IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/30093.html
   My bibliography  Save this paper

Center Pivot Irrigation Systems as a Form of Drought Risk Mitigation in Humid Regions

Author

Listed:
  • Daniel J. Cooley
  • Steven M. Smith

Abstract

Irrigation in the Eastern US receives little attention compared to the West, but farmers in humid states of the US, traditionally reliant on rainfall, have more than tripled irrigation since 1978. We examine this trend in Illinois where there has been a nearly threefold increase in center pivot irrigation systems (CPIS) installations since 1988. Specifically, we analyze where and when CPIS installations occur and their benefits in terms of annual crop yield, irrigated acreage, crop selection, and reduction in drought-related insurance payouts. To do so, we create a novel data set derived from a deep learning model capable of automatically identifying the location of CPIS during drought years along with annual county level crop, weather, and insurance data. The results indicate CPIS installations in Illinois are significantly more common over alluvial aquifers after droughts. Additionally, counties with a higher presence of CPIS do not have higher average crop yields, a shift to more water intensive crops, or an expansion of cropland. However, in drought years CPIS presence does have a significant positive effect on corn yield and a significant negative effect on indemnity payments for both soybeans and corn. The results provide insights into an emerging trend of irrigation in humid regions, raising potential policy considerations for crop insurance and signaling a potential need to address water rights as demand increases.

