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The Effects of Energy Prices on Groundwater Extraction in Agriculture in the High Plains Aquifer

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  • Pfeiffer, Lisa
  • Lin, Cynthia

Abstract

In this paper 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 important effect on both the intensive and extensive margin. Increasing energy prices would affect crop selection decisions, crop acreage allocation decisions, and the demand for water by farmers. Our estimated total marginal effect, which sums the effects at the intensive and extensive margins, is that an increase in the natural gas futures contract price of 1 cent/1000 btu would decrease water extraction by an individual framer by 102.88 acre-feet per year, which is approximately 63% of the average amount pumped in a year by a farmer.

Suggested Citation

  • Pfeiffer, Lisa & Lin, Cynthia, 2013. "The Effects of Energy Prices on Groundwater Extraction in Agriculture in the High Plains Aquifer," 2014 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161890, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaeass:161890
    DOI: 10.22004/ag.econ.161890
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    References listed on IDEAS

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    4. S. Mahendra Dev, 2008. "India," Chapters, in: Anis Chowdhury & Wahiduddin Mahmud (ed.), Handbook on the South Asian Economies, chapter 1, Edward Elgar Publishing.
    5. Pfeiffer, Lisa & Lin, C.-Y. Cynthia, 2012. "Groundwater pumping and spatial externalities in agriculture," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 16-30.
    6. Kumar, M. Dinesh, 2005. "Impact of electricity prices and volumetric water allocation on energy and groundwater demand management:: analysis from Western India," Energy Policy, Elsevier, vol. 33(1), pages 39-51, January.
    7. Michael R. Moore & Noel R. Gollehon & Marc B. Carey, 1994. "Multicrop Production Decisions in Western Irrigated Agriculture: The Role of Water Price," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 859-874.
    8. Bertone Oehninger, Ernst & Lin Lawell, C.-Y. Cynthia, 2021. "Property rights and groundwater management in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 63(C).
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    Cited by:

    1. Obembe, Oladipo S., 2018. "Impact of Climate Change on Groundwater Extraction for Corn Production in Kansas," 2018 Annual Meeting, August 5-7, Washington, D.C. 274309, Agricultural and Applied Economics Association.

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