WEAI/AERE 2012 - Individual Paper Abstract
Title: Agricultural Land Use under Natural and Institutional Risks of Water Shortage on the Irrigation Landscape [Paper]
Author(s): Wenchao XU,Department of Economics, Boise State University, 1910 University Dr., Boise, Idaho 83725-1620, USA, 208-426-3305, wenchaoxu boisestate dot edu; Kelly Cobourn, Scott Lowe and Sian Mooney, Boise State University [Photo credit: Benjamin Crosby]
Abstract:
Irrigated farming dominates the agricultural activities in the arid West. The impact of climate change on agricultural production is well addressed in the literature, with often contradictory results (Adams, 1989; Adams, et al., 1990, 1995, and 1999; Mendelsohn, et al. 2004; Schlenker, et al., 2005, 2006 and 2007; and others). However, other human-induced factors, such as water supply and institutional barriers, are highly relevant to irrigator decisions in the arid West. The analysis of questions related to the behavioral responses of irrigators to climate change are particularly difficult to address because the presence of water storage infrastructure and water rights institutions sever the direct linkage between climatic phenomena and the individual irrigator. Explicitly accounting for these factors is necessary in order to conduct an unbiased evaluation of the impacts of climate change on agriculture.
In this study, we evaluate the impacts of climate variability on an individual farmer's crop choice, considering both the irrigation water supply and water rights structures that the irrigators face. We are interested specifically in the relationship between short and long-term water availability and variation and the land use decisions made by individual irrigators with water rights that differ in terms of seniority. We first present a theoretical framework that outlines how water availability and water rights seniority affect an individual irrigator's land allocation decisions. We then conduct an empirical analysis that uses a unique dataset that combines various spatial data layers, including agricultural land use (by crop), water right priority date, water availability, and other environmental and socioeconomic factors. In the empirical analysis, we test three major hypotheses: (1) A farmer's crop choice is affected by both short- and long-term water availability and variation, (2) A farmer's crop choice is affected by the priority date of their water right, and (3) Farmers with different priority dates may respond differently to water supply forecasts.
This study fills a gap in current literature by making the following contributions. First, we focus on the value of the crops that are chosen by a water-constrained farmer. This addresses a critical issue that may arise if short-term crop choices are mistaken for long-term land allocation strategies. Second, the analysis is conducted at the level of the individual producer, which avoids problems that arise when decision-making agents are aggregated at the county or state level. Third, we control for water rights institutions at the level of the individual irrigator as well as water supply at the basin level by compiling and consolidating data developed by the Idaho Department of Water Resources and the Natural Resource Conservation Service, respectively.
Our estimates confirm the findings of the current climate literature - that climate change may improve agricultural productivity from a value-oriented perspective. However, our findings also indicate that farmers respond to short-term climate volatility by planting lower-value, less drought-sensitive crops. This effect is even more pronounced for junior water-rights holders who demonstrate heightened sensitivities to any anticipated water shortages. This paper generates new insights that can be used to study a farmer's response to variability in climate and water supply. With a better understanding of irrigator response to water supply variability, local and regional regulatory agencies will be able to assist irrigators during periods of stress. Similarly, the farmers' successes during drought periods will stabilize the economies of local communities, the larger agri-food system, and ultimately the state and national economies.