Valuing Access to Multiple Water Supply Sources in Irrigated Agriculture with a Hedonic Pricing Model (original) (raw)
Related papers
American Journal of Agricultural Economics
Increasing aridity, more frequent and intense drought, and greater degrees of water scarcity create unique challenges for agriculture. In response to these challenges, which often manifest themselves as lower and more variable surface water supplies, as well as depleted and degraded ground water supplies, growers tend to seek opportunities to adapt. One option for growers to reduce their exposure to water scarcity and heightened uncertainty is to diversify. Indeed, access to a portfolio of supplies is one way in which water and irrigation districts, as well as individual growers, are responding to the changing landscape of water resource availability. This article evaluates the benefits to irrigated agriculture from having access to multiple sources of water. With farm-level information on 1,900 agricultural parcels across California, we use the hedonic property value method to investigate the extent that growers benefit from having access to multiple sources of water (i.e., a water portfolio). Our results suggest that while lower quality waters, less reliable water, and less water all negatively impact agricultural land values, holding a water portfolio has a positive impact on land values through its role in mitigating the negative aspects of these factors and reducing the sensitivity of agriculture to climate-related factors. From a policy perspective, such results identify a valuable adaptation tool that irrigation districts may consider to help offset the negative impacts of climate change, drought, and population increases on water supply availability and reliability.
Conserving Water in Irrigated Agriculture: The Economics and Valuation of Water Rights
The effective management of water resources in Alberta is crucial to sustainable agriculture, industrial development, and environmental management. The historical water allocation mechanism, administrative apportionment, has been viewed in recent years as ineffective and cumbersome. Accordingly, the revision of the Water Act in 1996, included an attempt to improve the efficiency of water allocation. By making the transfer of water rights possible, the revised Act provides many new options for water use and flexibility. The implications of transferable water rights in Alberta water policy must be carefully considered in order to determine the viability and suitability of such a system in the provincial context. This project examines some of the economic aspects of transferable water rights and the potential for effective water allocation by way of transfers in an Alberta setting. As a major part of this project, a hedonic price model, focusing on land values in southern Alberta, was ...
Developing an Economic Tool to Predict the Value of Water Rights
2006
Evidence suggests that advances in technology may be hastening the physical exhaustion of the Ogallala aquifer. This situation places the State of Kansas in a difficult situation. In administering water policy, State agencies are required to achieve an absolute reduction in water consumption, while maintaining the economic viability of irrigated agriculture in western Kansas. In order to maintain the profitability of irrigated agriculture, technological innovations need to continually be developed through research and adopted by the agricultural community. The question is how to allow this process to continue while at the same time reducing water consumption from the Ogallala aquifer. Two potential policy alternatives are the Voluntary Water Rights Transition Program (VWRTP) and the Conservation Reserve Enhancement Program (CREP) currently under consideration by the State of Kansas. In order to implement these programs, the State of Kansas, policy makers, and stakeholders need input from the economic community on both program structure as well as the market value of water rights. This research suggests that the value of water for agricultural purposes depends upon the spatially fixed, site-specific characteristics of the land on which the water is used. These factors include water source, soil type, crop type, depth to water, saturated thickness of the aquifer, the seniority level of the water right, average annual water usage, and local precipitation. Additionally, evidence suggests that the markets for irrigated and nonirrigated cropland are separate and distinct and as such should be modeled separately. Conventional as well as spatial econometric hedonic models were developed to estimate the value of water rights in the five groundwater management districts in central and western Kansas. The spatially unadjusted OLS hedonic models for irrigated and nonirrigated land are
Holistically valuing public investments in agricultural water conservation
Agricultural Water Management, 2021
Multiple Inlet Rice Irrigation (MIRI) reduces water use and production costs for Arkansas rice producers. While the water savings from MIRI have been analyzed experimentally, the overall holistic benefits of MIRI rice have yet to be quantified compared to cascade flooded rice. As such, this study evaluates the economic and environmental benefits of MIRI resulting from publicly funded research, in this case the Rice Checkoff, to continue improvements in agricultural sustainability. MIRI acreage associated with public funding from the Rice Checkoff for 2002-2018 were identified by county using producer surveys. Based on MIRI acreage, we estimate cost savings, the future value of water conserved, and reductions in environmental impacts comparing cascade and MIRI rice irrigation.
Valuation of Water and its Sensitive Analysis in Agricultural Sector A Hedonic Pricing Approach
American Journal of Agricultural and …, 2010
Problem statement: In the recent decades water scarcity and its impacts on agricultural sectors and food security are growing concerns worldwide. Water scarcity is one the major problem facing agricultural production in Iran. In this context valuation of irrigation water can be suggest as an appropriate solution. Approach: This research based on utilizing hedonic pricing method for estimating effective variables on the value of agricultural lands and used a way, for obtaining the value of irrigation water in Mashhad. Sensitive analysis is also used for observation of varieties in the value of water. Results: Results showed that, irrigation water is the most effective and significant variable in the controversial area. Results of the sensitive analysis indicated that, by increasing discount rate, the value of water increased. Whereas by decreasing period of investment and annual consumption of water, the value of it, decreased. Conclusion: In the case of agricultural lands are allocated to cultivation of valuable crops, discount rate of investment would increase; and also if agricultural lands invested in quick return activities, period of investment decrease. And therefore, the value of irrigation water in m −3 increases. Results indicated that by decrease of aridity and so increase in water consumption, in a long run period of investment, value of irrigation water decreases.
SPATIAL HEDONIC PRICING MODELS FOR THE VALUATION OF IRRIGATION WATER
Global Nest Journal
The main objective of this work is to apply the hedonic pricing method using the methodology of spatial econometrics in order to assess the economic value of irrigation water, as one of the individual attributes of the value of agricultural land parcels. Most of the agricultural land’s value attributes, like neighbor characteristics as well as the availability of irrigation water, exhibit a spatial variability. This means that the application of a conventional hedonic pricing model, which is based on the assumption of spatial stationarity, may be inefficient and probably introduce bias in the estimation of several parameters. In fact, the spatial effect, and in particular the spatial dependence is a determinant of the efficiency and consistency of the hedonic model. Therefore, two spatial hedonic pricing models and a conventional one are formulated and implemented. Spatial dependence is incorporated in the modeling in two ways: a) by including a spatially lagged dependent variable (...
Water, water somewhere: The value of water in a drought-prone farming region
2008
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.
Valuing Irrigation Water: A Simulation/Mathematical Programming Approach
Journal of The American Water Resources Association, 1988
A two-stage simulation/mathematical programming model was developed to derive irrigation water values that reflect efficient response to reduced water supplies. The failure of many previous water valuation studies to represent the dynamic dimension of irrigation was shown to result in overestimation of derived water values. Water values are also shown to be dramatically influenced by both application system characteristics, as well as the relative costs of irrigation inputs. Finally, the marginal value of irrigation water was shown to vary considerably over the irrigation season, reaching its maximum when atmospheric demand is highest and crops are most susceptible to water stress. Results presented should be of interest to policymakers investigating the viability of alternative water reallocation mechanisms.