Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region
AbstractWater is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New Zealand) over nineteen years, enabling us to extract the value placed by farmers on long-term access to irrigated water. New Zealand has a system of water consents under the Resource Management Act (RMA) that enables farmers with consents to extract specified quantities of water for agricultural purposes. Some water is extracted through large-scale irrigation infrastructure and other flows by more localised means; the RMA and the water consents themselves are a critical legal infrastructure underpinning farming. Using panel methods, we estimate property sale price and assessed value as a function of the size of the farm's water right (if it has one), farm characteristics, and the water right interacted with farm characteristics to determine how the value of a water consent varies according to local conditions. We find that flatter areas and areas with poorly draining soils benefit most from irrigation, possibly because the water is retained for longer on these properties. Drier areas appear to benefit more from irrigation than do areas with higher rainfall. Farms that are situated close to towns derive especially strong benefits from irrigation since these properties are most likely to have potential water-intensive land uses such as dairying and cropping that require access to processing facilities and/or an urban labour pool.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Motu Economic and Public Policy Research in its series Working Papers with number 08_10.
Length: 47 pages
Date of creation: Jun 2008
Date of revision:
irrigation; hedonics; water supply; New Zealand;
Find related papers by 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
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-07-20 (Agricultural Economics)
- NEP-ALL-2008-07-20 (All new papers)
- NEP-ENV-2008-07-20 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert A Buckle & Kunhong Kim & Heather Kirkham & Nathan McLellan & Jared Sharma, 2002. "A structural VAR model of the New Zealand business cycle," Treasury Working Paper Series 02/26, New Zealand Treasury.
- Feng Xu & Ron C. Mittelhammer & Paul W. Barkley, 1993. "Measuring the Contributions of Site Characteristics to the Value of Agricultural Land," Land Economics, University of Wisconsin Press, vol. 69(4), pages 356-369.
- John Faux & Gregory M. Perry, 1999. "Estimating Irrigation Water Value Using Hedonic Price Analysis: A Case Study in Malheur County, Oregon," Land Economics, University of Wisconsin Press, vol. 75(3), pages 440-452.
- Raymond B. Palmquist, 1989. "Land as a Differentiated Factor of Production: A Hedonic Model and Its Implications for Welfare Measurement," Land Economics, University of Wisconsin Press, vol. 65(1), pages 23-28.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- L. Allen Torell & James D. Libbin & Michael D. Miller, 1990. "The Market Value of Water in the Ogallala Aquifer," Land Economics, University of Wisconsin Press, vol. 66(2), pages 163-175.
- Jan P. Crouter, 1987. "Hedonic Estimation Applied to a Water Rights Market," Land Economics, University of Wisconsin Press, vol. 63(3), pages 259-271.
- Yoo, James & Perrings, Charles & Kinzig, Ann & Abbott, Joshua K. & Simonit, Silvio & Connors, John P. & Maliszewski, Paul J., 2012. "The Value of Water Rights in Agricultural Properties in the Phoenix Active Management Area," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124095, Agricultural and Applied Economics Association.
- Yoo, James & Simonit, Silvio & Connors, John P. & Maliszewski, Paul J. & Kinzig, Ann P. & Perrings, Charles, 2013. "The value of agricultural water rights in agricultural properties in the path of development," Ecological Economics, Elsevier, vol. 91(C), pages 57-68.
- Kravchenko, Alexey, 2012. "Estimating Dairy Farms’ Demand for Water," 2012 Conference, August 31, 2012, Nelson, New Zealand 136048, New Zealand Agricultural and Resource Economics Society.
- Levente Tímár, 2011. "Rural Land Use and Land Tenure in New Zealand," Working Papers 11_13, Motu Economic and Public Policy Research.
- Hellegers, Petra & Davidson, Brian, 2010. "Determining the disaggregated economic value of irrigation water in the Musi sub-basin in India," Agricultural Water Management, Elsevier, vol. 97(6), pages 933-938, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tui Head).
If references are entirely missing, you can add them using this form.