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Agricultural Water Allocation under Uncertainty: Redistribution of Water Shortage Risk

Author

Listed:
  • Man Li
  • Wenchao Xu
  • Tingju Zhu

Abstract

This article develops an economic model to analyze how the risk of water shortages affects farmers’ land irrigation decision and how the priority-based water sharing arrangement redistributes such a risk among farms with different water rights priorities. The analysis brings together an array of comprehensive data files on irrigation rights, water supplies, and agricultural land use from eastern Idaho. Results indicate that a more left-skewed distribution of streamflow significantly discourages land irrigation among farmers except the most senior rights holders. The priority-based water sharing arrangement redistributes the macroscale risk of water shortages and thus exposes farmers of different water rights priorities to heterogeneous levels of risk: senior water rights holders are affected the least and such a risk is instead passed mostly on to junior water rights holders. The role of water rights in risk redistribution is more significant when the probability distribution of water shortage risk is asymmetric rather than symmetric. The historical development pattern of water rights influences how the priority of water rights takes effect on land irrigation decision.

Suggested Citation

  • Man Li & Wenchao Xu & Tingju Zhu, 2019. "Agricultural Water Allocation under Uncertainty: Redistribution of Water Shortage Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(1), pages 134-153.
    • Handle: RePEc:oup:ajagec:v:101:y:2019:i:1:p:134-153.
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    File URL: http://hdl.handle.net/10.1093/ajae/aay058
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    Citations

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    Cited by:

    1. Jie Zhu & Xiangyang Zhou & Jin Guo, 2023. "Sustainability of Agriculture: A Study of Digital Groundwater Supervision," Sustainability, MDPI, vol. 15(6), pages 1-15, March.
    2. Boxuan Li & Meng Niu & Jing Zhao & Xi Zheng & Ran Chen & Xiao Ling & Jinxin Li & Yuxiao Wang, 2023. "Agricultural Cultivation Structure in Arid Areas Based on Water–Carbon Nexus—Taking the Middle Reaches of the Heihe River as an Example," Land, MDPI, vol. 12(7), pages 1-18, July.
    3. Bao-Li Miao & Ying Liu & Yu-Bing Fan & Xue-Jiao Niu & Xiu-Yun Jiang & Zeng Tang, 2023. "Optimization of Agricultural Resource Allocation among Crops: A Portfolio Model Analysis," Land, MDPI, vol. 12(10), pages 1-18, October.
    4. Momeni, Marzieh & Zakeri, Zahra & Esfandiari, Mojtaba & Behzadian, Kourosh & Zahedi, Sina & Razavi, Vahid, 2019. "Comparative analysis of agricultural water pricing between Azarbaijan Provinces in Iran and the state of California in the US: A hydro-economic approach," Agricultural Water Management, Elsevier, vol. 223(C), pages 1-1.
    5. Jian Shi & JunJie Wu & Beau Olen, 2022. "Impacts of climate and weather on irrigation technology adoption and agricultural water use in the U.S. pacific northwest," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 387-406, May.
    6. Dietrich Earnhart & Nathan P. Hendricks, 2023. "Adapting to water restrictions: Intensive versus extensive adaptation over time differentiated by water right seniority," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1458-1490, October.
    7. Joey Blumberg & Christopher Goemans & Dale Manning, 2022. "Perceived Water Scarcity and Irrigation Technology Adoption," NBER Chapters, in: American Agriculture, Water Resources, and Climate Change, pages 173-201, National Bureau of Economic Research, Inc.
    8. Li, Man, 2023. "Adaptation to expected and unexpected weather fluctuations: Evidence from Bangladeshi smallholder farmers," World Development, Elsevier, vol. 161(C).

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