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.