Estimating the Demand for Groundwater: A Second-stage Hedonic Land Price Analysis for the Lower Mississippi River Alluvial Plain, Arkansas

Kent Kovacs and Shelby Rider

Journal of Agricultural and Applied Economics, 2023, vol. 55, issue 1, 194-216

Abstract: We estimate the benefits of the saturated thickness (water-bearing porous material) of the alluvial aquifer in Arkansas through an application of the hedonic price model to the sale of agricultural land. There is evidence from the first-stage analysis of diminishing returns from increasing saturated thickness. Using a survey of farmer operators’ preferences and socioeconomic characteristics, we recover the underlying demand function for saturated thickness in a second-stage analysis. Shifts in the demand function reveal that produced/social capital can be a substitute or a complement to saturated thickness, and human capital is a substitute for saturated thickness.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jagaec:v:55:y:2023:i:1:p:194-216_11

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