Suggested Citation

  • Daniel J. Cooley & Steven M. Smith, 2022. "Center Pivot Irrigation Systems as a Form of Drought Risk Mitigation in Humid Regions," NBER Working Papers 30093, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30093
    Note: EEE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w30093.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tsur, Yacov & Graham-Tomasi, Theodore, 1991. "The buffer value of groundwater with stochastic surface water supplies," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 201-224, November.
    2. Steven T. Berry & Michael J. Roberts & Wolfram Schlenker, 2012. "Corn Production Shocks in 2012 and Beyond: Implications for Food Price Volatility," NBER Working Papers 18659, National Bureau of Economic Research, Inc.
    3. Edwards, Eric C. & Smith, Steven M., 2018. "The Role of Irrigation in the Development of Agriculture in the United States," The Journal of Economic History, Cambridge University Press, vol. 78(4), pages 1103-1141, December.
    4. Marshall Burke & Kyle Emerick, 2016. "Adaptation to Climate Change: Evidence from US Agriculture," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 106-140, August.
    5. 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.
    6. Pfeiffer, Lisa & Lin, C.-Y. Cynthia, 2014. "Does efficient irrigation technology lead to reduced groundwater extraction? Empirical evidence," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 189-208.
    7. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2005. "Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach," American Economic Review, American Economic Association, vol. 95(1), pages 395-406, March.
    8. Hugo Storm & Kathy Baylis & Thomas Heckelei, 2020. "Machine learning in agricultural and applied economics," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(3), pages 849-892.
    9. Chenxiao Zhang & Peng Yue & Liping Di & Zhaoyan Wu, 2018. "Automatic Identification of Center Pivot Irrigation Systems from Landsat Images Using Convolutional Neural Networks," Agriculture, MDPI, vol. 8(10), pages 1-19, September.
    10. Christine Heumesser & Sabine Fuss & Jana Szolgayová & Franziska Strauss & Erwin Schmid, 2012. "Investment in Irrigation Systems under Precipitation Uncertainty," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(11), pages 3113-3137, September.
    11. Esha Zaveri & David Lobell, 2019. "The role of irrigation in changing wheat yields and heat sensitivity in India," Nature Communications, Nature, vol. 10(1), pages 1-7, December.
    12. Bigelow, Daniel P. & Zhang, Hongliang, 2018. "Supplemental irrigation water rights and climate change adaptation," Ecological Economics, Elsevier, vol. 154(C), pages 156-167.
    13. Kenneth A. Baerenklau & Keith C. Knapp, 2007. "Dynamics of Agricultural Technology Adoption: Age Structure, Reversibility, and Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 190-201.
    14. Steven T. Berry & Michael J. Roberts & Wolfram Schlenker, 2014. "Corn Production Shocks in 2012 and Beyond: Implications for Harvest Volatility," NBER Chapters, in: The Economics of Food Price Volatility, pages 59-81, National Bureau of Economic Research, Inc.
    15. Connor, Lawson & Katchova, Ani L., 2020. "Crop Insurance Participation Rates and Asymmetric Effects on U.S. Corn and Soybean Yield Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(1), January.
    16. Bryan Leonard & Gary D. Libecap, 2019. "Collective Action by Contract: Prior Appropriation and the Development of Irrigation in the Western United States," Journal of Law and Economics, University of Chicago Press, vol. 62(1), pages 67-115.
    17. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    18. Kevin E. Trenberth & Aiguo Dai & Gerard van der Schrier & Philip D. Jones & Jonathan Barichivich & Keith R. Briffa & Justin Sheffield, 2014. "Global warming and changes in drought," Nature Climate Change, Nature, vol. 4(1), pages 17-22, January.
    19. Vincent H. Smith & Barry K. Goodwin, 1996. "Crop Insurance, Moral Hazard, and Agricultural Chemical Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 428-438.
    20. David Zilberman, 1984. "Technological Change, Government Policies, and Exhaustible Resources in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(5), pages 634-640.
    21. 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.
    22. Francis Annan & Wolfram Schlenker, 2015. "Federal Crop Insurance and the Disincentive to Adapt to Extreme Heat," American Economic Review, American Economic Association, vol. 105(5), pages 262-266, May.
    23. Phoebe Koundouri & Céline Nauges & Vangelis Tzouvelekas, 2006. "Technology Adoption under Production Uncertainty: Theory and Application to Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 657-670.
    24. Ruixue Wang & Roderick M Rejesus & Serkan Aglasan, 2021. "Warming Temperatures, Yield Risk and Crop Insurance Participation [Federal crop insurance and the disincentive to adapt to extreme heat]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(5), pages 1109-1131.
    25. Daniel A. Brent, 2017. "The Value of Heterogeneous Property Rights and the Costs of Water Volatility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 73-102.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. 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.
    4. Liu, Ziheng & Lu, Qinan, 2023. "Ozone stress and crop harvesting failure: Evidence from US food production," Food Policy, Elsevier, vol. 121(C).
    5. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    6. repec:ags:aaea22:335469 is not listed on IDEAS
    7. Ariel Ortiz-Bobea, 2021. "Climate, Agriculture and Food," Papers 2105.12044, arXiv.org.
    8. Xun Su & Minpeng Chen, 2022. "Econometric Approaches That Consider Farmers’ Adaptation in Estimating the Impacts of Climate Change on Agriculture: A Review," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    9. Xie, Yang & Zilberman, David, 2015. "Water Storage Capacities versus Water Use Efficiency: Substitutes or Complements?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205439, Agricultural and Applied Economics Association.
    10. repec:ags:aaea22:335443 is not listed on IDEAS
    11. 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.
    12. Fernando M. Aragón & Francisco Oteiza & Juan Pablo Rud, 2018. "Climate change and agriculture: farmer adaptation to extreme heat," IFS Working Papers W18/06, Institute for Fiscal Studies.
    13. Fernando M. Aragón & Francisco Oteiza & Juan Pablo Rud, 2018. "Climate Change and Agriculture: Farmer Adaptation to Extreme Heat," Discussion Papers dp18-02, Department of Economics, Simon Fraser University.
    14. Lu, Xun & Che, Yuyuan & Rejesus, Roderick M. & Goodwin, Barry K. & Ghosh, Sujit K. & Paudel, Jayash, 2023. "Unintended environmental benefits of crop insurance: Nitrogen and phosphorus in water bodies," Ecological Economics, Elsevier, vol. 204(PA).
    15. Zhang, Hongliang & Mu, Jianhong E. & McCarl, Bruce A., 2018. "Adaptation to climate change via adjustment in land leasing: Evidence from dryland wheat farms in the U.S. Pacific Northwest," Land Use Policy, Elsevier, vol. 79(C), pages 424-432.
    16. Cui, Xiaomeng & Zhong, Zheng, 2024. "Climate change, cropland adjustments, and food security: Evidence from China," Journal of Development Economics, Elsevier, vol. 167(C).
    17. Charles A. Taylor, 2022. "Irrigation and Climate Change: Long-Run Adaptation and Its Externalities," NBER Chapters, in: Economic Perspectives on Water Resources, Climate Change, and Agricultural Sustainability, National Bureau of Economic Research, Inc.
    18. Chen, Zhangliang & Dall'Erba, Sandy, 2018. "Do crop insurance programs preclude their recipients from adapting to new climate conditions?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274398, Agricultural and Applied Economics Association.
    19. Nicole Karwowski, 2022. "Estimating the Effect of Easements on Agricultural Production," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 53-105, National Bureau of Economic Research, Inc.
    20. Zappalà, Guglielmo, 2024. "Adapting to climate change accounting for individual beliefs," Journal of Development Economics, Elsevier, vol. 169(C).
    21. Quintana-Ashwell, Nicolas E. & Al-Sudani, Amer & Gholson, Drew M., 2024. "The cost of mismanaging crop heat stress with irrigation: Evidence from the mid-south USA," Agricultural Water Management, Elsevier, vol. 300(C).
    22. Daniel Schuurman & Alan Ker, 2025. "Heterogeneity, climate change, and crop yield distributions: Solvency implications for publicly subsidized crop insurance programs," American Journal of Agricultural Economics, John Wiley & Sons, vol. 107(1), pages 248-268, January.

    More about this item

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:30093. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.