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Fixed Effects Estimation of the Intensive and Extensive Margins of Irrigation Water Demand

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Author Info

  • Hendricks, Nathan P.
  • Peterson, Jeffrey M.

Abstract

Irrigation water demand is estimated using field-level panel data from Kansas over 16 years. The cost of pumping varies over time due to changes in energy prices and across space due to differences in the depth to water. Exploiting this variation allows us to estimate the demand elasticity while controlling for field-farmer and year fixed effects. Fixed effects also allow us to control for land use without an instrument or assumptions about the distribution of errors. Our estimates of water demand are used to calculate the cost of reducing irrigation water use through water pricing, irrigation cessation, and intensity-reduction programs.

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File URL: http://purl.umn.edu/122312
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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 37 (2012)
Issue (Month): 1 (April)
Pages:

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Handle: RePEc:ags:jlaare:122312

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Web page: http://waeaonline.org/
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Related research

Keywords: fixed effects; High Plains Aquifer; water demand; Environmental Economics and Policy; Resource /Energy Economics and Policy;

References

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  1. Jeffrey M. Peterson & Ya Ding, 2005. "Economic Adjustments to Groundwater Depletion in the High Plains: Do Water-Saving Irrigation Systems Save Water?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 147-159.
  2. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
  3. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
  4. Wickens, Michael R, 1972. "A Note on the Use of Proxy Variables," Econometrica, Econometric Society, vol. 40(4), pages 759-61, July.
  5. AfDB AfDB, . "AfDB Group Annual Report 2008," Annual Report, African Development Bank, number 64 edited by Koua Louis Kouakou, 6.
  6. Beattie, Bruce R., 1981. "Irrigated Agriculture And The Great Plains: Problems And Policy Alternatives," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(02), December.
  7. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  8. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
  9. Wang, Chenggang & Segarra, Eduardo, 2011. "The Economics of Commonly Owned Groundwater When User Demand Is Perfectly Inelastic," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(1), April.
  10. Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does Marginal Price Matter? A Regression Discontinuity Approach to Estimating Water Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2jc295gr, Department of Agricultural & Resource Economics, UC Berkeley.
  11. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
  12. Mansur, Erin T. & Mendelsohn, Robert & Morrison, Wendy, 2008. "Climate change adaptation: A study of fuel choice and consumption in the US energy sector," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 175-193, March.
  13. Sheila M. Olmstead, 2010. "The Economics of Managing Scarce Water Resources," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 179-198, Summer.
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Cited by:
  1. Ashwell, Nicolas E. Quintana & Peterson, Jeffrey M., 2013. "The Impact of Irrigation Capital Subsidies on Common-pool Groundwater Use and Depletion: Results for Western Kansas," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150703, Agricultural and Applied Economics Association.

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