Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region

Arthur Grimes and Andrew Aitken

No 292649, Motu Working Papers from Motu Economic and Public Policy Research

Abstract: Water is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New Zealand) over nineteen years, enabling us to extract the value placed by farmers on long-term access to irrigated water. New Zealand has a system of water consents under the Resource Management Act (RMA) that enables farmers with consents to extract specified quantities of water for agricultural purposes. Some water is extracted through large-scale irrigation infrastructure and other flows by more localised means; the RMA and the water consents themselves are a critical legal infrastructure underpinning farming. Using panel methods, we estimate property sale price and assessed value as a function of the size of the farm’s water right (if it has one), farm characteristics, and the water right interacted with farm characteristics to determine how the value of a water consent varies according to local conditions. We find that flatter areas and areas with poorly draining soils benefit most from irrigation, possibly because the water is retained for longer on these properties. Drier areas appear to benefit more from irrigation than do areas with higher rainfall. Farms that are situated close to towns derive especially strong benefits from irrigation since these properties are most likely to have potential waterintensive land uses such as dairying and cropping that require access to processing facilities and/or an urban labour pool.

Keywords: Agricultural and Food Policy; Land Economics/Use; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 47
Date: 2008-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/292649/files/08_10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:motuwp:292649

DOI: 10.22004/ag.econ.292649

Access Statistics for this paper

More papers in Motu Working Papers from Motu Economic and Public Policy Research Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().