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Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer

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  • Richard Hornbeck
  • Pinar Keskin

Abstract

Agriculture may support the local nonagricultural economy in rural areas, though agricultural expansion may also crowd-out nonagricultural activity. On the United States Plains, areas over the Ogallala aquifer experienced windfall agricultural gains when post WWII technologies increased farmers' access to groundwater. Comparing counties over the Ogallala with similar counties, nonagricultural sectors experienced only short-run relative benefits. Despite substantial and persistent agricultural gains, there was no long run relative expansion of nonagricultural sectors in Ogallala counties. Agricultural development may still encourage regional or national nonagricultural development, but agriculture does not appear to generate local economic spillovers that differentially encourage local nonagricultural activity. (JEL Q12, Q15, Q18, Q25, R11)

Suggested Citation

  • Richard Hornbeck & Pinar Keskin, 2015. "Does Agriculture Generate Local Economic Spillovers? Short-Run and Long-Run Evidence from the Ogallala Aquifer," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 192-213, May.
    • Handle: RePEc:aea:aejpol:v:7:y:2015:i:2:p:192-213
    Note: DOI: 10.1257/pol.20130077
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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