies are already fully claimed, voluntary negotiated transactions have become a key means to obtain water for the environment. The cost of acquiring water in such transactions is hypothesized to vary with regional weather and climate conditions due to both the actual effects of temperature and precipitation on water supply and demand and the perceptions water users may hold about these effects. This article develops econometric models to examine the effect of temperature and precipitation on water lease prices in four U.S. states located in the desert southwest. Water leases for environmental and nonenvironmental purposes are contrasted to understand the differing nature of these lease markets and the role of weather and climate variables. The authors' analysis finds that temperature, precipitation, regional income, and population changes are variables that have differing effects in the two lease markets. Overall, analysis of over 20 yr of data shows the need to consider climate and weather factors given the growing importance of water leases as a tool to secure water for the environment. © 2010 American Meteorological Society.
• Bark, R. H., Osgood, D. E., Colby, B. G., Katz, G., & Stromberg, J. (2009). Habitat preservation and restoration: Do homebuyers have preferences for quality habitat?. Ecological Economics, 68(5), 1465-1475.
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  Abstract: This research examines homebuyers' preferences for nearby riparian habitat, an important issue because quality riparian habitat competes for water resources with other activities in semi-arid regions and because federal and local governments allocate significant resources to riparian habitat preservation and restoration plans. Riparian vegetation surveys comprising comprehensive measures of the ecological characteristics of riparian habitat were completed in the metropolitan Tucson study area and the data incorporated into a hedonic analysis of single family residential house prices. The results indicate that high quality riparian habitat adds value to nearby homes and that instead of indiscriminately valuing "green" open space, nearby homebuyers distinguish between biologically significant riparian vegetation characteristics. This research also suggests that it is worthwhile to account for the heterogeneity of natural amenities in hedonic analysis. Furthermore the results suggest that riparian preservation and restoration programs are more likely to receive public support if they incorporate features that are preferred by nearby homeowners. Our study's results show that household preferences for existing riparian habitat match features of the ecologically-functional riparian habitat envisaged in a recently funded joint federal-city urban riparian restoration project in Tucson, Arizona. © 2008 Elsevier B.V. All rights reserved.
• Pullen, J. L., & Colby, B. G. (2008). Influence of climate variability on the market price of water in the Gila-San Francisco basin. Journal of Agricultural and Resource Economics, 33(3), 473-487.
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  Abstract: Emerging water markets in the western United States have slowly developed as usage patterns have changed over time. This article develops an econometric model for the Gila-San Francisco Basin. Results indicate the market price of water has risen in response to drought and market conditions. Analysis shows a statistically significant relationship between the price and quantity of water transferred, year the transaction occurred, location where the transaction occurred, new use of the water right, and whether the transaction occurred during a drought year. Using the Standard Precipitation Index, we find negotiated prices are higher during dry years. Copyright 2008 Western Agricultural Economics Association.
• Bark-Hodgins, R., & Colby, B. G. (2006). An economic assessment of the Sonoran Desert Conservation Plan. Natural Resources Journal, 46(3), 709-725.
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  Abstract: Riparian corridors supply many environmental and aesthetic services in the arid and semi-arid regions world wide. Riparian ecosystems provide water filtering, bank stabilizing, flood mitigating benefits, and habitat for native birds, bats, fish, and other wildlife. The juxtaposition of lush herbaceous and treed areas with upland desert also makes these corridors an aesthetic resource. In Arizona, urban homeowners are one of the primary "consumers" of the riparian corridor. Recent research demonstrates that riparian corridors are capitalized into nearby home values. Specific to this research, urban and suburban homebuyers are willing to pay high premiums to live near sections of riparian corridors that support dense, species rich, and perennial-water-dependent habitat. In this study we calculate the estimated increases in property values and property tax revenues associated with proximity to healthy urban riparian corridors. These property premiums are then compared to the estimated costs of water leases necessary to support water-dependent habitats as detailed in the Sonoran Desert Conservation Plan (SDCP). The plan aims to protect open space in the Sonoran Desert in southern Arizona, specifically in Pima County. The property premiums are estimated at between $126.54M (Million) and $253.08M and generate an estimated $1.23M-$2.46M per annum in incremental property tax revenues, whereas, the annual cost of water leases to support the vegetation is $0.54M. This partial economic analysis demonstrates that urban riparian habitat preservation and restoration with the allocation of renewable water supplies can be financially self-supporting. In addition, the estimated property price premiums indicate potential benefits to modifying current well-spacing rules in Arizona.
