Spillover Effects in Irrigated Agriculture from the Groundwater Commons

Godwin Ekpe and Anna Klis

Environmental & Resource Economics, 2023, vol. 86, issue 3, No 6, 469-507

Abstract: Abstract This study examines irrigation spillover effects within the groundwater commons of the San Luis Valley in Colorado. We investigate the common pool competition predicted by a theoretical model of crop production through water-use intensity, acreage size choices, and production intensity among irrigators. By specifying Spatial Probit and regular Spatial Durbin Models, we empirically measure not only the effects of these choices on neighbors, but also the effect of other factors that affect water use and cultivation choices at neighboring farming units. For all three response variables, the results show that irrigators consider neighbors’ responses, with the strength of spatial dependency being highest for production intensity. Additionally, there are significant spillover effects from changes in key covariates, demonstrating the inadequacy of estimating direct effects only. For example, a one-foot increase in depth-to-water has both direct and indirect positive effects on water-use intensity, but the indirect effect constitutes over 81% of the total effect.

Keywords: Groundwater commons; Spatial externality; Irrigation; Spatial Durbin model; Spatial regression; Correlated random effects (search for similar items in EconPapers)
JEL-codes: Q21 Q25 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10640-023-00801-6

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