Efficiency and Water Use: Dynamic Effects of Irrigation Technology Adoption

Micah V. Cameron-Harp and Nathan P. Hendricks

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 2, 285 - 312

Abstract: As global aquifer levels continue to decline, clarifying the impact of irrigation efficiency improvements on water resources is critically important. This study uses two transitions in irrigation technology to investigate whether rebound effects cause such efficiency improvements to increase resource extraction, a phenomenon known as Jevons’s paradox. We demonstrate how staggered adoption of an irrigation technology and dynamic treatment effects cause two-way fixed effects (TWFE) to indicate the wrong sign for the effect on withdrawals. Using an estimator appropriate for these circumstances, we find no significant evidence of Jevons’s paradox. The dynamic effects we find explain this discrepancy and, perhaps more important, reveal irrigators’ process of adaptation to each new technology at the intensive and extensive margins.

Date: 2025
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