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Land market valuation of groundwater

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  • Sampson, Gabriel S.
  • Hendricks, Nathan P.
  • Taylor, Mykel R.

Abstract

We estimate irrigation premiums and implicit marginal valuations of water in-storage using parcel-level transaction data for land sales in the Kansas portion of the High Plains Aquifer. We find that agricultural land values are 53% higher for irrigated parcels than non-irrigated parcels on average and that the irrigation premium has increased at an average rate of 1.0 percentage points per year over the sample period (1988–2015). Spatial heterogeneity in irrigation premiums is explained by differences in saturated thickness of the aquifer. Water in-storage is capitalized into land prices at average marginal values ranging from $3.42/acre-ft to $15.86/acre-ft.

Suggested Citation

  • Sampson, Gabriel S. & Hendricks, Nathan P. & Taylor, Mykel R., 2019. "Land market valuation of groundwater," Resource and Energy Economics, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:resene:v:58:y:2019:i:c:s0928765518303749
    DOI: 10.1016/j.reseneeco.2019.101120
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    2. 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.
    3. Taylor, Mykel R. & Sudbeck, Lucas & Wilson, Christine & Yu, Jisang, 2020. "Quality Effects on Kansas Land Price Trends," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2020.
    4. Perez-Quesada, Gabriela & Hendricks, Nathan P. & Steward, David R., 2020. "Quantifying the economic costs of High Plains Aquifer depletion," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304225, Agricultural and Applied Economics Association.
    5. Shew, Aaron M. & Nalley, Lawton L. & Durand-Morat, Alvaro & Meredith, Kylie & Parajuli, Ranjan & Thoma, Greg & Henry, Christopher G., 2021. "Holistically valuing public investments in agricultural water conservation," Agricultural Water Management, Elsevier, vol. 252(C).
    6. Jeong, Dawoon & Sesmero, Juan Pablo, 2021. "Do changing weather patterns warrant more flexibility in cap-and-trade policy for irrigation water conservation? A case study in Mexico," 2021 Annual Meeting, August 1-3, Austin, Texas 314081, Agricultural and Applied Economics Association.
    7. Sampson, Gabriel S. & Al-Sudani, Amer & Bergtold, Jason, 2021. "Local irrigation response to ethanol expansion in the High Plains Aquifer," Resource and Energy Economics, Elsevier, vol. 66(C).
    8. Gardner, Grant & Sampson, Gabriel S., 2022. "Land Value Impacts of Ethanol Market Expansion by Irrigation Status," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    9. Manning, Dale T. & Rad, Mani Rouhi & Suter, Jordan F. & Goemans, Christopher & Xiang, Zaichen & Bailey, Ryan, 2020. "Non-market valuation in integrated assessment modeling: The benefits of water right retirement," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    10. 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.
    11. Sloggy, Matthew R. & Manning, Dale, 2020. "Natural Insurance and Weak Substitutability: Using Insurance Markets to Value Groundwater Stocks in Kansas," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304575, Agricultural and Applied Economics Association.
    12. Sampson, Gabriel & Gardner, Grant, 2021. "Land Value Impacts of Ethanol Market Expansion Differ by Irrigation Status," 2021 Annual Meeting, August 1-3, Austin, Texas 313854, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Agriculture; Groundwater; Hedonic; High plains aquifer; Irrigation; Valuation;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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