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Estimating Agricultural Acreage Responses to Input Prices: Groundwater in California

In: Sustainable Resource Development in the 21st Century

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  • Andrew W. Stevens

    (Agricultural and Applied Economics, University of Wisconsin–Madison)

Abstract

Water is arguably the most important input in California agriculture, and its importance has been highlighted by recent droughts. Farmers and researchers both have long been interested in the marginal value of agricultural water and its impact on production. However, due to a patchwork of legal doctrines, historic water rights, and the absence of any reliable market for agricultural water, estimates of water’s value in California agriculture have been challenging to come by (Buck et al., 2014). However, producers in California generally have the option to pump groundwater as a source of last resort. This pumping is largely unregulated, and only recently has California’s 2014 Sustainable Groundwater Management Act begun to impact farmers’ behavior. Producers who rely on groundwater use energy (electricity or fuel) to pump water up from an underlying aquifer. Therefore, the cost structure for groundwater is straightforward: the deeper the well, the more expensive the water.

Suggested Citation

  • Andrew W. Stevens, 2023. "Estimating Agricultural Acreage Responses to Input Prices: Groundwater in California," Natural Resource Management and Policy, in: David Zilberman & Jeffrey M. Perloff & Cyndi Spindell Berck (ed.), Sustainable Resource Development in the 21st Century, pages 93-106, Springer.
    • Handle: RePEc:spr:nrmchp:978-3-031-24823-8_8
    DOI: 10.1007/978-3-031-24823-8_8
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    References listed on IDEAS

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    1. Steven Buck & Maximilian Auffhammer & David Sunding, 2014. "Land Markets and the Value of Water: Hedonic Analysis Using Repeat Sales of Farmland," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(4), pages 953-969.
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    3. Stevens, Andrew, 2015. "Fueling Local Water Pollution: Ethanol Refineries, Land Use, and Nitrate Runoff," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205741, Agricultural and Applied Economics Association.
    4. Dinar, Ariel, 1994. "Impact of energy cost and water resource availability on agriculture and ground water quality in California," Resource and Energy Economics, Elsevier, vol. 16(1), pages 47-66, March.
    5. Karina Schoengold & David L. Sunding, 2014. "The impact of water price uncertainty on the adoption of precision irrigation systems," Agricultural Economics, International Association of Agricultural Economists, vol. 45(6), pages 729-743, November.
    6. 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.
    7. Nathan P. Hendricks & Aaron Smith & Daniel A. Sumner, 2014. "Crop Supply Dynamics and the Illusion of Partial Adjustment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1469-1491.
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