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Willingness to pay for irrigation water when groundwater is scarce

Author

Listed:
  • Knapp, T.
  • Kovacs, K.
  • Huang, Q.
  • Henry, C.
  • Nayga, R.
  • Popp, J.
  • Dixon, B.

Abstract

Conversion to surface water irrigation is one of the critical initiatives to address the decline in groundwater supply. A double-bounded dichotomous choice contingent valuation survey is used to estimate producers’ willingness to pay (WTP) for surface water supplied by irrigation districts in Arkansas, United States. The estimated mean WTP for irrigation water is 2.7¢/m3 ($33.21/acre-foot). Comparison indicates a significant share of producers are likely to have higher WTPs for surface water than the average pumping cost in the study area. Producers located in areas with less groundwater resources have higher WTPs. Producers that are more concerned with a water shortage occurring in the state in the next 10 years have higher WTPs. A somewhat unexpected result is that participation in the Conservation Reserve Program predicts lower WTPs. One possible explanation is that farmers see the transfer of land out of crop production as a more viable financial decision when groundwater supply decreases.

Suggested Citation

  • Knapp, T. & Kovacs, K. & Huang, Q. & Henry, C. & Nayga, R. & Popp, J. & Dixon, B., 2018. "Willingness to pay for irrigation water when groundwater is scarce," Agricultural Water Management, Elsevier, vol. 195(C), pages 133-141.
    • Handle: RePEc:eee:agiwat:v:195:y:2018:i:c:p:133-141
    DOI: 10.1016/j.agwat.2017.10.013
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    1. West, Grant H. & Snell, Heather & Kovacs, Kent & Nayga, Rodolfo M., 2020. "Estimation of the preferences for the intertemporal services from groundwater," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304220, Agricultural and Applied Economics Association.
    2. Hassan, Wasim & Manzoor, Talha & Jaleel, Hassan & Muhammad, Abubakr, 2021. "Demand-based water allocation in irrigation systems using mechanism design: A case study from Pakistan," Agricultural Water Management, Elsevier, vol. 256(C).
    3. Budiman Subhan Arif & Rondhi Mohammad & Khasan Ahmad Fatikhul & Peratama Bagus & Suwandari Anik & Ridjal Julian Adam & Rokhani & Soemarno & Prijono Sugeng & Soedarto, 2021. "Water Scarcity, Mountain Deforestation and the Economic Value of Water in a Small-Scale Irrigation System: A Case Study in East Java, Indonesia," Quaestiones Geographicae, Sciendo, vol. 40(2), pages 153-166, June.
    4. Hassan, Wasim & Manzoor, Talha & Muhammad, Abubakr, 2023. "Improving equity in demand-driven irrigation systems through a rights-preserving water allocation mechanism," Agricultural Water Management, Elsevier, vol. 287(C).
    5. Suter, Jordan F. & Rouhi Rad, Mani & Manning, Dale T. & Goemans, Chris & Sanderson, Matthew R., 2021. "Depletion, climate, and the incremental value of groundwater," Resource and Energy Economics, Elsevier, vol. 63(C).
    6. Kent F. Kovacs & Shelby Rider, 2022. "Estimating the Demand for In Situ Groundwater for Climate Resilience: The Case of the Mississippi River Alluvial Aquifer in Arkansas," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 367-381, National Bureau of Economic Research, Inc.

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