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A Dynamic Analysis of the Impact of Water Quality Policies on Irrigation Investment and Crop Choice Decisions

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  • Wu, JunJie
  • Mapp, Harry P.
  • Bernardo, Daniel J.

Abstract

A dynamic model is developed to analyze farmers' irrigation investment and crop choice decisions under alternative water quality protection policies. The model is applied to an empirical example in the Oklahoma High Plains. The choices of crops and irrigation systems and the resulting levels of irrigation, income, and nitrogen runoff and percolation are simulated over a ten-year period. An effluent tax on nitrogen runoff and percolation is shown to be effective in reducing nitrate pollution. The efficacy of cost sharing in adopting modern irrigation technologies and restrictions on irrigation water use depends on soil type. A tax on nitrogen use is shown to be the least effective policy.

Suggested Citation

  • Wu, JunJie & Mapp, Harry P. & Bernardo, Daniel J., 1994. "A Dynamic Analysis of the Impact of Water Quality Policies on Irrigation Investment and Crop Choice Decisions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 506-525, December.
    • Handle: RePEc:cup:jagaec:v:26:y:1994:i:02:p:506-525_02
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    References listed on IDEAS

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    1. Segerson, Kathleen & Opaluch, James J., 1991. "Aggregate Analysis Of Site-Specific Pollution Problems: The Case Of Groundwater Contamination From Agriculture," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 20(1), pages 1-15, April.
    2. Negri, Donald H. & Brooks, Douglas H., 1990. "Determinants Of Irrigation Technology Choice," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(2), pages 1-12, December.
    3. Subhash C. Ray, 1982. "A Translog Cost Function Analysis of U.S. Agriculture, 1939–77," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(3), pages 490-498.
    4. Erik Lichtenberg, 1989. "Land Quality, Irrigation Development, and Cropping Patterns in the Northern High Plains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 187-194.
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    1. Chowdhury, Manzoor E. & Lacewell, Ronald D., 1996. "Implications Of Alternative Policies On Nitrate Contamination Of Groundwater," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-14, July.
    2. C.S. Kim & Glenn Schaible, 2000. "Economic Benefits Resulting From Irrigation Water Use: Theory and an Application to Groundwater Use," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 73-87, September.
    3. Lee, Juhee & Hendricks, Nathan P., 2022. "Crop Choice Decisions in Response to Soil Salinization on Irrigated Land in California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322602, Agricultural and Applied Economics Association.
    4. Wu, JunJie & Babcock, Bruce A., 1995. "Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-12, December.
    5. Apland, Jeffrey & Grainger, Corbett & Strock, Jeffrey, 2004. "Modeling Agricultural Production Considering Water Quality and Risk," Staff Papers 14240, University of Minnesota, Department of Applied Economics.
    6. JunJie Wu & Bruce Babcock, 2001. "Spatial Heterogeneity and the Choice of Instruments to Control Nonpoint Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(2), pages 173-192, February.
    7. Chi H. Truong, 2014. "A Two Factor Model for Water Prices and Its Implications for Evaluating Real Options and Other Water Price Derivatives," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(1), pages 23-45, March.
    8. Lee, Juhee & Hendricks, Nathan, 2022. "Irrigation Decisions in Response to Groundwater Salinity in Kansas," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.

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