• Colby, B., & Orr, P. (2005). Economic tradeoffs in preserving riparian habitat. Natural Resources Journal, 45(1), 15-31.
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  Abstract: Riparian habitat has been diminishing throughout the Western United States due to land development and water diversions. Efforts to preserve remaining riparian habitat confront problems with competition for water and inadequate policy mechanisms to assure water for habitat maintenance. This article highlights economic tradeoffs in efforts to preserve the San Pedro River in southeastern Arizona and reports the results of a recent contingent valuation method study determining visitors' willingness to pay for riparian area preservation.
• Colby, B., & Smith-Incer, E. (2005). Visitor values and local economic impacts of riparian habitat preservation: California's kern river preserve. Journal of the American Water Resources Association, 41(3), 709-717.
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  Abstract: Preservation of the few remaining ecologically vital riparian areas in the southwestern United States is a significant policy concern. This article reports on two economic aspects of preserving a nationally renowned riparian birding area in Southern California. First, the article examines visitor willingness to pay (WTP) for habitat restoration and estimates an annual WTP of US$77 per visitor to preserve the habitat, about a half-million dollars a year for estimated visitor numbers in 2000 and 2001. Second, it documents visitor expenditures in the local economy to be approximately three-quarters of a million dollars per year. This direct visitor spending attributable to the riparian habitat generates around US$1.3 million in increased local business activity in this relatively remote rural area.
• McCann, L., Colby, B., Easter, K. W., Kasterine, A., & Kuperan, K. V. (2005). Transaction cost measurement for evaluating environmental policies. Ecological Economics, 52(4), 527-542.
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  Abstract: Policy choice and policy design need to take account of transaction costs in order to increase the efficiency and sustainability of policies. However, transaction costs must first be measured to be included in the evaluation of alternative environmental or natural resource policies. While a number of studies measure transaction costs, there has been no systematic treatment of the fundamental issues involved. This article examines the issues involved in transaction cost measurement and makes recommendations regarding a typology of costs as well as the measurement methodologies themselves. In particular, methods used for nonmarket valuation of environmental goods may have potential for the measurement of transaction costs. © 2004 Elsevier B.V. All rights reserved.
• Brookshire, D. S., Colby, B., Ewers, M., & Ganderton, P. T. (2004). Market prices for water in the semiarid West of the United States. Water Resources Research, 40(9), W09S0401-W09S0408.
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  Abstract: Market prices contain information about supply and demand, the institutions that influence both these elements, and the operation of the market. Prices also allocate scarce resources to higher-valued uses. In this paper we analyze the price history of three water markets in the arid Southwest: Arizona's Central Arizona Project, Colorado's Colorado Big Thompson Project, and New Mexico's Middle Rio Grande Conservancy District. Using water transfers over 11 years, we estimate a simultaneous system of market equations, one for price and the other for quantity demanded. Comparison of the institutional characteristics of each market reveals that Colorado's market is well developed, with many trades and rising prices that respond to market conditions, and New Mexico's market is developing well, with lower prices, but showing some response to supply and demand factors. Arizona's market is the least developed, with few trades and very low prices. Our empirical findings support our claim that markets are becoming more efficient in these regions despite the considerable institutional and historical impediments to the evolution of water markets.
• Orr, P., & Colby, B. (2004). Groundwater management institutions to protect riparian habitat. Water Resources Research, 40(12), 1-9.
