Priced Inputs and Unpriced Resources; How Energy Pricing Influences Groundwater Use Decisions
Abstract: Groundwater resources provide vital irrigation inputs supporting global agricultural production. Yet in many of the world’s most productive aquifers rates of extraction exceed natural recharge leading to resource depletion. Price signals play an important role in determining extraction decisions and the rate of depletion. However, groundwater extraction is often neither regulated or priced. When groundwater extraction lacks an explicit price other salient price signals, e.g. energy costs related to pumping, determine resource use. This paper analyzes the relationship between energy pricing and groundwater use decisions when energy is priced according to a decreasing block rate price schedule. I leverage a unique dataset from the Republican River Basin of Colorado to empirically estimate agricultural producers’ responsiveness to the energy price schedule. Results indicate that decreasing block rate energy pricing increases groundwater use by 3-9% and inform a broader understanding of the relationship between priced inputs and complementary unpriced environmental goods and resources.
The Complementarity of Irrigation Technology Adoption and Groundwater Development; Evidence from the Trifa Plain
with Emily BurchField (Utah State), Dale Manning (Colorado State), Aymen Frija (ICARDA)
An Experimental Approach to Assessing the Influence of Information on Conservation Impacts
with Jordan Suter, Dale Manning, and Chris Goemans
Abstract: Economic research that couples models of dynamic natural systems with economic decision making models has proliferated in recent years, especially in the area of agrienvironmental policy. The research has generated compelling results related to the economic costs and beneﬁts of resource management policies, but little focus has been given to how the results inﬂuence the attitudes of the resource users that would be subjected to the policies. This is an important gap given that these stakeholders often have a direct role in determining policy implementation. In this article we present results from a randomized controlled trial (RCT) that varies the information that agricultural producers and landowners receive regarding the predicted costs and beneﬁts of speciﬁc groundwater management policies as determined by a coupled hydroeconomic model. The results illustrate how heterogeneity in resource availability and depletion rates determine the eﬀect associated with the dissemination of such information and help to inform the role that academic research plays in outreach eﬀorts aimed at inﬂuencing agri-environmental policy attitudes.