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The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land-allocation Decisions

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  • Ji, Xinde
  • Cobourn, Kelly M.

Abstract

The economic literature has established that prior appropriation doctrine induces heterogeneity in risk among water users, which leads to an inefficient allocation of resources. In this study, we show that irrigation districts alleviate that risk by deviating from the strict application of prior appropriation doctrine. As a result, farmers inside irrigation districts are able to plant more water‐intensive crops than farmers outside irrigation districts, which increases average profitability. We empirically examine this hypothesis by leveraging a georeferenced panel data set at the spatial scale of the individual water right and spanning 2007–14 in Idaho's Eastern Snake River Plain. Our results indicate that on average, irrigation districts allocate larger portions of their land to drought‐sensitive, high‐value crops such as sugar beets and potatoes. As a result of differences in planting decisions, members of irrigation districts earn on average $16.20 per acre, or 6.0% more per year than those outside of irrigation districts. La littérature économique a établi que la doctrine d'appropriation préalable entraîne une hétérogénéité du risque parmi les utilisateurs d'eau, conduisant à une allocation inefficace des ressources. Dans cette étude, nous montrons que les districts d'irrigation réduisent ce risque en s’éloignant de l'application stricte de la doctrine d'appropriation préalable. Par conséquent, les agriculteurs à l'intérieur des districts d'irrigation peuvent planter plus de cultures grandes consommatrices d'eau que les agriculteurs à l'extérieur de ces derniers, augmentant ainsi la rentabilité moyenne. Nous examinons empiriquement cette hypothèse en tirant parti d'un ensemble de données de panel géoréférencées à l’échelle spatiale du droit individuel à l'eau, qui couvrent la période de 2007–2014 dans la Eastern Snake River Plain de l'Idaho. Nos résultats indiquent qu'en moyenne, les districts d'irrigation allouent de plus grandes portions de leurs terres à des
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  • Ji, Xinde & Cobourn, Kelly M., 2017. "The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land-allocation Decisions," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252838, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea17:252838
    DOI: 10.22004/ag.econ.252838
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    Cited by:

    1. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    2. Kelly M. Cobourn & Xinde Ji & Siân Mooney & Neil F. Crescenti, 2022. "The effect of prior appropriation water rights on land‐allocation decisions in irrigated agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 947-975, May.
    3. Ji, Xinde & Cobourn, Kelly M. & Weng, Weizhe, 2018. "The Effect of Climate Change on Irrigated Agriculture: Water-Temperature Interactions and Adaptation in the Western U.S," 2018 Annual Meeting, August 5-7, Washington, D.C. 274306, Agricultural and Applied Economics Association.
    4. Browne, Oliver R. & Ji, Xinde James, 2023. "The Economic Value of Clarifying Property Rights: Evidence from Water in Idaho’s Snake River Basin," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    5. Hrozencik, Aaron & Aillery, Marcel, 2021. "Trends in U.S. Irrigated Agriculture: Increasing Resilience Under Water Supply Scarcity," USDA Miscellaneous 316792, United States Department of Agriculture.
    6. Harris, Lena, 2024. "Farmer response to policy induced water reductions: Evidence from the Colorado River," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    7. Xinde Ji & Kelly M. Cobourn, 2021. "Weather Fluctuations, Expectation Formation, and Short-Run Behavioral Responses to Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 77-119, January.
    8. 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.
    9. Browne, Oliver R., 2017. "Do Secure Property Rights Affect Resource Allocation and Firm Production? Evidence from Water Right Adjudications in Idaho," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258498, Agricultural and Applied Economics Association.
    10. Hrozencik, Aaron & Aillery, Marcel, 2021. "Trends in U.S. Irrigated Agriculture: Increasing Resilience Under Water Supply Scarcity," Economic Information Bulletin 327359, United States Department of Agriculture, Economic Research Service.
    11. Grumstrup, Ethan & Rollins, Kimberly S. & Pram, Kym & Koirala, Samjhana, 2021. "The Effect of Climate Change on Agricultural Production with Priority Water Rights," 2021 Annual Meeting, August 1-3, Austin, Texas 314068, Agricultural and Applied Economics Association.

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    Agricultural and Food Policy; Land Economics/Use; Resource /Energy Economics and Policy; Risk and Uncertainty;
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