The Effects of Pricing Policies on Water Conservation and Drainage

Margriet Caswell, Erik Lichtenberg and David Zilberman

American Journal of Agricultural Economics, 1990, vol. 72, issue 4, 883-890

Abstract: A general model of adoption of input-conserving technologies by competitive firms is introduced using drip irrigation as an example. An environmental regulation such as a drainage effluent charge is shown to influence adoption. Early adopters are likely to be producers with less efficient fixed assets (land of low quality or antiquated capital), higher input costs (higher water prices or greater depth to groundwater), and in more environmentally sensitive regions. Simulations show that drainage regulations can be expected to play a major role in adoption of more efficient irrigation technologies in California. Thus, conservation may be a key to solving resource scarcity problems and reducing external environmental costs.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:72:y:1990:i:4:p:883-890.

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