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Effectiveness of Two Water Conservation Policies: An Integrated Modeling Approach

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  • Das, Biswa R.
  • Willis, David B.
  • Johnson, Jeffrey W.

Abstract

Agriculture in the Texas High Plains depends entirely on the Ogallala Aquifer. Texas enacted water conservation legislation to address declining reserves in the aquifer. We developed an integrated regional water policy model that links a hydrology model with an economic optimization model to estimate policy impacts with respect to economic cost and water conservation. Testing the effectiveness of two policies, a groundwater extraction tax and extraction quotas, we observe that neither significantly inhibits groundwater use. Although both policies conserve similar amounts of groundwater, the regional cost of the tax policy to agriculture is more than the quota policy.

Suggested Citation

  • Das, Biswa R. & Willis, David B. & Johnson, Jeffrey W., 2010. "Effectiveness of Two Water Conservation Policies: An Integrated Modeling Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(04), November.
  • Handle: RePEc:ags:joaaec:100523
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    File URL: http://purl.umn.edu/100523
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    References listed on IDEAS

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    1. Koop, Gary & Tobias, Justin L., 2006. "Semiparametric Bayesian inference in smooth coefficient models," Journal of Econometrics, Elsevier, vol. 134(1), pages 283-315, September.
    2. Holt, Matthew T & Goodwin, Barry K, 1997. "Generalized Habit Formation in an Inverse Almost Ideal Demand System: An Application to Meat Expenditures in the U.S," Empirical Economics, Springer, vol. 22(2), pages 293-320.
    3. Joost M.E. Pennings & Raymond M. Leuthold, 2000. "The Role of Farmers' Behavioral Attitudes and Heterogeneity in Futures Contracts Usage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 908-919.
    4. Dorfman, Jeffrey H. & Pennings, Joost M.E. & Garcia, Philip, . "Is Hedging a Habit? Hedging Ratio Determination of Cotton Producers," Journal of Agribusiness, Agricultural Economics Association of Georgia.
    5. Pennings, Joost M. E. & Garcia, Philip, 2004. "Hedging behavior in small and medium-sized enterprises: The role of unobserved heterogeneity," Journal of Banking & Finance, Elsevier, vol. 28(5), pages 951-978, May.
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    Cited by:

    1. Hrozencik, Robert Aaron & Manning, Dale T., 2016. "Groundwater Management Policy Evaluation with a Spatial-Dynamic Hydro-Economic Modelling Framework," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236116, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    integrated regional water policy model; Texas High Plains; water conservation policy; hydrology model; economic optimization model; Ogallala Aquifer; tax policy; quota policy; Agribusiness; Community/Rural/Urban Development; Food Security and Poverty; Land Economics/Use; Political Economy; Q30; Q31; Q38;

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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