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  Abstract: Groundwater pumping affects riparian habitat when it causes the water table to drop beyond the reach of riparian plants. Riparian habitat provides services that are not directly traded in markets, as is the case with many environmental amenities. There is no direct market where one may buy or sell the mix of services provided by a riparian corridor. The objective of this article is to review groundwater management mechanisms and assess their strengths and weaknesses for preserving the ecological integrity of riparian areas threatened by groundwater pumping. Policy instruments available to those concerned with the effects of groundwater pumping on riparian areas fall into three broad categories: (1) command and control (CAC), (2) incentive-based economic instruments, and (3) cooperative/suasive strategies. The case of the San Pedro River illustrates multiple and overlapping strategies applied in an ongoing attempt to reverse accumulating damage to a riparian ecosystem. Policy makers in the United States can choose among a broad menu of policy options to protect riparian habitat from groundwater pumping. They can capitalize on the clarity of command-and-control strategies, the flexibility and less obtrusive nature of incentive-based economic strategies, and the benefits that collaborative efforts can bring in the form of mutual consideration. While collaborative problem solving and market-based instruments are important policy tools, experience indicates that a well-formulated regulatory structure to limit regional groundwater pumping is an essential component of an effective riparian protection strategy.
• Colby, B. G. (2000). Cap-and-trade policy challenges: A tale of three markets. Land Economics, 76(4), 358-638.
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  Abstract: Cap-and-trade policy instruments have been applied to a number of environmental problems, with varying success. This article examines cap-and-trade programs for SO2 allowances fishery quotas, and water rights. Design and implementation of cap-and-trade mechanisms involves challenging policy tradeoffs: accommodating equity concerns, balancing use levels with resource conditions, facilitating transactions, accounting for externalities, assuring adequate monitoring, and documenting welfare gains. Efficient trading mechanisms are more readily implemented when there is a strong political or legal mandate to cap resource use and trades are perceived as a means to ease adjustment to use limits. (JEL Q28).
• Colby, B. G., & D'Estree, T. P. (2000). Economic evaluation of mechanisms to resolve water conflicts. International Journal of Water Resources Development, 16(2), 239-251.
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  Abstract: Conflicts involving water resources are pervasive and the costs of the conflicts themselves and attempts to resolve them represent a substantial social investment. Several mechanisms are used to resolve water disputes: litigation, market transactions, political deal-making, and alternative dispute resolution techniques. This article examines the types of costs and benefits associated with resolving water disputes and proposes several criteria to be used in evaluating the economic aspects of dispute resolution mechanisms.
• Leones, J., Colby, B., & Crandall, K. (1998). Tracking expenditures of the elusive nature tourists of southeastern Arizona. Journal of Travel Research, 36(3), 56-64.
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  Abstract: Expansion of nature tourism markets may be limited because of restrictions on visitor numbers at specific sites. Hence, factors affecting visitor expenditures are critical. This study of nature tourists in Arizona indicates that birdwatchers spend more money than other visitors to natural sites. Communities that target nature visitors from areas more than a few hours' drive away and encourage visits to multiple sites can increase visitor expenditures.
• Kirchhoff, S., Colby, B. G., & LaFrance, J. T. (1997). Evaluating the performance of benefit transfer: An empirical inquiry. Journal of Environmental Economics and Management, 33(1), 75-93.
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  Abstract: Benefit transfers are used by public agencies needing information on costs and benefits of policy decisions, although scientific debate regarding the validity of benefit transfer is ongoing. This article develops a methodology to evaluate the performance of direct benefit transfer and benefit function transfer and applies the methodology to two pairs of similar non-market amenities. Empirical results indicate that benefit function transfer is more robust than transfer of average site benefits. Our results suggest that the circumstances under which benefit function transfer provides valid, policy-relevant information may be limited and that errors from applying benefit transfer can be quite large, even across seemingly similar amenities.
