Surface water for irrigation is commonly delivered through canals and ditches, where
conveyance losses can be substantial. Despite the policy relevance of improving the
delivery infrastructure, there are no empirical estimates of the value of improvements in
canal conveyance efficiency. In this paper, we estimate the willingness to pay for improving
conveyance efficiency by exploiting the relationship between canal conveyance efficiency
and producers’ investments in on-farm irrigation technology across two river basins in
Colorado. We show that producers are more likely to invest in on-farm irrigation efficiency
when canal conveyance efficiency is lower, consistent with private adaptation to losses in
the delivery system. We use this relationship to recover are vealed preference value for
improvements in canal conveyance efficiency. We find an average value of $2,898.71 per
canal for a one percentage point increase in conveyance efficiency in the South Platte River
Basin and $1,898.58 in the Rio Grande Basin. Using these estimates, we compare the
benefits of canal lining with the costs and find that there are no canals in the study area
for which benefits exceed costs. Taken together, these findings help explain the limited
historical investment in canal conveyance improvements in our study area and shed light
on opportunities for investment.
