Rebound Effects of New Irrigation Technologies: The Role of Water Rights

We study how institutions such as water rights can complement new irrigation technologies in promoting the sustainability of U.S. agriculture. Using data from the Ogallala-High Plains Aquifer region of Kansas, we find that water extraction moderately increases after adopting Low Energy Precise Application (LEPA) irrigation, and this rebound effect is in general higher for farmers with larger water rights. About half of the LEPA’s rebound effects arise because adopters tend to irrigate more land and grow more water-intensive crops, with the remaining half attributable to more intensive irrigation. Farmers with greater water rights use more water, with two-thirds of the effects arising from irrigating larger land areas, and one-third of the effects attributable to more intensive irrigation. A 10% reduction of water rights will reduce water use by 5% in the long run, and if the reduction targets the majority of the water rights, which lie between 100 and 500 AF, LEPA’s rebound effect decreases by 15.4%. Finally, we find that farmers have an incentive to apply a small amount of water in order to preserve their water rights, but the associated water waste is insignificant.