• Booker, J. F., & Colby, B. G. (1995). Competing water uses in the southwestern United States: valuing drought damages. Water Resources Bulletin, 31(5), [d]877-888.
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  Abstract: Economic benefit functions of water resource use are estimated for all major offstream and instream uses of Colorado River water. Specific benefit estimates are developed for numerous agricultural regions, for municipal uses, and for cooling water in thermal energy generation. Economic benefits of hydropower generation are given, as are those for recreation on Colorado River reservoirs and on one free-flowing reach. Marginal and total benefit estimates for Colorado River water use are provided. The estimates presented here represent a synthesis of previous work, providing in total a comprehensive set of economic demand functions for competing uses of Colorado River water. Non-use values (e.g., benefits of preserving endangered species) are not estimated.
• Colby, B. G., Crandall, K., & Bush, D. B. (1993). Water right transactions: market values and price dispersion. Water Resources Research, 29(6), 1565-1572.
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  Abstract: The growing interest in water market transactions among policymakers and water users has created a need for understanding market price behavior and the heterogeneous nature of water rights. This article analyzes characteristics of markets, water rights, and water transactions to identify attributes which affect market values and price dispersion within regional markets. Based on econometric analysis of market data, water commodity and transaction characteristics are shown to be significantly related to market prices. Price dispersion that is unexplained by commodity attributes is related to characteristics of the regional market, including the number and size distribution of potential traders, costs of obtaining market information, and heterogeneity of water commodities traded. -Authors
• Colby, B. G., McGinnis, M. A., & Rait, K. A. (1991). Mitigating environmental externalities through voluntary and involuntary water reallocation: Nevada's Truckee-Carson River Basin. Natural Resources Journal, 31(4), 757-783.
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  Abstract: This article explores the challenges that arise as environmental externalities become a consideration in Western water reallocation. The analysis evaluates voluntary water transfers and exchanges as tools for conflict resolution, for accommodating environmental values, and for expanding the benefits generated by regional water resources. Voluntary transfers are compared to involuntary reallocations prompted by judicial rulings. Both types of reallocations will continue to be important for Western water, but the magnitude and distribution of costs and benefits differs significantly depending on the approach taken to reallocating water. The central issues are illustrated by examining the Truckee-Carson Basin in Nevada. The next section of this article provides an overview of the economic values that motivate water reallocation for environmental purposes. The following section briefly describes water interests in the Truckee-Carson basin, the evolution of water institutions and infrastructure, and the pressures for change in water management and allocation. The final section looks at institutional innovations that may accommodate the changing needs of the area. The emphasis throughout is on incorporating environmental considerations into the Western water allocation framework, and on mitigating externalities by reallocating water from one use to another. -from Authors
• Colby, B. G. (1990). Enhancing instream flow benefits in an era of water marketing. Water Resources Research, 26(6), 1113-1120.
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  Abstract: Examines current instream flow policies in the western states and outlines the economic values generated by stream flows. The author argues that instream values are high enough to compete in the market for water rights with offstream uses when important recreation sites and wildlife species are involved. Suggests how western state policies might be altered to accommodate instream flow protection within the context of water marketing, with the objective of improving the efficiency of water allocation among instream and consumptive uses. -from Author
• Colby, B. G. (1990). Transactions costs and efficiency in Western water allocation. American Journal of Agricultural Economics, 72(5), 1184-1192.
