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The value of agricultural water rights in agricultural properties in the path of development

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  • Yoo, James
  • Simonit, Silvio
  • Connors, John P.
  • Maliszewski, Paul J.
  • Kinzig, Ann P.
  • Perrings, Charles

Abstract

This paper estimates the value of water rights in a rapidly urbanizing semi-arid area: Phoenix, Arizona. To do this we use hedonic pricing to explore the impact of water rights on property values in 151 agricultural land transactions that occurred between 2001 and 2005. We test two main hypotheses: (1) that the marginal willingness to pay for water rights is higher in more developed urbanizing areas than in less developed rural areas, and (2) that the marginal willingness to pay for water rights in urban areas is increasing in the value of developed land. We find that the marginal willingness to pay for water rights is highest among properties in urbanized or urbanizing areas where a significant proportion of the land has already been developed. Additionally, we find that the marginal willingness to pay for agricultural water rights is greatest in cities where developed land is most valuable.

Suggested Citation

  • Yoo, James & Simonit, Silvio & Connors, John P. & Maliszewski, Paul J. & Kinzig, Ann P. & Perrings, Charles, 2013. "The value of agricultural water rights in agricultural properties in the path of development," Ecological Economics, Elsevier, vol. 91(C), pages 57-68.
    • Handle: RePEc:eee:ecolec:v:91:y:2013:i:c:p:57-68
    DOI: 10.1016/j.ecolecon.2013.03.024
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    3. Yoder, Jonathon, 2018. "Fiscal gridlock over the budget in Washington state: The politics and economics of pouring exempt wells into the prior appropriations bucket," Western Economics Forum, Western Agricultural Economics Association, vol. 16(1).
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    5. Fang, Lan & Fu, Yong & Chen, Shaojian & Mao, Hui, 2021. "Can water rights trading pilot policy ensure food security in China? Based on the difference-in-differences method," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(6), pages 1415-1434.
    6. Changhai Qin & Shan Jiang & Yong Zhao & Yongnan Zhu & Qingming Wang & Lizhen Wang & Junlin Qu & Ming Wang, 2022. "Research on Water Rights Trading and Pricing Model between Agriculture and Energy Development in Ningxia, China," Sustainability, MDPI, vol. 14(23), pages 1-15, November.
    7. Xin, Liangjie & Li, Xiubin, 2019. "Rental rates of grain land for consolidated plots and their determinants in present-day China," Land Use Policy, Elsevier, vol. 86(C), pages 421-426.
    8. Caroline King-Okumu, 2018. "Valuing Environmental Benefit Streams in the Dryland Ecosystems of Sub-Saharan Africa," Land, MDPI, vol. 7(4), pages 1-23, November.
    9. Choumert, Johanna & Phélinas, Pascale, 2015. "Determinants of agricultural land values in Argentina," Ecological Economics, Elsevier, vol. 110(C), pages 134-140.
    10. Wang, Y.B. & Liu, D. & Cao, X.C. & Yang, Z.Y. & Song, J.F. & Chen, D.Y. & Sun, S.K., 2017. "Agricultural water rights trading and virtual water export compensation coupling model: A case study of an irrigation district in China," Agricultural Water Management, Elsevier, vol. 180(PA), pages 99-106.
    11. Choumert, Johanna & Phélinas, Pascale, 2014. "A Hedonic Analysis Of Agricultural Land Values In A Gm Soybean Area Of Argentina," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182750, European Association of Agricultural Economists.
    12. James Yoo & Charles Perrings, 2017. "Modeling the short-run costs of changes in water availability in a desert city: a modified input-output approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 549-564, July.
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    More about this item

    Keywords

    Water rights; Hedonic price method; Urbanization; Farmland prices; Elasticity; Marginal-willingness-to pay;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q19 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Other
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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