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Economic Benefits Resulting From Irrigation Water Use: Theory and an Application to Groundwater Use

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  • C.S. Kim
  • Glenn Schaible

Abstract

Traditional economic analysis using a crop production function approachhas assumed that all variable factors, including irrigation water, arefully employed in the crop production process. However, this paper firstdemonstrates that economic benefits of irrigation water areoverestimated when the crop production function, and therefore theirrigation water demand function, is expressed in terms of irrigationwater supplied, rather than consumptive irrigation water use. Second,the paper demonstrates that the magnitude of the estimation bias isproportional to the rate of irrigation water losses through leaching,runoff and evaporation. Consequently, the model misspecification problemwould lead to increased irrigation water use and reduce incentives forfarmers to adopt improved irrigation technologies. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • C.S. Kim & Glenn Schaible, 2000. "Economic Benefits Resulting From Irrigation Water Use: Theory and an Application to Groundwater Use," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 73-87, September.
    • Handle: RePEc:kap:enreec:v:17:y:2000:i:1:p:73-87
    DOI: 10.1023/A:1008340504971
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    References listed on IDEAS

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    1. Wallace E. Huffman & Robert E. Evenson, 1989. "Supply and Demand Functions for Multiproduct U.S. Cash Grain Farms: Biases Caused by Research and Other Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 761-773.
    2. C.S. Kim & C. Sandretto & N.D. Uri, 1997. "The Implications of the Adoption of Alternative Production Practices on the Estimation of Input Productivity in Agriculture," Energy & Environment, , vol. 8(2), pages 133-150, June.
    3. Just, Richard E & Hueth, Darrell L, 1979. "Welfare Measures in a Multimarket Framework," American Economic Review, American Economic Association, vol. 69(5), pages 947-954, December.
    4. Wu, JunJie & Mapp, Harry P., Jr. & Bernardo, Daniel J., 1994. "A Dynamic Analysis Of The Impact Of Water Quality Policies On Irrigation Investment And Crop Choice Decisions," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(2), pages 1-20, December.
    5. Margriet F. Caswell & David Zilberman, 1986. "The Effects of Well Depth and Land Quality on the Choice of Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 798-811.
    6. Gisser, Micha, 1983. "Groundwater: Focusing on the Real Issue," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 1001-1027, December.
    7. Feinerman, Eli, 1988. "Groundwater management: Efficiency and equity considerations," Agricultural Economics, Blackwell, vol. 2(1), pages 1-18, June.
    8. Keith C. Knapp, 1983. "Steady-State Solutions to Dynamic Optimization Models with Inequality Constraints," Land Economics, University of Wisconsin Press, vol. 59(3), pages 300-304.
    9. Kim, C. S. & Moore, Michael R. & Hanchar, John J. & Nieswiadomy, Michael, 1989. "A dynamic model of adaptation to resource depletion: theory and an application to groundwater mining," Journal of Environmental Economics and Management, Elsevier, vol. 17(1), pages 66-82, July.
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    Cited by:

    1. Willis, David B. & Rainwater, Ken & Tewari, Rachna & Stovall, Jeff & Hayhoe, Katharine & Hernandez, Annette & Mauget, Steven A. & Leiker, Gary & Johnson, Jeff, 2014. "Projecting the Economic Impact and Level of Groundwater Use in the Southern High Plains under Alternative Climate Change Forecasts Using a Coupled Economic and Hydrologic Model," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170705, Agricultural and Applied Economics Association.
    2. Schaible, Glenn D. & Kim, C.S. & Aillery, Marcel P., 2009. "Towards a Sustainable Future: The Dynamic Adjustment Path of Irrigation Technology and Water Management in Western U.S. Agriculture," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49244, Agricultural and Applied Economics Association.
    3. Gill, Tania & Punt, Cecilia, 2010. "The Potential Impact of Increased Irrigation Water Tariffs in South Africa," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96425, African Association of Agricultural Economists (AAAE).
    4. Molle, Francois & Berkoff, J., 2007. "Water pricing in irrigation: the lifetime of an idea," IWMI Books, Reports H040600, International Water Management Institute.
    5. Huang, Qiuqiong & Rozelle, Scott & Howitt, Richard E. & Wang, Jinxia & Huang, Jikun, 2006. "Irrigation Water Pricing Policy in China," 2006 Annual meeting, July 23-26, Long Beach, CA 21241, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Molle, Francois & Berkoff, Jeremy, 2007. "Water pricing in irrigation: the lifetime of an idea," Book Chapters,, International Water Management Institute.
    7. Elsa Martin, 2010. "Are the gains from a groundwater management policy so low?," INRA UMR CESAER Working Papers 2010/2, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.
    8. Kim, C.S. & Fuglie, Keith O. & Wallander, Steve & Wechsler, Seth, 2015. "Endogenous Technical Change and Groundwater Management: Revisiting the Gisser-Sanchez Paradox," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205350, Agricultural and Applied Economics Association.
    9. Wakeyo, Mekonnen B. & Gardebroek, Cornelis, 2013. "Does water harvesting induce fertilizer use among smallholders? Evidence from Ethiopia," Agricultural Systems, Elsevier, vol. 114(C), pages 54-63.
    10. Lee, Gi-Eu & Rollins, Kimberly S. & Singletary, Loretta, 2018. "Farm-level Cropping Decision and Irrigation Water Use under Both Institutional and Hydrological Constraints," 2018 Annual Meeting, August 5-7, Washington, D.C. 274321, Agricultural and Applied Economics Association.

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