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The Effects of Energy Prices on Agricultural Groundwater Extraction from the High Plains Aquifer

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  • Lisa Pfeiffer
  • C.-Y. Cynthia Lin

Abstract

We examine the effects of energy prices on groundwater extraction using an econometric model of a farmer's irrigation water pumping decision that accounts for both the intensive and extensive margins. Our results show that energy prices have an effect on both types of margins. Increasing energy prices would affect crop selection decisions, crop acreage allocation decisions, and farmers' demand for water. Our estimated total marginal effect, which sums the effects on the intensive and extensive margins, suggests that a $1 per million btu increase in the energy price would decrease water extraction by an individual farmer by 5.89 acre-feet per year, a decrease of 3.6 percent of the average annual extraction rate. Our estimated elasticity of water extraction with respect to energy price is -0.26.

Suggested Citation

  • Lisa Pfeiffer & C.-Y. Cynthia Lin, 2014. "The Effects of Energy Prices on Agricultural Groundwater Extraction from the High Plains Aquifer," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1349-1362.
    • Handle: RePEc:oup:ajagec:v:96:y:2014:i:5:p:1349-1362.
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    File URL: http://hdl.handle.net/10.1093/ajae/aau020
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    Cited by:

    1. Yongxi Ma & Lu Zhang & Shixiong Song & Shuao Yu, 2022. "Impacts of Energy Price on Agricultural Production, Energy Consumption, and Carbon Emission in China: A Price Endogenous Partial Equilibrium Model Analysis," Sustainability, MDPI, vol. 14(5), pages 1-14, March.
    2. R. Aaron Hrozencik & Dale T. Manning & Jordan F. Suter & Christopher Goemans, 2022. "Impacts of Block‐Rate Energy Pricing on Groundwater Demand in Irrigated Agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 404-427, January.
    3. Sampson, Gabriel S. & Al-Sudani, Amer & Bergtold, Jason, 2021. "Local irrigation response to ethanol expansion in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 66(C).
    4. Li, Haoyang & Zhao, Jinhua, 2016. "Rebound Effect of Irrigation Technologies? The Role of Water Rights," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235966, Agricultural and Applied Economics Association.
    5. Shaikh M. S. U. Eskander & Edward B. Barbier, 2023. "Adaptation to Natural Disasters through the Agricultural Land Rental Market: Evidence from Bangladesh," Land Economics, University of Wisconsin Press, vol. 99(1), pages 141-160.
    6. Wang, Tong & Park, Seong & Jin, Hailong, 2016. "Will Farmers Save Water? A Theoretical Analysis of Groundwater Conservation Policies for Ogallala Aquifer," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229904, Southern Agricultural Economics Association.
    7. Collie, Samuel, 2015. "Accounting for well capacity in the economic decision making of groundwater users," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205783, Agricultural and Applied Economics Association.
    8. Paul Christian & Florence Kondylis & Valerie Mueller & Astrid Zwager & Tobias Siegfried, 2022. "Monitoring Water for Conservation: A Proof of Concept from Mozambique," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 92-110, January.
    9. Lee, Juhee & Hendricks, Nathan P., 2022. "Crop Choice Decisions in Response to Soil Salinization on Irrigated Land in California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322602, Agricultural and Applied Economics Association.
    10. Bruno, Ellen M. & Jessoe, Katrina, 2021. "Missing markets: Evidence on agricultural groundwater demand from volumetric pricing," Journal of Public Economics, Elsevier, vol. 196(C).
    11. Dietrich Earnhart & Nathan P. Hendricks, 2023. "Adapting to water restrictions: Intensive versus extensive adaptation over time differentiated by water right seniority," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1458-1490, October.
    12. Silva, Felipe & Perrin, Richard K. & Fulginiti, Lilyan E. & Schoengold, Karina, 2017. "The Effects of Irrigation and Climate on the High Plains Aquifer: An econometric analysis of groundwater levels and irrigation behavior," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259183, Agricultural and Applied Economics Association.
    13. Lee, Juhee & Hendricks, Nathan, 2022. "Irrigation Decisions in Response to Groundwater Salinity in Kansas," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    14. Benjamin Ouvrard & Arnaud Reynaud & Stéphane Cezera & Alban Thomas & Dishant Jojit James & Murudaiah Shivamurthy, 2023. "Distributive Justice in the Field: How do Indian Farmers Share Water? ," Working Papers hal-04150233, HAL.
    15. Xu, Yuelu & Elbakidze, Levan & Yen, Haw & Arnold, Jeffrey G. & Gassman, Philip W. & Hubbart, Jason & Strager, Michael P., 2022. "Integrated assessment of nitrogen runoff to the Gulf of Mexico," Resource and Energy Economics, Elsevier, vol. 67(C).

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