Farmer response to policy induced water reductions: Evidence from the Colorado River
Lena Harris
Journal of Environmental Economics and Management, 2024, vol. 125, issue C
Abstract:
Surface water supplies are becoming increasingly strained, pushing policy makers to find solutions to facilitate reductions in water use though there is limited evidence on how farmers respond to policy induced variation in surface water supplies. This paper uses a difference-in-differences framework to compare the response of farmers to a bundle of policies reducing deliveries from the Colorado River by 35%. I find that on average, farmers reduce the amount of land planted but plant more water intensive crops leading to a minimal reduction in total estimated water use compared to the counterfactual. Additionally, there is strong suggestive evidence that farmers are using groundwater to offset a significant amount of the surface water loss. These findings have important consequences for understanding the relative trade-offs policy makers face when implementing policies that protect surface water sources.
Keywords: Agricultural production; Drought; Surface water; Groundwater; Water policy (search for similar items in EconPapers)
JEL-codes: Q15 Q25 Q28 Q38 Q54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:125:y:2024:i:c:s0095069624000603
DOI: 10.1016/j.jeem.2024.102986
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