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  Abstract: Over the last 20 yr the tension between market forces and broader social values has become increasingly evident in state water transfer policies. Through the 1950s, water transfers out of agriculture were uncommon and were discouraged by some Western states. However, the American West's economic transition from ranching, irrigated farming, and mining to urban growth, services, tourism, and industry brings strong incentives to transfer some water out of agriculture. Agriculture accounts for 85%-95% of water use in many Western states, and the cost of reducing irrigated acreage so that water can be available for other uses is generally far less than the cost of developing new water supplies. Over the last decade, market transfers have become a more common means to reallocate water. Transactions costs are generally characterized as factors that prevent markets from operating efficiently or as factors that prevent markets from forming altogether. In Western US water markets, transactions costs are incurred in searching for trading partners, ascertaining the characteristics of water commodities, negotiating price and other terms of transfer, and obtaining legal approval for the proposed change in water use. This paper addresses the latter category of transactions costs, termed policy-induced transactions costs (PITC) in this discussion. This paper evaluates PITC generated by state water transfer policies and argues that PITC force consideration of externalities that would otherwise be ignored by water buyers and sellers negotiating in their own best interests, concluding that PITC have a legitimate role in promoting efficient water allocation. Data from several Western states with active water markets are used to analyze the economic incentives and distributional impacts of transactions costs imposed by state water transfer policies. -from Author
• Colby, B. G. (1989). Estimating the value of water in alternative uses. Natural Resources Journal, 29(2), 511-527.
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  Abstract: Many public and private decisions regarding water use, allocation, and management require estimation of water's value in alternative uses. This paper discusses economic concepts essential in valuing water, outlines and compares market and nonmarket based approaches used to estimate water values, and reviews the application of these methodologies for valuing water in instream, irrigation, municipal and industrial uses in the western US. -Author
• Colby, B. G. (1988). Economic impacts of water law - state law and water market development in the Southwest. Natural Resources Journal, 28(4), 721-749.
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  Abstract: Western state statutes, case law and administrative procedures significantly affect the economic benefits and costs associated with market transfers of water rights. State laws define the uses to which water rights can be applied and the conditions that must be satisfied to change the point of diversion place or purpose of use. Administrative procedures for transferring water rights can involve substantial costs to the transferor and become a significant factor in determining whether a potential transfer can profitably be implemented. Laws and policies that are changing or ambiguous add an additional element of risk to the transfer process and can affect market activity by failing to clarify the conditions under which a transfer may or may not take place. This paper reviews and contrasts key elements in water policies of the southwestern states, focusing on the economic implications of these policies for market transactions. -Author

Presentations

• Colby, B. G., Lopez Hoffman, L. -., Wiederholt, R., Klawitter, R., & Presnall, C. (2013, June). Transboundary Spatial Subsidies in Ecosystem Services: Bi-national Incentive Mechanisms for the Colorado River Delta.. European Society for Ecological Economics.. Lille, France..
• Colby, B. (2011, May). Sharing Best Economic Practices in Adaptation Planning. Eighth Annual Climate Prediction Applications Science Workshop. San Diego, California.

Others

• Adler, R., Colby, B. G., Flessa, K. W., Kenney, D., Lettenmeier, D., Overpeck, J. T., Schmidt, J., Udall, B., & Waskom, R. (2017, June). Innovations in Agricultural Water Conservation and Use: Fertile Ground for Lasting Solutions. Colorado River Research Group.
• Colby, B. G. (2012, August). Measurement, Monitoring, and Enforcement of Irrigation Forbearance Agreements.
• Colby, B. G., & Schuster, E. (2012, Fall). Water Supply Reliability Strategies for Agriculture and the Environment in the Colorado River Delta: A Farm Household Analysis. Agricultural and Resource Economics.
• Bark, R., Osgood, D., Colby, B., & Halper, E. (2011, Fall). How Do Homebuyers Value Different Types of Green Space?. Journal of Agricultural and Resource Economics.
• Colby, B. G. (2011, March). Prioritizing Water Acquisitions for Cost-Effectiveness.
• Colby, B. G. (2011, October). Entendiendo el Valor del Agua en la Agricultura: Herramientas para Negociar Intercambios de Agua.
• Colby, B. G. (2011, September). Understanding the Value of Water in Agriculture: Tools for Negotiating Water Transfers.
• O'Donnell, M., & Colby, B. (2009, May). Water Banks: A Tool for Enhancing Water Supply Reliability. Department of Agricultural and Resource Economics. http:/ag.arizona.edu/arec/people/profiles/colby.html