Property rights and groundwater management in the High Plains Aquifer

Ernst Bertone Oehninger and C.-Y. Cynthia Lin Lawell

Resource and Energy Economics, 2021, vol. 63, issue C

Abstract: Groundwater is an important natural resource that needs to be managed dynamically. Ideally, institutions governing property rights to the groundwater of low-recharge aquifers should not discourage or disincentivize groundwater users from dynamic management. We develop an empirical model to examine whether agricultural groundwater users faced with prior appropriation property rights to groundwater in western Kansas exhibit dynamic, forward-looking behavior consistent with dynamic management. We find that although farmers are allotted a time-invariant maximum amount of groundwater that they can extract each year, they still behave in a manner consistent with dynamic management. Their groundwater extraction decisions are not significantly affected by the quantity they are authorized to extract, but are instead affected by expected future crop prices, expected future energy prices, and groundwater extraction by neighbors. Our results provide evidence that farmers manage their groundwater resource dynamically, even if their property rights do not necessarily encourage or incentivize them to do so.

Keywords: Groundwater extraction; Property rights; Prior appropriation; Dynamic optimization (search for similar items in EconPapers)
JEL-codes: Q15 Q30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:63:y:2021:i:c:s0928765518303026

DOI: 10.1016/j.reseneeco.2019.101147

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