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Estimating Agricultural Acreage Responses to Input Prices: Groundwater in California

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  • Stevens, Andrew W.

Abstract

How does agricultural land use respond to variation in the price of agricultural water? Answering this question is difficult in California where there is no well-functioning market for water. To overcome this challenge, I use variation in groundwater depth over space and time to proxy for the price of water. This makes sense in a setting where groundwater pumping is unregulated, meaning the effective price of pumped groundwater is the energy cost to pump it. I construct a panel of agricultural fields in Fresno County, California from 2008 to 2016, and estimate a fixed effects model to estimate groundwater depth's effect on transition probabilities between different categories of land cover. I find that groundwater depth reduces the likelihood that parcels will be planted to an annual crop, but increases the likelihood of fallowing land. Groundwater depth seems to have a less profound effect on choosing to plant perennial crops.

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  • Stevens, Andrew W., 2018. "Estimating Agricultural Acreage Responses to Input Prices: Groundwater in California," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266691, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea18:266691
    DOI: 10.22004/ag.econ.266691
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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.
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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy; Land Economics/Use; Resource /Energy Economics and Policy;
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