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The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land‐Allocation Decisions

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  • Xinde Ji
  • Kelly M. Cobourn

Abstract

The economic literature has established that prior appropriation doctrine induces heterogeneity in risk among water users, which leads to an inefficient allocation of resources. In this study, we show that irrigation districts alleviate that risk by deviating from the strict application of prior appropriation doctrine. As a result, farmers inside irrigation districts are able to plant more water‐intensive crops than farmers outside irrigation districts, which increases average profitability. We empirically examine this hypothesis by leveraging a georeferenced panel data set at the spatial scale of the individual water right and spanning 2007–14 in Idaho's Eastern Snake River Plain. Our results indicate that on average, irrigation districts allocate larger portions of their land to drought‐sensitive, high‐value crops such as sugar beets and potatoes. As a result of differences in planting decisions, members of irrigation districts earn on average $16.20 per acre, or 6.0% more per year than those outside of irrigation districts. La littérature économique a établi que la doctrine d'appropriation préalable entraîne une hétérogénéité du risque parmi les utilisateurs d'eau, conduisant à une allocation inefficace des ressources. Dans cette étude, nous montrons que les districts d'irrigation réduisent ce risque en s’éloignant de l'application stricte de la doctrine d'appropriation préalable. Par conséquent, les agriculteurs à l'intérieur des districts d'irrigation peuvent planter plus de cultures grandes consommatrices d'eau que les agriculteurs à l'extérieur de ces derniers, augmentant ainsi la rentabilité moyenne. Nous examinons empiriquement cette hypothèse en tirant parti d'un ensemble de données de panel géoréférencées à l’échelle spatiale du droit individuel à l'eau, qui couvrent la période de 2007–2014 dans la Eastern Snake River Plain de l'Idaho. Nos résultats indiquent qu'en moyenne, les districts d'irrigation allouent de plus grandes portions de leurs terres à des cultures de haute valeur sensibles à la sécheresse telles que les betteraves à sucre et les pommes de terre. En raison des différences au niveau des décisions de plantation, les membres des districts d'irrigation gagnent en moyenne 16,20 $ par acre, ou 6,0 % de plus par an que ceux qui se retrouvent à l'extérieur des districts d'irrigation.

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  • Xinde Ji & Kelly M. Cobourn, 2018. "The Economic Benefits of Irrigation Districts under Prior Appropriation Doctrine: An Econometric Analysis of Agricultural Land‐Allocation Decisions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(3), pages 441-467, September.
  • Handle: RePEc:bla:canjag:v:66:y:2018:i:3:p:441-467
    DOI: 10.1111/cjag.12165
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    2. Xinde Ji & Kelly M. Cobourn, 2021. "Weather Fluctuations, Expectation Formation, and Short-Run Behavioral Responses to Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 77-119, January.
    3. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    4. Hrozencik, Aaron & Aillery, Marcel, 2021. "Trends in U.S. Irrigated Agriculture: Increasing Resilience Under Water Supply Scarcity," USDA Miscellaneous 316792, United States Department of Agriculture.
    5. Browne, Oliver R., 2017. "Do Secure Property Rights Affect Resource Allocation and Firm Production? Evidence from Water Right Adjudications in Idaho," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258498, Agricultural and Applied Economics Association.
    6. Kelly M. Cobourn & Xinde Ji & Siân Mooney & Neil F. Crescenti, 2022. "The effect of prior appropriation water rights on land‐allocation decisions in irrigated agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 947-975, May.
    7. Grumstrup, Ethan & Rollins, Kimberly S. & Pram, Kym & Koirala, Samjhana, 2021. "The Effect of Climate Change on Agricultural Production with Priority Water Rights," 2021 Annual Meeting, August 1-3, Austin, Texas 314068, Agricultural and Applied Economics Association.
    8. Browne, Oliver R. & Ji, Xinde James, 2023. "The Economic Value of Clarifying Property Rights: Evidence from Water in Idaho’s Snake River Basin," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    9. Ji, Xinde & Cobourn, Kelly M. & Weng, Weizhe, 2018. "The Effect of Climate Change on Irrigated Agriculture: Water-Temperature Interactions and Adaptation in the Western U.S," 2018 Annual Meeting, August 5-7, Washington, D.C. 274306, Agricultural and Applied Economics Association.
    10. Hrozencik, Aaron & Aillery, Marcel, 2021. "Trends in U.S. Irrigated Agriculture: Increasing Resilience Under Water Supply Scarcity," Economic Information Bulletin 327359, United States Department of Agriculture, Economic Research Service.

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